Case Study 3
Restaurant Optimization Through Trade

The following case study follows one year for a restaurant first without Tradebank and then with Tradebank. Please read the notes explaining the changes, as they are critical to understanding the benefits that were provided to the business. After the notes is a table showing the flow of the Trade Account during the year.

Explanation of Differences

1. Tradebank was able to bring in $100,000 of new business and cannibalized $15,000 of existing business. (ie. 13% of Tradebank sales were old customers who now pay trade). Additional advertising / restaurant improvements / word of mouth increased cash revenue
by $50,000.

2. The food costs as a % of sales was the same for trade business as it was for the existing business.

3. An additional staff was brought in once a week to service the extra traffic through the restaurant. Also, a staff get away party was held at a local laser tag and go-cart track on trade. The staff really bonded and the restaurant as never run smoother.

4. Increased the quality and number of the menus through a Tradebank supplier. New menus looked nicer for a longer period of time (helping to improve word of mouth traffic).

5. Replaced previous advertising with door knob advertising through trade that was more expensive but also more effective. Also, tried first local radio ads for the restaurant. Based on the additional revenue the response seems positive.

6. No change in rent costs as a result of using Tradebank. If the restaurant owner was going to open a new restaurant, he could look at using Trade dollars for that expense as well.

7. The owner took a bonus out of the restaurant on trade and the owners wife went to the spa, bought a new set of golf clubs, took their sons to some local sporting events and paid for their trip to Niagara Falls.

8. The restaurant got a fresh coat of paint, the wood floors were refinished and part of the restaurant's new POS system (the $10,000 under W/O Tradebank) was paid via trade. The system they ended up buying was a step above the one they had been looking at so it cost a little more ($15,000 - of which they were able to get $10,000 on trade).

9. At the end of the year the restaurant had $10,000 left in its trade account. Once they save up another $15,000 trade they plan on purchasing a delivery truck for the catering business they plan on expanding into the new year.

* NOTE: Although this is often shown in the cost of goods sold for a restaurant it is a fixed cost in terms of choosing whether or not to barter - ie those staff will be in the restaurant regardless if the barter customer eats at the restaurant that night or not. If additional staff need to be brought in to service the additional business then the additional cost should be considered.

Trade Account for the year

** In one of their suppliers contracts they negotiated that if they purchased at least $25,000 of wine the winery would reimburse $7500 in exchange for T$7500. In previous years they had purchased approximately $20,000 from the winery but with the new incentive they were able to shift $30,000 of their wine purchasees to that winery.