As NoBull Burger shows, determining capacity needs is a key for growth
By Tim Kraft,
The big idea: In fall 2011, NoBull Burger, a new Charlottesville-based vegetarian burger company, was at a critical juncture in its development. The business faced a number of challenges as it continued to expand its sales outside the region. In particular, as the burgers increased in popularity, the owners were unsure as to whether production could keep pace with demand.
The scenario: NoBull was started by Charlottesville native Crissanne Raymond. Raymond had run her own successful catering business for years when in 2011 she saw an opportunity to start a new venture based on her vegetarian burger recipe. To launch NoBull, Raymond enlisted the help of two of her daughters, Heather and Elizabeth. Running a family business proved challenging. Heather noted, “[We were] always learning from the past . . . [asking ourselves] ‘how can we make this easier?’ because as we found, there’s always a better way.”
Early on, the Raymonds spent a significant amount of time promoting the business and identifying new markets. Initially, NoBull sold its handmade burgers through the Charlottesville City Market and to a few local health food stores and restaurants. But as NoBull saturated the Charlottesville market, demand spread, and NoBull expanded its reach to nearby cities such as Washington and Richmond and to larger retailers such as Whole Foods.
The Raymonds spent less time understanding NoBull’s operational capabilities. With an increase in demand, however, they began to worry whether NoBull had the necessary capacity to fulfill orders. NoBull’s kitchen was cramped, with limited space for cooks and equipment. To increase its capacity, the Raymonds explored automating portions of the burger-making process. For example, they identified an automated steamer that could cook the ingredients for the burger mixture in a fraction of the time required on a stove top. Still, they were unsure whether the investment made operational or financial sense. For help with NoBull’s operations, the family reached out to a group of students from the Darden School of Business.
The resolution: With the help of the students, the Raymonds determined NoBull’s existing capacity and identified potential process improvements for increasing production. The capacity constraint for the burger-making process turned out to be labor hours and not equipment. In addition, they found that grilling the burgers — not cooking the ingredients — was the process bottleneck. Therefore, buying an automated steamer would not increase the capacity of the existing kitchen because it would not increase the capacity of the constrained step. Instead, NoBull could increase its capacity by 20 to 25 percent simply by increasing the hours worked by cooks by one hour a day or by increasing the batch size of burgers cooked on the grill.
The lesson: Determining the capacity requirements of your operations sounds obvious but is often overlooked by new businesses, which are so focused on growth that they lose sight of the importance of operations and execution. When scaling an operation, it is important to first understand your existing capacity before making financial commitments. Often, easy fixes exist that cost less and are less disruptive to operations.
— Tim Kraft
Kraft is an assistant professor of business administration at the University of Virginia Darden School of Business. This article is based on a case study, “NoBull Burger,” written by Darden MBA students Merritt Osborn and Elizabeth Tang.