Kamma Andersen, Gary Shen
26 February 2015
Jack’s Beach Service is entering it’s 86th year of operation on Fort Lauderdale beach. However, even with its history on the beach, the owner, Joe Broward is not satisfied with the company’s profitability. Next month is the beginning of the peak season for the company where rentals often reach 80-90% of capacity and Joe would like to explore methods of generating more success and ultimately profits. The service that Jack’s Beach Service provides is the rental of a raised wooden platform for tanning purposes. This platform can be used for one or two people and can be adjusted for individual preferences. Currently, Joe has 13 locations on the beach, with 7 major locations staffed by multiple attendants and 6 smaller locations staffed by only one attendant. The attendants are paid $95.00 for every day of work and are responsible for raising the awnings and placing the cushions at 8:00 AM, collecting rental fees throughout the day and locking the platform’s cushions away, folding the platforms and collapsing the awnings at 5:00 PM. The attendants often are faced with surprised sunbathers when they explain that the platforms are provided by a private company and have a rental fee. While their are opportunities for increasing the awareness to avoid this problem, Joe uses very little advertising. Overall the company runs smoothly, yet the previous year, the company’s revenue was $340,940 but the net income was only $10,615. Joe would like this number to increase and is looking for ideas to help his business become more successful.
Immediate Problem: Jack’s Beach Service is not profitable enough.
Root Problem: The management responsible for various aspects of Jack’s Beach Service is inadequate.
1. The full day fee for using the service is not flexible and is causing the loss of potential consumers.
2. Insufficient advertising has resulted in low awareness for the service provided by Jack’s Beach Service.
3. Attendant wages do not vary to reflect changes in consumer traffic during peak and off-seasons.
4. Vandalism costs are causing Jack’s Beach Service expenses that do not maximize profits.
Criteria for an Effective Solution
1. Increase sales/revenue from wooden platform rental service.
2. Decrease proportion of revenue lost to labour expense, particularly in the off-season.
3. Improve brand image and awareness.
4. Increase customer relations.
5. Enhances management within company.
6. Minimize expenses associated with vandalism.
1. Change the pricing to an hourly fee instead of the full day fee.
$2.00 for 1 hour of use
Won’t scare away customers and will increase the number of sales.
Platform must be rented for 6 hours in total during the day to make the same revenue as the full day fee.
Potential revenue if the platform is used for the whole day increases from $12.00 to $18.00.
More work for attendants since they have to keep checking for new customers more frequently.
2. Introduce a half day fee along with the full day fee.
$6.00 for half day (4.5 hours)
Still $12.00 for full day
Offers varied pricing so customers wont be scared away.
Moderately more work for attendants since they have to keep checking for new customers more frequently.
3. Change the pricing to a per person fee.
For a group, prices per person could decrease depending on the number of rentals/customers.
Increase revenue if customer has family or friends who want to share the platform.
Increased price for a group could decrease the number of rentals.
4. Advertise service in beachfront hotels.
Increases awareness for business, particularly for tourists.
Increased expenses for brochures, signs, possibly a fee from hotel.
5. Put signs and other advertisements on the beach so that customers are aware that the service is not free.