The Wallingford Bowling Alley
Wallingford bowling alley is a 24-hour state of the art bowling alley that is looking for areas to increase their profitability. The Wallingford bowling alley has opportunities to increase their margin as well as drive more daily sales. We see an opportunity for Wallingford because they already have a profitable business. By making the following advancements to achieve more business during slower times of the day they can seize this opportunity. By putting more consideration into using labor hours more effectively, creating community partnerships, and taking advantage of beneficial organizations, Wallingford will see a considerable growth in their bottom line and an expansion of their brand and recognition.
Solutions for Growth
The Wallingford bowling alley faces the opportunity to increase their profitability and simultaneously attain a larger return on investment. Through a reengineering process Wallingford bowling alley will drastically improve profits through promotions and cost control. There are several opportunities facing Wallingford that we will examine and analyze to determine the most effective course of action needed to achieve our goals.
To help appeal to their consumers, Wallingford needs to enhance their image as well as their accommodations. With the addition of customized bowling balls to fit the needs of their customers, Wallingford would be able to bring in a new market looking for these higher end products. Also, by creating a more appealing menu to offer the residents of Wallingford they could potentially bring more customers that are interested in dining out. This could also create a new customer base for potential marketing.
After looking at the times at which they are doing business as well as the reported expenses we were provided, we believe that there is a huge opportunity to cut costs by closing the top half of the bowling alley from the hours of 1am until noon.
As you can see, about a third of Wallingford’s expenses come from payroll. By making these cuts in available lanes they can decrease this payroll amount and increase their profits. This will decrease utility costs, employee wages, and make the ally appear busier by having everyone bowling on one level during slower times. Say there are 3 employees needed to staff the upstairs when it is open; the average wage for an employee is $12 an hour. If cut, that’s $72 a day and over 26 thousand dollars a year going straight to increasing the bottom line and decreasing overhead costs.
As well as cutting labor to help increase the bottom line we can help eliminate the threat of revenue loss on Sundays due to church services. Wallingford should offer discounted rates during times that church is in session. By focusing on getting these customers in the door they could increase revenue during a slower time of the week. In order to take advantage of these slow times we saw an opportunity for the bowling alley to make some sales revenue. Wallingford could offer local schools a discounted rate for large groups to use the bowling alley for field trips or for Physical Education classes. This would give the bowling alley sales during slow periods and also gain interest for bowling in younger markets and hopefully a gain in future customers.
Another opportunity is to join the Bowling Proprietors’ Association of America. The BPAA is an organization focused on enhancing the profitability of their members through grants and a stronger purchasing ability. The costs of becoming a member and loss of some administrative control create an opportunity cost for Wallingford but the long-term ability to be able to create programs with these grants would make up for the short-term costs. This would allow Wallingford to cut down on operation costs through the added buying power supplied by the BPAA, and the savings in money would go to the increased profits. Also, with the opportunity to receive grants from the BPAA, Wallingford would be able to start high school bowling programs to increase interest in the bowling alley.
We felt Wallingford was not doing enough promotions to attract value conscious customers to their bowling alley. In order to capture more sales during slower periods we feel that offering special promotions like a free game with the purchase of an entrée from the restaurant, the rental of shoes would not be included in this promotion. Not only would this get more bowlers in Wallingford, but it would increase revenue for the restaurant located at the alley. This promotion would run from 10am to 2pm Monday through Friday. Other promotions would be happy hour bowling from 4pm to 7pm where bowlers could get a discounted rate for games during this period.
So far, we have only focused on capturing sales during slower mid-day hours, but not for late night. The ability to be open 24 hours in a unique characteristic and sets them apart from a lot of other businesses. In order to take advantage of these late hours, we felt like having a late night bowling special. Bowlers who are up late would be able to take advantage of this opportunity. Also, in order to capture sales from bar going groups, partnering with alcohol companies or breweries could capture some of their customers and would increase popularity with an under-utilized group. These partnerships could also give Wallingford a cheaper form of advertisement and low cost or free labor from these partners. Wallingford can really tap into a new market by taking advantage of these promotions and partnerships.
The BPAA allows their members to participate in numerous different buying promotions from office supplies to foods and drink. These discounts could save Wallingford money and increase their bottom line. The money that the BPAA could provide would help promote school partnerships by supporting transportation and other costs associated. This could increase interest with kids 13-18 and create returning customers. Increasing interest with this market influences other markets like parents of students looking for family activities.
The cost of the BPAA is a draw-back. Like any premium membership there is a premium cost associated with it. However, with these costs come also numerous benefits and increased profitability. Membership costs would be offset by increased revenue and improved customer base. Another weakness may be loss of some creative or administrative control.
The partnership with high schools that the BPAA provides would cause an increase in high school tournaments being held at Wallingford. This would bring in hundreds of people on an annual basis and increase profits for food, drink, and merchandise.
Like in any business there are always substitutes for your consumers. In this case substitutes for Wallingford would be movie theatres, bars, and community events.
2) Cross Promotions and Partnerships
Cross promotions are a low cost form of advertising that gives the company
high exposure and strong partnerships with local business and takes advantage of other company’s loyal customers.
The ability for Wallingford to utilize local businesses for co-sponsored events creates a higher exposure by advertising to new customers and creating high exposure. In addition to higher exposure for Wallingford the use of their partners’ labor and products would help with labor cost and product costs.
The draw-back of these partnerships would be the conflict of two or more differing opinions from two or more organizations. There is also a certain level of uncertainty with these partnerships through not knowing the expectations of each others’ business practices. These weaknesses could be harmful to the business practices of Wallingford but the opportunity to bring in a new customer base to the bowling alley is too big to not use this resource.
One of the opportunities that are involved with these partnerships is sponsorships. We believe that the addition of sponsored lanes would add an increase and draw in customers loyal to our sponsors which would bring in a new customer base. This would be a new market for Wallingford and would bring new customers and profits to the bowling alley.
There is a threat of customers who may be opposed to our sponsors and subsequently will not want to support the bowling alley. Paying attention to the opinions of their consumers can give insight on to who Wallingford chooses to do their cross promotions with. By implementing polls or surveys to their customers, they could find out what local business appeal to them and develop partnerships with them to create a more effective promotion and increased sales.
We feel like the best solution for Wallingford would be to focus on cross promotions, partnerships and strategic alliances. We feel that this is an opportunity because they are not currently doing any program like this. By focusing on this option Wallingford is able to penetrate untapped markets, increase marketing, actively engage the community and their business, and ultimately increase profitability.
Wallingford could evaluate the success of promotions, partnerships and strategic alliances by measuring the increase or decreased customer count that promotions and partnerships supplied. Wallingford could keep track of customer awareness by asking customers how they heard about the bowling alley. After a trial period of six months we could come together with
Wallingford management and evaluate the decision and the effect it had on increasing the profitability, customer flow and look for a decrease in slow times.
The steps in the decision making process are; Identifying and diagnosing problems, generating alternative solutions, evaluating alternatives, making the choice, implementing the decision, and evaluating the decision. In using and applying these concepts to this case, with the first step we identify the major problem with the bowling center which is that the profit pool is too low at the end of the year and that capacity and sales needs to be increased. Five alternative solutions are; more advertising, offering incentives to customers during slow hours to increase sales, use the extra space and rooms to generate income by renting that space, closing the business during slow times, put the business on the market to gauge potential profit from sale. In evaluating the alternatives we determine the adequacy of the alternatives that have been generated.
More advertising would provide a larger customer base especially for the slow periods in turn increasing profits, but it may not be an adequate solution because of the company’s position of operating expenses; however it could increase profits by luring in more customers especially during times when capacity is low. Offering incentives to customers is an option that could provide more customers that otherwise would not have visited the business. Using the extra space of the bowling alley as a rental for special events especially during slow hours could provide a potential profit in space that would otherwise go unused. Closing the business during slow hours would be a very viable option because it would save on operating costs and in turn increase the profits. Testing the market with this business could also be an option, although the profit pool has not been desirable, the business seems to be established which could be very attractive to potential buyers. It would at least be worth a look to see what kind of profit margin could be reached with a sell.
Wallingford Bowling Center is facing low profit performance after four years in business. This reduced in profit is due to many factors. As we have seen, wallingford is not operating in full capacity for most days of the week but it is still open for twenty four hours regardless of its operation. The net income is 2.38 percent of he total revenue generated and it shows that operation cost is very high. Having the above mentioned problems and more, wallingford can not have a good future unless there is immediate solution for The major challenge the center faces which is maximizing the capacity and also sales. As it is described in the chapter, the decision making process includes six stages:
1, Identifying and diagnosing the problem * In wallingford’s case the problem is low profit performance.
2,Generating Alternative Solutions * Here in our case we can have as many alternative as we can just to mention some of the alternative solutions: a, closing the business in the time when business is low.
b, Advertise the organization more.
c, Create effective relationship with employees and customers by empowerig the employees and increasing value to existing and new customers.
d, motivate customers to come during slow time by offering incentives such as reduced rate.
e, To use those extra rooms to generate income by renting or hosting social events and many more.
3,Evaluating Alternative Solutions * Now it is time to determine the adequacy of the alternatives that were generated.
A, To close the business in the time whene business is low :- which helps us reduce the cost of operations , utilities, payroll, supplies and some more account and increase the profit. B, Create effective relationship with employees and customers by empowerig the employes…… (continue)