TerraBiteCase - Terra Bite Case One of the main issues...

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Terra Bite Case One of the main issues facing the Terra Bite lounge is the trust and reliance that the consumer will pay for their coffee and that it will be enough to sustain the business over the long term. Terra Bite has proven successful in it’s current location which is in the middle of an affluent neighborhood but the owner Ervin Peretz wants to open more locations and believes it will be successful in different geographic regions as well. These new locations may not have consumers with the same affluence of the first location. This could be a potential issue because it is uncertain if people with less expendable money will pay a fair price for their coffee and if there will be enough people who overpay to make up the difference. Swot Analysis Strengths: 1. Unique Concept: The pay what you think model is very unique and gives Terra Bite a competitive advantage over other café’s in the area. Consumers will be attracted to the café because of concept and it should drive new business as people come to experience the concept for themselves. 2. Cost of Operation: One of Terra Bite’s main strengths is its efficiency and simplification in which it operates its café. There is no cash handling done by the staff, which frees up the staff members time to focus on making the drinks. This helps Peretz keep costs low by having just one paid barista per shit and avoid costly cash and credit card services. 3. Environment: While Terra Bites unique pay what you think concept helps create buzz and drive new business they have also worked hard to create a good environment within the café as well. They are focused on providing the best possible environment for consumers so that they will be motivated to pay a higher
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then average amount for there coffee drinks. This environment includes free wireless internet, console games, and large reading selection. Weaknesses: 1. Voluntary Payment System: As previously mentioned, Terra Bite’s voluntary payment system can be considered strength because it is such a unique concept but it also lends itself to be a weakness as well. This payment system could be a weakness because it is heavily reliant on consumer’s goodwill and this could open up the possibility of abuse. Since consumers choose to pay what they feel is appropriate, Terra Bite’s bottom could be directly affected if customers start consistently paying less then average prices. 2. Limited Staff: Because of the volatile nature of the voluntary payment system, Peretz decided it made financial sense to only employ one or two staff members to work at a time in order to trim costs. This has worked for his business model but it is also a potential weakness because the limited staff means that consumers will be exposed to longer wait times. Even if the workers don’t have to handle any cash, which frees up some time to focus on drinks, if the cafe was hit with a rush of customers on a Saturday morning it would be difficult for them to maintain a
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TerraBiteCase - Terra Bite Case One of the main issues...

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