Business GCSE / National 5: The challenge of launching a new café

Dragon Den’s Theo Paphitis interviews two café owners of Hedley’s, and assesses the relative importance of each element of the marketing mix - particularly location.

The market for cafés in Gloucester city centre is saturated, with several failed café plots for let.

Financial data on one café is given suggesting turnover must increase by £3000 to achieve break even.

The importance of location in the marketing mix is identified as Hedley’s café is some distance from the city centre and the impact on footfall (the number of passing customers) is analysed.

Theo organises a tasting session in the busiest part of Gloucester to see if price, product or location is more important in the café’s overall marketing mix.

Theo returns to Gloucester three months later to find that Hedley’s have changed strategy and branched out into outside catering; supplying high quality sandwiches to local shops and visitor attractions.

Expansion has been financed by reinvesting the profits of their city centre café. The owners explain the challenges of managing an expanding business and the long hours of work involved - sometimes seven days a week.

Teacher Notes

Key Stage 4

This short film could be used as a lesson starter to explore how underperforming businesses can adapt tactics and strategy to reach their objectives. Students could explore how different sources of finance can be used to fund further expansion. Are retained profits likely to be sufficient? Are there benefits in being a company and selling new shares, even if control is diluted? Are there opportunities for Hadley’s to become a franchise?

Curriculum Notes

This short film is suitable for teaching GCSE (KS4) / National 5 business.

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