Reference no: EM131304293

Finagle A Bagel

Finagle A Bagel, a fast-growing New England small business co-owned by Alan Litchman and Laura Trust, is at the forefront of one of the freshest concepts in the food-service business: fresh food. The 20 stores bake a new batch of bagels every hour and receive new deliveries of cheeses, vegetables, and other ingredients every day. Rather than prepackaging menu items, store employees make everything to order to satisfy the specific needs of each guest (Finagle A Bagel's term for a customer). Customers like this arrangement because they get fresh food prepared to their exact preferences-whether it's extra cheese on a bagel pizza or no onions in a salad- along with prompt, friendly service. "Every sandwich, every salad is built to order, so there's a lot of communication between the customers and the cashiers, the customers and the sandwich makers, the customers and the managers," explains Trust.

As a result, Finagle A Bagel's store employees have ample opportunity to build customer relationships and encourage repeat business. Many, like Mirna Hernandez of the Tremont Street store in downtown Boston, are so familiar with what certain customers order that they spring into action when regulars enter the store. "We know what they want, and we just ring it in and take care of them," she says. Some employees even know their customers by name and make conversation as they create a sandwich or fill a coffee container. Over time, the owners have introduced a wide range of bagels, sandwiches, and salads linked to the core bagel product. Some of the most popular offerings include a breakfast bagel pizza, salads with bagel chip croutons, and BLT (bacon, lettuce, and tomato) bagel sandwiches.

Round, flat, seeded, plain, crowned with cheese, or cut into croutons, bagels form the basis of every menu item at Finagle A Bagel. "So many other shops will just grab onto whatever is hot, whatever is trendy, in a ‘me-too' strategy," observes Heather Robertson, director of marketing, human resources, and research and development. In contrast, she says, "We do bagels-that's what we do best. And any menu item in our stores really needs to reaffirm that as our core concept." That's the first of Finagle A Bagel's marketing rules.

To identify a new-product idea, Robertson and her colleagues conduct informal research by talking with both customers and employees. They also browse food magazines and cookbooks for ideas about out-of-theordinary flavors, taste combinations, and preparation methods. When developing a new bagel variety, for example, Robertson looks for ideas that are innovative yet appealing: "If someone else has a sun-dried tomato bagel, that's all the more reason for me not to do it. People look at Finagle A Bagel as kind of the trendsetter." Once the marketing staff comes up with a promising idea, the next step is to write up a formula or recipe, walk downstairs to the dough factory, and mix up a test batch.

Through trial and error, they refine the idea until they like the way the bagel or sandwich looks and tastes. Occasionally, Finagle A Bagel has to put an idea on hold until it can find just the right ingredients. To further reinforce the brand and reward customer loyalty, Finagle A Bagel created the Frequent Finagler card. Cardholders receive one point for every dollar spent in a Finagle A Bagel store and can redeem accumulated points for coffee, juice, sandwiches, or a dozen bagels (actually a baker's dozen, meaning 13 instead of 12).

To join, customers visit the company's website (www.finagleabagel.com) and complete a registration form asking for name, address, and other demographics. From then on, says Litchman, "It's a web-based program where customers can log on, check their points, and receive free gifts by mail. The Frequent Finagler is our big push right now to use technology as a means of generating store traffic." Pricing is an important consideration in the competitive world of quick-serve food. This is where another of Finagle A Bagel's marketing rules comes in. Regardless of cost, the company will not compromise quality.

Therefore, the first step in pricing a new product is to find the best possible ingredients and then to examine the costs and calculate an approximate retail price. After thinking about what a customer might expect to pay for such a menu item, shopping the competition, and talking with some customers, the company settles on a price that represents "a great product for a fair value," says Robertson. Although Finagle A Bagel's rental costs vary, the owners price menu items the same in both higher-rent and lower-rent stores. "We have considered adjusting prices based upon the location of the store, but we haven't done it because it can backfire in a very significant way," owner Laura Trust explains. "People expect to be treated fairly, regardless of where they live."

Although Finagle A Bagel competes with other bagel chains in and around Boston, its competition goes well beyond restaurants in that category. "You compete with a person selling a cup of coffee; you compete with a grocery store selling a salad," Litchman notes. "People only have so many ‘dining dollars,' and you need to convince them to spend those dining dollars in your store." Finagle A Bagel's competitive advantages are high-quality, fresh products, courteous and competent employees, and clean, attractive, and inviting restaurants. Social responsibility is an integral part of Finagle A Bagel's operations. Rather than simply throwing away unsold bagels at the end of the day, the owners donate the bagels to schools, shelters, and other nonprofit organizations.

When local nonprofit groups hold fundraising events, the owners contribute bagels to feed the volunteers. Over the years, Finagle A Bagel has provided bagels to bicyclists raising money for St. Jude Children's Research Hospital, to swimmers raising money for breast cancer research, and to people building community playgrounds. Also, the owners are strongly committed to being fair to their customers by offering good value and a good experience. "Something that we need to remember and instill in our people all the time," Trust emphasizes, "is that customers are coming in and your responsibility is to give them the best that you can give them."

Even with 300-plus employees, the owners find that owning a business is a nonstop proposition. "Our typical day never ends," says Trust. They are constantly visiting stores, dealing with suppliers, reviewing financial results, and planning for the future. Despite all these responsibilities, this husband-and-wife entrepreneurial team enjoys applying their educational background and business experience to build a business that satisfies thousands of customers every day.

Questions for Discussion
1. Describe Finagle A Bagel's marketing mix.

2. What forces from the marketing environment provide opportunities for Finagle A Bagel? What forces might threaten the firm's marketing strategy?

3. Does Finagle A Bagel appear to be implementing the marketing concept? Explain your answer.