CASE STUDY: Steuben's Food Service Company Background Steuben's Food Service was founded in 2006 by Josh Wolkon, a successful restaurateur in Denver, Colorado. Steuben's Food Service includes an independent restaurant in uptown Denver specializing in unique comfort cuisine, as well as a food truck service, which regularly circuits through the city providing both residents and travelers alike with quality food and exceptional service. At Steuben's, heavy emphasis is placed on providing a unique dining experience that cultivates a sense of comfort and familiarity. The menu consists of a variety of regional American classics, which serve to inspire memories of favorite dishes from their customer's pasts. This is where Steuben's differentiates itself from other restaurants in Denver, bringing national appeal to a local spectrum.
Inspiring Success
When Steuben's opened in 2006, it was busy from day one. In the first year of operation, Steuben's raked in approximately $70,000 per week ($364,000 annual revenue). From that point on, Steuben's made a name for itself, which resulted in annual business growth due to a successfully run operation and positive word of mouth. From 2010 to 2011, Steuben's experienced 17 percent sales increase, and then in 2011, Steuben's was featured on Food Network's Diners, Drive-Ins and Dives. Subsequently, demand continued to grow and sales increased an additional 12 percent from 2011 to 2012, amounting to approximately $6 million in annual revenue.
A Worthy Proposal
In 2011, Wolkon was approached by a third-party business, who presented an investment proposal for a licensing agreement to use Steuben's brand and concept to open a location in Denver International Airport. At the time, airports in large cities were looking to better represent their city by adding more independent and less commercial restaurants. By partnering with this business, Wolkon believed he would be doing a great service to the local Denver traveler, as well as worldwide visitors, by providing the experience, service, and food quality of the Steuben's brand in the airport's Terminal C. The licensing agreement would not require Wolkon to put up any money on his end, and he would receive a piece of the location's profit in the form of a licensing fee.
Questions:
1. Do you think Steuben's should license its brand to a third-party and expand its business or remain as an independent operator in one location? How does planning play into this decision?
2. Are there other opportunities to expand the brand without possibly compromising Steuben's current brand and philosophy?
3. How would Wolkon benefit from the licensing agreement for the Terminal C proposal in terms of the expenses of purchasing kitchen equipment?
4. What are the advantages and disadvantages of offering a food truck service, in terms of equipment?
