The Pub Case

The Pub: Survive, Thrive, or Die? 1

It was midnight on a Friday night in the middle of April 2008, and Mount AllisonUniversity campus was alive. The Pub was filling up. Patrons waited in line for twen-ty minutes, had their identification cards thoroughly checked, and entered into thebasement-level facility. The music was pumping, the strobe lights were moving, and thedance floor was crammed. It was going to be another entertaining night at The Pub.Behind the bar was a familiar faceJonathan Clarkknown to everyone in town asScooter. Scooter had been The Pubs regular manager since 1993. Students and alumniwould remember him long after they had forgotten their grade point average. On thatparticular night, Scooters thoughts were elsewhere. He was thinking about the boardmeeting held earlier that week. The board talked at length about The Pubs financial sit-uation and the need to change how it did business.

The Pub had experienced financial difficulties for several years, although the currentyear had been financially sound. The likelihood of The Pub remaining profitable in thefuture was unclear. Competition among bars had increased as alcohol consumption pat-terns in Canada changed. The Pub had a special connection with the student base astheir campus pub, but students were fickle and quick to move on to a different bar if itoffered something more appealing. The Pub was set to move to a new location on cam-pus in August 2008, and the board and Scooter needed to determine the most appro-priate business model to ensure its survival. Scooter needed a plan to bring back to theboard at the end of the summer.

THE CAMPUS

Officially known as The Tantramarsh Club, The Pub was formed in 1974 at MountAllison University (Mount A) in Sackville, New Brunswick, Canada. The town ofSackville was located in southeastern New Brunswick, in the middle of the Maritimeprovinces of Canada. The town bordered the province of Nova Scotia. Sackvilles econ-omy was driven by tourism and the staff, students, and visitors of Mount A. Sackvilles

The Pub: Survive, Thrive, or Die?

Gina Grandy, Mount Allison UniversityMoritz P. Gunther, Mount Allison UniversityAndrew Couturier, Mount Allison UniversityBen Goldberg, Mount Allison UniversityIain MacLeod, Mount Allison UniversityTrevor Steeves, Mount Allison University

Copyright 2010 by the Case Research Journal and by G. Grandy, M.P. Gunther, A. Couturier, B.Goldberg, I. MacLeod and T. Steeves. The authors would like to acknowledge the help of Tupper Cawseyand three reviewers. An earlier version of this case was presented at the Atlantic Schools of BusinessConference held in St. Johns, Newfoundland, Canada in 2008.

NA0084

2 Case Research Journal Volume 30 Issue 1 Winter 2010

population was comprised of approximately 5,000 residents and a university studentbase of an additional 2,000 people.

Mount A was a public university and employed approximately 180 faculty (30part-time and 150 full-time) and 340 staff (50 part-time and 290 full-time)1. Theuniversitys target enrollment level was 2,275 students. The university administrationdeliberately controlled enrollment at this target number to ensure students benefitedfrom the close-knit nature of relationships with students, staff, and faculty. The univer-sity experienced a decline in enrollments in 20042005 that took four years to workthrough the system. Enrollment levels were approximately 2,200 in 20072008.

National trends indicated that between 2001 and 2011, undergraduate enrollmentwould increase by 34 percent. Data showed that 85 percent of all full-time students wereenrolled in undergraduate programs. These rising participation rates were attributed to(1) an increasing number of university-educated parents influencing their children toattend university, and (2) students perceptions that a university degree would result ina higher paying and more rewarding career.2 National trends also indicated that malesrepresented 42 percent of total enrollment at universities.3 This national pattern was alsoevident at Mount A where female enrollment made up 61 to 64 percent of total enroll-ment in any given year. Mount A was primarily an undergraduate university with morethan forty distinct programs. The university offered bachelors degrees in arts, science,commerce, fine arts, and music, as well as master of science (biology and chemistry) anda certificate in bilingualism. Mount A ranked as the number one undergraduate univer-sity in 2007 by Macleans magazine. The university achieved this number one positiontwelve times over a seventeen-year period.4

Founded in 1839, the university was known for excellence in liberal arts education.There were more than 140 clubs and societies (e.g., Bio-Med Society, CommerceSociety, Coalition for Social Justice, Garnet and Gold Musical Theatre Society, JudoClub), a campus theatre, a visiting performing arts series, and numerous concerts (oftenperformed by students and faculty of the music department). University constituentswere also actively involved in community-based activities in Sackville. The universityhad a strong alumni base and there were more than thirty chapter locations across theworld. The university held two significant on-campus events annually: the reunionweekend in May and the homecoming weekend in September.

TRACING THE PUBS ROOTS

The university established regulations in 1968 that permitted students to consume alco-hol on campus. Mount As governing body approved the formation of a campus pub in1973 but it would operate as a separate entity from the university. The Pubs financialyear did coincide with the universitys financial reporting year (May 1 through to April30). The Constitution, originally approved on November 2, 1973, outlined the purposeof The Pub as:

. . . fostering and promoting artistic, literary, educational, social, recreational, and sport-ing activities for the advancement of the interests of its members and others; providing aclub room and other conveniences and facilities for members and guests; promotingsocial and friendly intercourse among its members and guests; and, affording opportuni-ties for informal conferences on all matters of common interest.5

Most campus pubs were non-profit entities operated through university studentunions. The Pub at Mount A operated separately from the Student Administrative


Council (SAC) and had its own insurance and financial reporting. Over the years,The Pub and SAC organized joint events and benefitted from cross marketing but ingeneral, income generated by The Pub rested with the management of The Pub. ThePubs net profits were re-invested into operations and facilities or held as savings.

The university signed a formal agreement with The Pub in 1984 to more clearly out-line the relationship between the two organizations. The university appointed a senioradministrative official to The Pub board. The director of administrative services,Michelle Strain, assumed this responsibility. Strain indicated, The Pub does not oper-ate fully at arms length. The University has some input into decisions of The Pub. Theuniversitys lease agreement with The Pub read, The university has a vital interest inensuring that the operations of the club within the premises will not create an adversereflection of the university. The Pub existed at the discretion of the university. The uni-versity dictated whether or not The Pub was to purchase new appliances or engage inother upgrades to reflect the universitys intended image to potential students, visitors,and the public at large. The Pubs lease could be terminated if its management did notcomply with the requirements set by Mount As administrators and board of regents.

Within a year of opening, the directors of The Pub employed a full-time manager tohandle all operational issues. The managers duties included, staffing, inventory control,cash reconciliations, bank deposits, liquor purchasing and pickup, security, mainte-nance, cleaning and equipment maintenance, payroll, accounting assistance, record-keeping, public relations, promotions and advertising, music/entertainment control, andregular operational maintenance of the third-party ATM machine. The manager actedin a similar fashion as an owner/operator would in such a small organization of approx-imately twenty-two employees, twenty of whom were part-time student employees.

A WORN BUT ADORED PLACE

The Pub was located in the basement of the University Centre on the north side ofcampus. Access via a treacherous staircase meant that students with disabilities haddifficulty entering The Pub. No signage appeared on the exterior of the building, butmost individuals on campus knew exactly where to find it. The Pub symbolized tradi-tion and for former and current students it was a nostalgic place. A vibrant overheadmural on the entrance staircase corresponded with the interior dcor. Walls were alsopainted with colorful murals depicting political and social scenes. Small round tables,painted like the rest of the facility, dotted the premises in no real order or form. A smallcoat check was at the entrance, covered with pictures of patrons from years gone by. Along, thin, cramped bar stretched the length of the room, with clear signs stating, Orderin this Area. There was one cash register and this slowed down ordering, despite the bestefforts of the employees. A maximum of two bartenders served customers. On somenights The Pub set up a second bar in another corner of the club as a remedy to addressslow service.

A DJ booth overlooked a dance floor to the left as patrons entered the facility.Speakers surrounded the DJ booth and pool tables were located in the back area. Theceiling was exposed, allowing all who entered to notice the piping and ventilation sys-tems. The majority of the floors were covered with old, stained carpet and the rest withbland tile. This was The Pub, and despite its run-down appearance, it had been theadored hangout of Mount A students for decades.


Fire regulations limited The Pubs maximum capacity to 175 patrons. Long lineswere common on nights with special entertainment, and on Friday and Saturday nightsin general. Customers most frequent complaint was waiting in line at The Pub.

The development of a new University Centre on campus meant The Pub wouldmove to a new location later in 2008. Strain indicated, there was a campus facilitymaster plan done in 2001 and the decision was made to move all student-related func-tions over to one student centre. So, all non-academic services including the radio sta-tion, bookstore, cafe, pub, and registrars office will be located there. As a part of thatplan, a building on campus, Trueman House, was selected to be renovated because it isin the student services zone with the athletics building. Scooter indicated that movingThe Pub would be bittersweet for staff as there was both anxiety and anticipation.There were still uncertainties with the new location. There would be a new layout andemployees were concerned about the size of The Pub and the absence of a permanentDJ booth. They also worried that the culture and working environment would changewith the new location. Strain noted, People are apprehensive. The old Pub is fallingapart. There are leaking pipes, electrical issues, sewage back-ups and a few things not upto building code. On the one hand, students know it has to move to a new building withnew facilities. One big factor in peoples minds is the size. The Pub is now 3,300 squarefeet and the new Pub will be 2,800 square feet. And so, that 500 feet has become a bigissue for quite a few people. However, the new Pub did provide new opportunities.Scooter stated, It will certainly take a bit of time for us to become accustomed to a dif-ferent bar layout, but the new bar presents an opportunity for greater efficiencies in serv-ing customers, especially since we will be able to have more serving stations in place.

THE MOST SOCIAL WORKPLACE ON CAMPUS

All employees of The Pub were students, except Scooter and the doorman. The staff con-sidered The Pub to be the most social workplace on campus. Promotions manager ChrisGrove pointed out, it helps build another side of students education here at Mount A.Employees were offered drink discounts on nights they were not working, were allowedto walk past lines, and shared tips equally (regardless of position) amounting to $300 or$400 per individual annually. Scooter donated his share of the tips to charity. Mostemployees moved between positions depending on what needed to get done. No formaljob descriptions existed. Generally, hiring occurred in early September and January, fol-lowed by several weeks of training for newcomers. If the Pub needed more staff duringthe year, further employees would be hired. Scooter expressed, weve always tried topurposefully aim for the broadest possible selection of students during the hiringprocess. In terms of gender, the split is fairly equal. In terms of academic standing,there is a heavier emphasis on upper-year students, although we try to hire studentsin their second year to minimize turnover. We try to have at least one member of eachof the four or five biggest varsity sports teams and rugby clubs, at least one studentfrom each of the dozen most popular areas of study, members of most of the biggestcampus extra-curricular bodies and charities, several students who speak multiple lan-guages, a few international students, and a few students with diverse sexual orienta-tions.

The full-time management and DJ positions required extensive training of at leastone year and replacement was difficult, as individuals graduated and left the univer-sity. Scooter indicated that retention was the biggest challenge to The Pub given its

employee structure. As a partial remedy, the board was considering hiring another non-student full-time employee in the future.

Staff described the working environment at The Pub as informal and fun, despite thefact that almost all positions paid minimum wage. Employees joked around and every-one was easy to get along with. At the same time, one bartender pointed out thatemployees recognize there is a job to do and they get it done. On busy nights, partic-ularly weekends, it was a demanding working environment, often with late nights. Onceclean-up was finished at around four in the morning, employees sat down for half anhour, had a drink, and relaxed. The board expected staff members to be role models toother students. Unruly behavior and excessive drinking were reprimanded by bans fromThe Pub, the elimination of discounts, or reduced hours, but almost never a notice toleave employment forever. Underperformance on the job, such as slow service as a bar-tender, was discussed by Scooter and Grove. The managers frequently worked as bar-tenders on busy nights. In general, less experienced staff members were scheduled towork on slower nights during the week.

DECISION MAKING AND GOVERNANCE

The Pub had a clear, but not necessarily strict hierarchy (see Exhibit 1). This hierarchy,although informal, was clearly understood by employees. One bartender noted, rolesare not entrenched or established within contracts or job descriptions. Seniority andexperience played a significant role and best described the structure of The Pub. Staffmembers who had been employed at The Pub for a number of yearsusually two ormorewere given added responsibilities such as key access so that they could open ThePub on nights they were working.


Exhibit 1 The Pubs Structure

Board ofDirectors

(1517 people)

Manager(Scooter)

StudentPromotions Manager

(Chris Grove)

Bartenders CoatCheck

DoormanIan Allenlong time employee

and Mount A staff member

BusStaff

Five Mount A students, elected and voting One university administrator, appointed by the

university and voting. Two Mount A alumni, elected and voting. Two members at large from the university com-

munity, elected and voting. Up to two alternative members at large, elected

and non-voting. One faculty member, elected and voting. One SAC representative, appointed by SAC. One accountant, appointed and non-voting. One manager, appointed and non-voting. One student manager, appointed and non-voting.

Scooter, a graduate of the commerce program at Mount Allison, was a well-rec-ognized face on campus. Staff felt that he had a pleasant disposition and was easygoing. Scooter also had strong ties to the community. He owned and operated alocal restaurant, The Olive Branch, and did a lot of local contracting work withvideo and audio recording and productions. He worked as The Pubs manager dur-ing the regular academic year (September to April) and travelled to Western Canadaduring the summer months working as a tree planter. A Mount A student-employeetook on the responsibility of manager during the slow, summer months. The Pubssales during the summer break were minimal because the majority of students lefttown, so The Pub operated at reduced hours.

The Pub was a non-profit entity with an active board of directors. The board pri-marily fulfilled an advisory and governance role providing checks and balances, ratherthan getting involved with the operational side of the organization. Yet, the board wasalso a key resource to the university in monitoring The Pub and influencing its actions.For example, similar to most universities across Canada, Mount A made an effort toensure responsible drinking on and around campus. The board was one way for the uni-versity to keep a check on the activities of The Pub and ensure safe and responsibledrinking on campus.

In 1995, the board requested that Scooter compile a list of sanctions commonlyimposed upon patrons who caused problems. Using Scooters list as the starting point,Scooter and a sub-committee of the board developed a set of disciplinary policies andprocedures in line with the university judicial guidelines. In the event of unruly patrons,The Pub enforced appropriate sanctions as outlined in its Disciplinary Guidelines,6

including details on smuggling alcohol on premises, attempting to access a restrictedarea, breakage of bottles/glasses, violence/aggression, damage to property, drinking anddriving, drinking after being cut off, fighting, harassment, indecency, loaning identifica-tion cards, refusal to comply with staff, theft, use/possession of illegal drugs, and under-age drinking. An appeal process was also outlined, as well as guidance, albeit in lessdetail, on appropriate behavior for staff and board members.

Strain described her role on the board as someone who brings sober second thought.Anyone who has been the university representative is articulate enough to present theuniversitys position without having to veto decisions. Board decisions were mostlyunanimous, and it had made some tough decisions over the years. For the 20062007academic year, the board decided to reduce Scooters salary and responsibilities at ThePub to cut expenses. His salary was reduced from $42,000 to $28,000. In 20062007the board also decided to hire a student manager to fulfill some of Scooters responsibil-ities (e.g., promotions) at an estimated annual expense of $4,000. Collectively we hadno choice, we had cut back other costs and one big cost is Scooters salary. So when youare running deficits, savings are depleted. In an effort to turn it around, we all agreed toreduce the managers salary for one year, explained Strain.

TARGET MARKETS

The Pub was open to all past and present members of the Mount A community, thatis, faculty, alumni, current students, and anyone with a definable affiliation with the uni-versity. Patrons were required to provide government issued identification indicating thatthey were of legal drinking age (nineteen years old) before entering the facility. Scooterstated, the core group of customers at the Pub would be the Pub members. Almost half


of Mount As students purchase a VIP membership that gives them a number of bene-fits. Basically, those students who purchase Pub memberships are generally the mostsocial students on campus, the ones who will come to the Pub at least a couple times permonth throughout the year. While all students at Mount A were technically members,only those who purchased a membership of The Pub for $40 were granted entry with-out having to pay a cover charge or discount on the cover charged at special events. Themembership provided other privileges, such as drink tickets for a free glass of mixed hardliquor and frequent e-mail updates on events and drink specials at The Pub.

Scooter and Grove promoted the annual memberships aggressively. Membershipswere $40 ($30 for one term) and The Pub sold more than 700 memberships in the20072008 academic year. The two years prior, the number of memberships sold wasapproximately 550 per year. However, Scooter noted that incentives offered in conjunc-tion with these memberships (e.g., tickets for free drinks) had eliminated a substantialportion of the associated profits.

Scooter indicated that from time to time, faculty used the facility for a class event;however, this was infrequent. Scooter noted in terms of revenue, the most valuablegroup of students are those who frequent The Pub because they are attracted to thedance floor. About 80 to 90 percent of the revenue earned by The Pub happens onFriday and Saturday nights, when we have dance parties. There are certainly other mar-ket nichesa small group of students prefers a sit-down Pub atmosphere, and will usu-ally only visit The Pub on weeknights for quieter events such as trivia, games nights, andnights with no special theme or louder dance music. However, the majority of studentsprefer the dance club atmosphere of the weekend dance parties. The Pub did not offerhot foodjust snacks such as nuts, chips, and bars. Scooter also explained that provid-ing food would not be option for The Pub in its current location. It did not have akitchen and the cafeteria in the University Centre was located on another floor, andwould be moved to the new University Centre.

The Pub offered a wet/dry event every Wednesday night and sometimes for specialevents such as when there was live music. For these events, individuals who were underthe legal drinking age and those who chose to refrain from the consumption of liquorwere restricted to a clearly marked and separated area within The Pub. On rare occasionsThe Pub hosted completely dry events. Scooter expressed that attempts to host wet/dryevents in close co-operation with SAC had not always resulted in the expected turnoutof students. Generally speaking, turnout of non-drinkers depended upon what else wasoffered, such as live music or other forms of entertainment. Scooter explained that prof-it margins on non-alcoholic beverages were low.

The most attended event during the weekday evenings was Trivia Night on Tuesdays.It was a quiet night and teams that correctly answered the most trivia questions in around of ten won drink tickets. On any given Tuesday, The Pub was likely to give awaymore than thirty drink tickets. Various events, such as live music, often in support ofcharitable causes, were sometimes hosted at The Pub and most of the cover charge forthese events was passed on to the bands or charity. (Exhibit 2 provides a schedule of theusual events hosted at The Pub during a regular week).

The Pubs open access Web site had become a popular outlet to keep members as wellas the broader community up-to-date on past, present, and future events.7 Photos takenat The Pub were posted on a weekly basis. There was a section devoted to alumni thatincluded an e-mail directory and photos of homecoming and convocation/reunion.


FINANCIAL CRISIS

During the last decade, The Pub had experienced several years of financial loss (seeExhibit 3). The Pub drew upon its savings accumulated in the 1990s to cover itslosses and if those reserves expired, The Pub would likely close. The Pub had nearlyexhausted financial reserves and, at times, it was close to bankruptcy. New Brunswicksrising minimum wage had increased expenses for a number of years. For example, in2004 the minimum wage rate in New Brunswick was $6.20, in 2005 $6.30, in 2006$6.70, in 2007 $7.25 and in 2008 $7.75. Strain indicated that The Pubs financial situ-ation was particularly acute in 2003/2004 when insurance costs shifted sharply.

Beginning January 1, 2004, changes by the universitys insurance provider, theCanadian University Reciprocal Insurance Exchange (CURIE), prohibited the uni-versity from providing liability coverage to The Pub. CURIE provided coverage for mostuniversities across Canada. CURIE decided to remove coverage from all student groupson every campus. The Pub was not the only organization on campus affected by this.The student-led newspaper (The Argosy), the student-led radio station (CHMA), and theSAC all had to find and fund their own coverage. CURIEs rationale was that each mem-ber university did not control the risk associated with these groups. Cases involvingstudent groups were driving up costs of coverage. This resulted in The Pub having topurchase liability insurance externally, costing an average of $17,000 per year. In sub-sequent years Strain noted, the insurance market became less risk averse in generaland our broker was able to get better rates for the same insurance, which helped.

The Pub mounted television sets to screen advertisements along with pictures ofpatrons in an attempt to increase revenues. Scooter estimated that advertising revenuewas less than $600 annually for each of the last three years. The Pub made minimal


Day Mon. Tues. Wed. Thurs. Fri. Sat.Hours of operation(Closed Sun)

Normal BarHours (9 P.M.1 A.M.)

Normal Bar Hours (9 P.M.1 A.M)

Normal BarHours (9 P.M.1 A.M)

Normal BarHours (9 P.M.1 A.M)

9 P.M.2 A.M 9 P.M.2 A.M

Specialprogramming

None Trivia Wet/DryWednesdays

Club/SocietyEvent or Bingo

Dance/Music Dance/Music

Cover charge Usually none Usually none Usually none Usually none Yes Yes

Description ofactivities

No particularprogram

Three rounds oftrivia questions/music in between

Molson Canadiandraft drink ticketsas prizes

Busiest night dur-ing the week(excluding Fridayand Saturday)

Live enter-tainment

Part offacilityseparatedfor non-drinking

Bingo on tel-evisionscreens

MolsonCanadiandraft drinktickets asprices

Music

Music, pool,dance floor,quiet areas

Secondbusiest nightof the week

Music, pool,dance floor

Usually thebusiest nightof the week

Note: Some university affiliated organizations, such as The Argosy (the student newspaper), occasionally obtained exclusiveaccess to The Pub on a weeknight, for example, to hold their semi-annual staff party there. Usually The Pub sponsored any alcoholthat was consumed and was allowed certain privileges in return. For example, The Argosy allowed The Pub to advertise for free inthe paper, although The Pub rarely did this.

Exhibit 2 The Tantramarch Club Weekly Schedule

Exhi

bit 3

Fina

ncia

l Sta

tem

ents

Year

en

ding

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Expe

cted

200

8Re

venu

eBa

r & F

ood

reve

nues

134,

728

126,

429

155,

513

193,

763

186,

393

214,

934

224,

352

273,

912

320,

501

349,

176

304,

261

285,

025

273,

778

240,

135

184,

714

161,

095

232,

426

Bar &

Foo

dco

st o

f sal

es72

,650

76,6

7388

,583

109,

277

105,

761

118,

068

117,

003

131,

275

155,

795

175,

070

153,

737

144,

152

129,

146

109,

602

86,4

7288

,007

119,

367

Gro

ss P

rofit

62,0

7849

,756

66,9

3084

,486

80,6

3296

,866

107,

349

142,

637

164,

706

174,

106

150,

524

140,

873

144,

632

130,

533

98,2

4273

,088

113,

059

Mem

bers

hip

fees

13,3

3116

,454

15,6

9215

,337

13,2

4115

,661

17,7

1819

,328

21,0

2421

,485

20,6

1919

,400

20,7

9616

,184

20,1

9917

,557

31,4

84In

sura

nce

Claim

745

1,96

20

00

00

00

00

00

00

00

Misc

Rev

enue

s, C

over

cha

rge

9,52

014

,655

18,4

3413

,679

12,4

4124

,947

24,6

7321

,335

26,7

2032

,096

30,0

0931

,020

23,0

2515

,592

18,1

8914

,846

21,3

57Su

btot

al re

venu

es85

,674

82,8

2710

1,05

611

3,50

210

6,31

413

7,47

414

9,74

018

3,30

021

2,45

022

7,68

720

1,15

219

1,29

318

8,45

316

2,30

913

6,63

010

5,49

116

5,90

0Ex

pens

esAd

verti

sing

& pr

omot

ion1,

528

1,09

22,

494

1,94

370

01,

068

1,93

42,

151

1,57

947

41,

097

848

00

00

0Ca

sh lo

st/th

eft

1,01

751

40

00

00

00

00

00

8,33

50

00

Clea

ning

4,93

05,

953

6,86

56,

798

4,90

98,

556

8,20

97,

999

9,44

410

,714

8,07

59,

614

8,60

18,

380

6,93

06,

493

8,87

7Co

urt s

ettle

men

t0

992

00

00

00

00

00

00

00

0De

prec

.fix

ed a

sset

s3,

614

4,49

45,

566

5,53

36,

880

8,05

58,

911

11,8

4413

,951

15,5

5921

,843

24,5

3423

,816

18,7

2715

,880

8,26

46,

094

Depr

ec. l

ease

hold

impr

ov.

7,04

58,

345

8,34

56,

701

3,00

03,

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3,18

20

00

00

00

00

0En

terta

inm

ent

6,22

87,

759

6,35

05,

615

7,47

27,

633

4,21

73,

917

6,58

08,

306

9,04

48,

352

5,84

87,

426

4,46

02,

726

1,93

6G

lassw

are

254

2,12

53,

296

1,40

193

067

92,

579

1,35

14,

163

3,88

11,

689

1,63

11,

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3,52

834

81,

109

718

Insu

ranc

e47

250

050

050

050

050

050

066

06,

275

17,1

6613

,134

9,01

47,

210

Inte

rest

& b

ank

char

ges

2,31

31,

801

1,01

81,

791

3,05

33,

853

3,87

03,

888

2,37

81,

400

632

804

619

657

874

835

659

Lice

nse

fee

00

00

025

025

025

025

025

025

025

025

025

030

025

030

0M

iscel

lane

ous

3,41

52,

288

1,68

01,

896

2,24

335

40

00

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680

119

00

Offic

e2,

767

2,02

52,

555

2,82

43,

539

3,04

44,

851

4,40

56,

825

4,51

36,

538

6,10

07,

298

8,06

27,

765

6,14

86,

214

Prof

essio

nal f

ees

1,57

81,

660

1,25

01,

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3,09

52,

821

3,35

53,

141

3,35

23,

418

3,85

13,

510

3,01

05,

629

4,53

04,

690

4,64

5Pr

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iona

l0

00

00

07,

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8,42

65,

616

9,80

23,

420

3,88

35,

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206

841

475

3,66

3Re

nt13

,800

14,5

0015

,225

16,0

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56


Tantramarsh Club Inc. Balance Sheet Fiscal Year Ended April 30, 20072007 2006

AssetsCURRENT ASSETS:Cash $10,037 $30,729Term Deposits 18,936 21,307Inventory (Note 3) 23,524 8,304Prepaid Expenses 5,215 6,541Total current assets $57,712 $66,881EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Note 4) $24,620 $28,265Total Assets $82,332 $95,146Liabilities and Members Equity:CURRENT LIABILITIES:Accounts payable and accrued liabilities $1,526 $41Due to Mount Allison University 1,141 805Total Liabilities $2,667 $846

MEMBERS' EQUITY:Retained Earnings $79,665 $94,300Total Liabilities and Members Equity $82,332 $95,146

Tantramarsh Club Inc. Statement of Cash Flows Fiscal Year Ended April 30, 2007

2007 2006Operating ActivitiesCash receipts from customers $193,498 $226,931 Cash paid to suppliers & employees (211,444) (230,981)Interest paid (835) (874)Cash Flow Used By Operating Activities $(18,781) $(4,924)

Investing ActivitiesAdditions to capital assets $(4,618) $(1,053)Proceeds on disposal of capital assets --- 274 Term deposits 2,371 (361)Cash flow used by investing activities $(2,247) $(1,140)

Financing ActivityAdvances from (to) related parties $-336 $(1,319)Cash flow from (used by) financing activity $336 $(1,319)

Decrease in Cash Flow $(20,692) $(7,383)CashBeginning of year 30,729 38,112CashEnd of Year $10,037 $30,729

attempts to make the facilities available to conference guests over the summer months.The idea was promising, as higher prices could be charged to these guests and tips wereusually much higher than with students. Approximately 3,000 conference attendees overnineteen years of age stayed on campus during the spring and summer months.Unfortunately, as Scooter noted, The Pub was old, tired, and had a student-orientedphysical appearance, which discouraged conference attendees from visiting. Some sum-mer guests had openly commented that the colorful drawings, worn-down plastic chairs,1950s style repainted tables, openly displayed heating pipes and air vents on the ceiling,noticeable stench, and countless stains on the carpet were powerful reasons for not enter-ing the locale. Strain echoed Scooters comments and she too felt that the run-downappearance of The Pub affected sales from conference attendees. She also noted themanager goes away in the summer and The Pub hires a student manager. Sometimes thesummer manager has another job and can decide when and how often The Pub is open.So it is problematic. To ensure service for conference guests, it is sometimes better to rec-ommend that they go to Duckys, in town. Scooter and Strain anticipated that facultyand conference attendees would be more inclined to visit The Pub in its new location.Both felt that The Pub needed to find a way to capitalize on this opportunity.

COMPETING FOR A SMALL MARKET

Scooter indicated 20072008 shows signs of being one of our most profitable years insome time, partly because of the closure of one of the competing bars in town. Threecompeting bars catered primarily to students (see Exhibit 4). There had been a fourthcompetitor but it had recently closed. All bars were located within a one kilometer radiusof each other. Scooter was friendly with the management of these other pubs. Often, oneof The Pub boards members was a manager from one of the competing pubs in town.There were also several other small bars located in Sackville that primarily attractedlocals, but not students. Scooter estimated that each direct competitor took awayapproximately 10 percent of The Pubs potential sales revenue and affected its contribu-tion margin by $15,000. We were faced with a strong competitive challenge from onespecific establishment located off-campus. That establishment recently closed, due inpart to regulatory noncompliance issues relating to the fact that a large number of under-age university students were able to get into that bar on a regular basis. As soon as thatestablishment closed down, business volumes and profitability returned to The Pub.

The Pubs primary focus was to offer a service to Mount A constituents and as a non-profit organization, it offered the lowest prices on alcoholic beverages in town. Recentprovincial legislation permitted bars to advertise prices. However, The Pubs close affili-ation with Mount A and its related university policies and regulations prevented this.The Mount A Liquor Policy indicated that advertising on campus, outside The Pub, andfor events at The Pub, had to comply with University policies.8 Prices of alcohol (includ-ing reduced prices) were not to be quoted and promotion of overconsumption was notpermitted.

The local liquor store (Alcool New Brunswick Liquor (ANBL)) was approximately1 kilometer from The Pub. The town of Amherst, Nova Scotia, was about 20 kilome-ters from Sackville and the city of Moncton, New Brunswick, about 50 kilometers.Scooter did not consider bars in Amherst and Moncton a threat; however, students wereknown to travel to these areas from time to time for a night out. A University Club on



Exhibit 4 Competitor Details and Map of Sackville Uncle Larrys. Located approximately a kilometer from The Pub in downtown Sackville. The facility could hold approximately 300 people and wasa popular hangout for locals of Sackville throughout the week, as well as a popular hangout for students when special events were held there. Itwas formerly a Dooleys franchise and as a result, numerous pool tables were located throughout the facility. There was also a dance floor compa-rable to or slightly bigger than the dance floor space at The Pub. The facility itself was much larger than The Pub and could therefore accommo-date a larger group. Generally, Friday and Saturday nights were the busiest nights at Uncle Larrys. Students frequent Uncle Larrys usually forspecial events such as Keiths Crew and Mount A fundraisers. Keiths Crew was an event held once or twice a semester sponsored by AlexanderKeiths Brewery. Entry was $12 for all you could drink of Keiths beer and there was usually a live band. It was usually held on a weeknight(Thursday) and the bar was often filled to its capacity. Uncle Larrys also hosted events for fundraisers such as Shinerama. Operating hours were 10 A.M. until 12 A.M. Sunday to Thursday (unless there was a special event) and Friday and Saturday until 2 A.M. Priceswere comparable to The Pub and there were always drink specials that were comparable with The Pub. There was a large selection of availabledrinks and this was comparable to other places in town.Duckys. A venue considerably smaller than Uncle Larrys, The Pub or Georges Roadhouse. It was located near Uncle Larrys in the downtownof Sackville, less than a kilometer from The Pub. Duckys typical consumer was someone interested in non-mainstream music (e.g., indie musicwas popular there). The crowd of Duckys was very low key; students who wanted to go out for a drink would go to Duckys rather than go to ThePub where people usually had more than a drink. It was a laid back atmosphere. Students, locals and faculty of the university were known to fre-quent Duckys. The manager of Duckys was a former Mount A graduate who was also a member of The Pub board of directors. There was nodance floor but there was a large screen television. There were some couches located near the television. It was open seven days a week from3 P.M. to 2 A.M. The busiest nights were Friday and Saturdays, although Tequila Tuesdays (reduced prices on Tequila) were popular as well. Georges Roadhouse. Located the furthest from downtown Sackville, at approximately 1.5 kilometers from The Pub. It was not a regular hangoutfor students who preferred mainstream music, although the inexpensive Sunday brunch was known to draw a Mount A following. Mount A studentswho had an interest in Indie music were likely to frequent Georges for live acts by student bands or visiting bands. Georges had a stage to sup-port live music acts and hosted visiting acts organized by The Tantramarsh Blues Society every couple of months. The Tantramarsh Blues Societywas a non-profit organization that coordinated live blues music acts. The contact person for the society was a faculty member of Mount A17. TheRoadhouse provided an avenue for non-mainstream music. The music would be different than what would be heard at The Pub or Uncle Larrys.

Source. http://www.mta.ca/conference/images/map_sackville.gif

campus targeted faculty and staff. It offered bar services for special events usually heldon Fridays. The University Club was open for lunch throughout the week, but did notoffer bar services during that time.

LESS ALCOHOL MORE FOOD

Revenues for the Canadian Food Services and Drinking Places industry were $40.6 bil-lion in 2006, up 4.5 percent from 2005.9 Three of the four sectors of the industry expe-rienced growth. The Limited Service sector (restaurants where meals were ordered andpaid at the counter) experienced growth of 6.6 percent, the Special Food Services sector(contractors, social caterers, and mobile food services) experienced growth of 6.2 percentand Full Service Restaurants (consumers ordered and paid for meals at a table) experi-enced a growth of 4 percent. The fourth sector, Drinking Places, was the only sector toexperience a decline in operating revenues. In 2006 the decline was 6.2 percent, and thatwas the second consecutive year of decline for that sector. In 2006, sales of food and non-alcoholic beverages accounted for 83 percent of total sales in the industry, while sales ofalcoholic beverages accounted for 14 percent.

Campus pubs had been hit hard by the decline in their alcoholic beverages sales.Campus pubs were no longer lucrative cash cows. In Canada, most campus pubs hadexperienced declining revenues as students became more studious, health conscious, andmoney minded.10 Students preferred to spend time socializing at campus coffee shopsrather than at campus pubs. For example, in 2006 Dalhousie Universitys campus pub,the Grawood Lounge, located in Halifax, Nova Scotia, had experienced a $40,000 loss,and one of the campus pubs at University of Alberta, the Power Plant, was closed andreplaced by a coffee shop.

To survive, campus pubs moved from a model that focused on alcohol sales to onethat was more multi-purpose with food offerings and a diversified range of programmingto attract and retain consumers.11 For example, the University of Windsors campus pub,the Basement, experienced a decline in alcohol sales in 2007, but food sales were up andoverall revenues increased. Renovations to the facilities, new catering options, andchanges to the entertainment resulted in the higher sales. Student unions were quick toargue that the intent of campus pubs was not to attain profits but rather, break-even andprovide a safe and convenient locale for students. For example, Olivers, CarletonUniversitys campus pub, subsidized the cost of food to keep prices as low as possible forstudents.

UNIVERSITIES TAKING ON RESPONSIBLE DRINKING

There were efforts at universities across the country to tackle social norms and alcoholconsumption. BACCHUS Canada, a part of The Student Life Education Company, wasa non-profit organization committed to the promotion of healthy decisions on the useand non-use of alcohol and other health issues by post-secondary education students.12

Through its membership base, BACCHUS strived to disseminate information to stu-dents and worked to facilitate change on campuses across the country. Research indi-cated that students estimates of alcohol consumption by peers were much higher thanreal consumption.13 In 2004, BACCHUS conducted research with 14,000 universitystudents at ten universities in Canada. Sixty-three percent drank twice or less per month,but 80 percent believed that their peers drank once or more per week. Other campus


groups across the country, similar to BACCHUS, strived to eliminate misconceptionsabout alcohol consumption among students.

Mount A implemented several mechanisms through which non-drinking and mod-erate drinking were encouraged. The Health Matters Society organized health promo-tion activities annually to promote non-drinking and responsible drinking.14 An alcoholuse/awareness week often occurred at the same time as homecoming weekend. The Pubwas sometimes involved in these initiatives. In 2006, a partnership between SAC and theStudent Life Department at the university set out to celebrate Mount A students whodid not drink, drank moderately, or changed their alcohol behaviors temporarily.15 TheOur Best Times Are Not Wasted initiative offered mini grants to individuals or groupswho organized non-alcoholic events and the group offered tips for moderate drinking.More than 400 people attended one event held at The Pub in September 2006.16

OPPORTUNITY FOR A NEW BUSINESS MODEL

Mount A began renovations in 2007 on one of the older buildings on campus to createa new University Centre housing almost all administrative and non-academic student-related operations of the university. The Pubs move to its new location within the newcentre was scheduled to take place in August 2008. Many details were still unclear andThe Pub still needed to make decisions about the type of bar that it was to become.Strain expressed, the board was giving input all along the way. It was back and forth.Right now it is a dance bar opened essentially for two hours on two nights of the week.We discussed where we will place a DJ booth, does it have to be like the DJ booth in thecurrent location or is it going to be one we can push into a closet, pull out and set up toallow more flexibility. Even though we are moving in a few months, the board has notreally made many decisions that need to be made. For example, about the pool tables,the number of seats, the types of tables. The university will have to make those decisionsif the board and Scooter do not. Scooter had been heavily involved in the planning ofthe new location. He designed the bar to serve up to 300 guests; however, the new pubscapacity would be 150. In The Pubs new location up to four bartenders would be ableto serve customers and two cash registers would be available. Strain indicated that thenew pub could also rent a space adjacent to it which would increase its capacity to 200.The university designed a space that was as flexible as possible, so that The Pub can beanything it wants to be said Strain.

The new location was expected to provide many improvements. It would be moreprofessional in terms of physical appearance, thus allowing for corporate and conferenceguests to bring business to The Pub over the slow summer months. It would have a debitcard payment option for patrons and an ATM would be located outside The Pub butwithin the University Centre building. New appliances, such as a more environmen-tally friendly dishwasher, better draft pouring appliances, new chairs, tables, counters,and a generally more convenient bar set-up, would provide for more efficient service andincreased profitability. Scooter noted, some of the most likely opportunities for the newlocation will relate specifically to the facility and to the nearby location of the universi-ty caf. From an operational point of view, the current location is in pretty rough shapeas far as the infrastructure goes, so it will be nice to move into a new location with func-tional plumbing and electrical, which doesnt require repairs every week or so. From thecustomers point of view, we should be able to partner with the new caf in terms of hav-


ing pub food available, which could enhance our weekday traffic and increase sales andprofitability during times when the dance floor is not operational.

The university would cover incidental costs such as moving fees and infrastructureneeds. The university would provide The Pub with a loan to buy the new equipmentand furniture that the university required it to purchase. This loan would be repaid overa number of years. University officials had recently indicated that the loan would bemore than the $100,000 first expected. The Pub was to make a $40,000 down paymenton the loan and set up a payback plan at a 2 percent interest rate.

Members of the board and Scooter had contemplated the future of The Pub. Thenew location would be an ideal opportunity to alter the business model that had beenin place for some time. The board had to evaluate The Pubs ability to compete withother bars targeting the student market in Sackville, as well as The Pubs ability to attracta broader scope of consumers, students and otherwise. It was clear that Scooter neededto develop an explicit plan before the board met again.

NOTES

1. Mount Allison Universitys Web site www.mta.ca.

2. 2008. Trends in higher education. Backgrounder. Snapshot of Canadian universi-ties. Association of Universities and Colleges of Canada. Web site accessed March19, 2009. http://www.aucc.ca/publications/media/2002/trendsback_e.html .

3. 2008. The gap in achievement between boys and girls. Statistics Canada. Web siteaccessed March 19, 2009, http://www.statcan.gc.ca/pub/81-004-x/200410/7423-eng.htm.

2004. University enrolment. The Daily. Statistics Canada. Web site accessedMarch 19, 2009, http://www.statcan.gc.ca/daily-quotidien/040730/dq040730b-eng.htm.

4. The Macleans magazine annual rankings assesses Canadian universities on a diverserange of factors, from spending on student services and scholarships and bursaries,to funding for libraries and faculty success in obtaining national research grants.Macleans surveys universities with a focus on the undergraduate experience. Theintent is to offer an overview of the quality of instruction and services available tostudents at public universities across the country.

Source. Dwyer, M. 2008. Our 18th Annual Rankings. Macleans, 19 December,Web site accessed August 31, 2009, http://oncampus.macleans.ca/educa-tion/2008/12/19/our-18th-annual-rankings/.

5. The Constitution of the Tantramarsh Club http://www.mta.ca/pub/constitu-tion.html.

6. The Tantramarsh Disciplinary Policies and Procedures http://www.mta.ca/pub/dis-cipline.html.

7. The Tantramarsh Club Web site http://www.mta.ca/pub.

8. Mount Allison University Liquor Policyhttp://www.tantramarshclub.com/archives/liquorpolicy2008.pdf.

9. 2008. Food Services and Drinking Places 2006 62-243-X, Service IndustriesDivision. Statistics Canada. Web site accessed March 2, 2009, http://www.stat-can.gc.ca/pub/63-243-x/2008001/5206040-eng.htm.


10.CanWest News Service. 2007. Campus pubs going dry. November 10. Website accessed August 21, 2009, http://www.canada.com/topics/news/nation-al/story.html?id=0be6aac4-24e1-445a-bfa2-c0e75bed9da2&k=90085.

11.Fex, S. 2008. Campus pubs: The end is not nigh. University Affairs, January 7. Website accessed August 31, 2009, http://www.universityaffairs.ca/campus-pubs-the-end-is-not-nigh.aspx.

12.BACCHUS Canada Web site www.studentlifeeducation.com.

13.Gordon, A. 2007. Campus pubs hits dry spell. TheStar.com, October 27. Web siteaccessed August 31, 2009, http://www.thestar.com/living/article/269627.

14.Mount Allison Universitys Health Matters Society Web sitehttp://www.mta.ca/health/hms/index.html.

15.Mount Allison Universitys Our Best Times Are Not Wasted Web sitehttp://www.mta.ca/departments/sss/timenotwasted/index.html.

16.Trotter, Kris. 2006. Best Times at Mount A. Campus Notebook. Mount AllisonUniversitys Communication Newsletter 27(2), Sackville: 8. Web site accessedFebruary 20, 2009, http://www.mta.ca/extrelations/notebooks/05-06/oct_06.pdf.

17.The Tantramarsh Blues Society Web site http://www.mta.ca/tbs.


Documents

The Pub Case