Wil's grill case analysis

Wil’s Grill 1

Wil’s Grill Leonard R. Hostetter, Northern Arizona University Nita Paden, Northern Arizona University

In January 2017, John Christ needed to make some decisions about his business, Wil’s Grill. Not long ago, his dad had said, “Son, passion has gotten you here; not the money.” Now, John needed to focus on “the money” – but which path should he take? He could expand his “street food” business, add a catering business, or do something else. John, who loved to make customers happy by serving them great

healthy local food, recognized that he also needed to do so profitably.

BACKGROUND John grew up on a ranch in Cave Creek, AZ, a small community northeast of Phoenix

Arizona. His parents had food service and restaurant experience, and cooking and

entertaining were an integral part of spending time with them. “By age 10,” John recalled, “I could cook.”

As a teenager, John bussed tables at a restaurant where his dad Wil worked. He

also spent many mornings with his dad at a clay-bird sport shooting range near Cave

Creek. When done, they needed to go elsewhere for lunch, since the range did not

offer food or beverages. So, father and son worked out an agreement with the range

owner to open a small food booth on-site, which they named “Wil’s Grill.” On a single grill they cooked burgers, fries and served beverages. Wil taught his son the nuts and

bolts of running the business: obtaining necessary permits and licenses, ordering food

and supplies, shopping, transportation, inventorying, cooking, cleaning and most

importantly, “treating customers as friends.” Hospitality-driven service was a core value.

To celebrate his high school graduation in December 2009, John went on a 30-day

backpacking excursion with the National Outdoor Leadership School in Wyoming,

where he later recalled, “I honed my leadership skills there and this would serve me well in managing my future business.”

In August 2010 Wil closed Wil’s Grill when John enrolled at Northern Arizona University (NAU), in Flagstaff, about 120 miles north of Phoenix. At that time NAU

----------------------------- Copyright © 2017 by the Case Research Journal and by Leonard R. Hostetter, Jr. and Nita Paden. This case study was prepared as the basis for classroom discussion rather than to illustrate either effective

or ineffective handling of an administrative situation. The authors wish to thank John Lawrence,

Brent Beal, Gina Grandy, Janis Gogan, Kathryn Savage, Lance Rohs, Joseph Anderson and the

anonymous CRJ reviewers for their helpful suggestions on how to make this a more effective case.

An earlier version of the case was presented at the 2016 Annual Meeting of the North American

Case Research Association in Las Vegas, NV, United States.

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2 Case Research Journal Volume 37 Issue 4 Fall 2017

enrolled about 23,000 students. John majored in Environmental Studies, and also took

classes in other areas, driven by “my inquisitive nature to learn as much as I could about the world around me.” At the NAU School of Hotel and Restaurant Management John learned about the “clean food” movement – characterized by locally produced, organic foods and sustainable practices.1 Clean food was healthy for both

the planet and for people through production of efficient amounts of food, provision

of leftovers to local shelters, and minimization of waste via biodegradable products

and recycling practices.

WIL’S GRILL FLAGSTAFF

On a visit to Costa Rica in 2013, John and another NAU student – Karl Shilhanek observed a vibrant “street food” community.2 The “chicken lady,” “kabob guy,” and many other vendors served tasty, locally sourced and ready-to-eat fresh foods to local

residents on the street, in the market, at a fair or other public place. Vendors sold

“street food” from a portable stall, cart or food truck. John and Karl were inspired to start their own business, and the flames of Wil’s Grill were reignited when they founded their own Wil’s Grill in Flagstaff, AZ in January 2014.

The young men worked hard to get Wil’s Grill off the ground. They wrote a business plan, secured the required permits and licenses, and set up as a general

partnership. The two partners each invested $500 to get the business off the ground,

and John’s parents provided a $2000 low-interest loan to help them purchase grilling equipment.

“We earned our stripes in the first year,” John recalled. “We were hands-on with every aspect of the business.” Karl focused on business strategy, marketing and social media. He created a website that included their “clean food” menu, a mobile app and a social media presence (on Facebook). John focused on operations and food

preparation. He established relationships with five local food sources -- including

John’s parents’ Happy Mountain Farms. John believed his relationship with farms and producers “allowed me to have a unique understanding of the local supply chain.”

Wil’s Grill was highly portable, and targeted two main markets: 1) NAU students who were tired of chain-based fast food and wanted good, reasonably priced, late night

food, and 2) community events, where organizers and customers wanted reasonably

priced, clean, high quality street food (in contrast, many street food vendors served

manufacturer prepared and processed food). Operations included procuring food,

preparing main courses and sides, transporting food to venues, and hiring temporary

labor for serving and clean-up. Wil’s Grill leased excess kitchen space in non- competing Flagstaff restaurants and bars, for prepping or cooking some food. Once

the food was prepared in these locations it was served on tables with warming trays.

For outdoor events, an event management company assigned Wil’s Grill and other vendors to specific locations for specific hours. Most food (e.g. burgers, vegetables)

was prepared on site, in view of customers.

Within four months John and Karl were able to pay off the $2000 loan; since then,

they had taken no further loans. The business was not profitable and they did not pay

themselves a salary. John and Karl both worked second jobs to cover basic living

expenses in 2014 and 2015, and their parents paid their college tuition. John lived a

simple lifestyle with minimal financial obligations. They did not invest in a brick-and-

mortar operation. Their “office” was as portable as the business. Do N

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Wil’s Grill 3

In May 2014, Karl decided to relocate to Bellingham, WA to be closer to his family.

The breakup was amicable. John reestablished Wil’s Grill as a sole proprietorship. Without his partner, at first John relied on “gut instinct” to run his business. Summer 2014 was tough, especially interviewing and hiring people. John felt this “was challenging. I didn’t know what I was looking for.” To hire temporary employees for street events he posted ads and networked with local bar owners. In June John hired

what he referred to as “my first permanent part-time employee, Cody McCrae, a Hotel and Restaurant Management student.” Cody had also “grown up in the kitchen.” On his first day John gave him some instructions and left for another commitment.

Working alone, Cody prepared sliders and coleslaw and proved himself. John placed a

lot of trust in Cody, his first assistant manager. Cody flexed his hours and worked as

business levels demanded. Preparation and cooking was fast paced, whether in a leased kitchen or on the grill

at an event. There were many 18 to 20 hour work days. John believed that he treated

his temporary employees fairly, and therefore they were customer focused and wanted

to work for him again. John also learned that he needed to define routines and flow-

chart responsibilities for some job positions, and to calculate staffing based on the

estimated number of plates/day to be served.

STREET FOOD EVENTS

Street events involved lots of guess work, since both weather and attendance were

unpredictable. John told a friend, “It’s like rolling the dice to try and guess what food people will want.” During the Flagstaff Pro Rodeo, Wil’s Grill served 425 plates of barbecue per day, whereas for most events, 200 - 300 plates/day was typical. During

the Rodeo, one employee quit. John recalled: “Lines formed quickly; everyone came to the booth around lunch time, hungry. We performed well -- though there’s always room for improvement.” Getting food out quickly was most important, and food quality was more important than presentation or quantity.

Customers enjoyed watching food preparation, including the employee chatter.

Pricing was customized for each event client (Exhibit 1 includes sample menus), so

event revenue varied. A 200 to 300 plate day could gross $2,000 to $3,000, enough to

sustain operations. Ongoing grill maintenance and food purchases were the main

operating costs. Other expenses included liability insurance, permitting, licensing and

payroll. John lived modestly, paid bills in cash and avoided debt. He used his personal

pick-up truck to transport food, and budgeted for fixed costs, irrespective of ebbs and

flows of revenue. He estimated that profit margins averaged 18% - 25% -- good for

the street food business. 2014 to 2016 revenues totaled $129,000 (Exhibit 2).

John had “learned on the fly;” he worked hard and wasn’t discouraged by challenges. Feelings he experienced when customers told him how much they enjoyed

his street food and his passion for clean food outweighed any discouragement. Street

food was fun and fast-paced. John loved it.

THE WIL’S GRILL MARKET

By 2015 Wil’s Grill primarily served Flagstaff, along with Prescott and Sedona to the south, Williams to the west and most of Northern Arizona (with a combined

population of about 275,000 people3). Winter weather limited the number of street

food events in Flagstaff, given its 7,000 foot elevation. Sedona, Prescott and the Verde

Valley (all within 100 miles of Flagstaff), at lower elevations, were warmer. Collectively, Do N

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4 Case Research Journal Volume 37 Issue 4 Fall 2017

each of these communities held almost 50 events that featured street food. For special

events John sometimes traveled as far as Phoenix or Page (both within 150 miles of

Flagstaff); he included fuel costs in his pricing. Phoenix was the 12th largest

metropolitan area in the U.S. with a population of 4.57 million people and a vibrant

street food scene.4 Wil’s Grill had received excellent reviews from local writers, food critics and customers, and was featured in the July 2015 issue of Flagstaff Business News. More food trucks were also appearing on the scene, and some new entrants served

healthier fare. John’s promotional marketing budget for 2016 was $2,100, although he believed he should spend $5,000.

As for catering, large competitors included Big Foot BBQ and Satchmo’s (local barbeque restaurants that also offered catering), as well as Main Street Catering and

Thorneger’s Catering. Some competitors had been in business for twenty years or more, and were well-established in the local catering market. Wil’s Grill had the strongest focus on clean food, and John received referrals from caterers for specialties

Wil’s Grill was known for -- smoked meats and barbeque. Various studies conducted in the United States indicated a growing interest in

“clean food” and this was beginning to influence some customers’ food and beverage purchase decisions. Consideration for healthy choices had reportedly increased from

61% in 2012 to 71% in 2014, and in 2015 67% of respondents had given thought to

environmental sustainability, 72% had given consideration to how food was produced

or farmed, and 26% regularly purchased locally sourced items.5 John believed that the

demographics and psychographics of people in Northern Arizona aligned well with the

national clean food movement.