Lessons Learned From a Failed Ivy League Entrepreneur

A "Case Story" By Chris Cononico
 

Chapter Six

Based on our analysis, we believed there was a strong demand from students for our off-campus meal plan idea. Unlike the school cafeteria, our program was available 24/7 and there were no missed meals. If a student didn’t spend his cash balance on the card, he got a full refund. With such obvious benefits, our success largely depended on how well we delivered our marketing message. We envisioned QuakerCard as an “alternative meal plan,” not as a generic debit card. From our perspective, we just happened to use debit card technology to link our restaurants together, but that wasn’t the value we offered.

The school cafeteria required students to prepay for the semester for a designated number of weekly meals. Therefore, if a student missed a meal, he was still charged for it. The school didn't offer refunds and unused meals didn’t accumulate for later use. Most students missed several meals per week, so the money was wasted. By using QuakerCard, students would be able to eat whenever they wanted, and any unused balance would be refunded back to them.

The first step in positioning QuakerCard as a viable alternative to the cafeteria was offering suggested “deposit amounts,” so students could sign up for fully-refundable “meal plans.” We hoped parents would gladly fund the account, because it was only for food purchases. It was also a way to help students budget their dining expenses.

The breakdown of our meal plans was as follows:
 

 
In our sample brochures, we showed that by eating at local merchants like Thriftway Supermarket, Saladworks Café, Campus Market, My Favorite Muffin, Oriental Gourmet, Basset’s Original Turkey, Mad 4 Mex, Genji, Allegro Pizza, Billybob’s, Smokey Joe’s, Cinnabon, Hillary’s Gourmet Ice Cream, Hong Kong Café, Cool Peppers, Chilis, Domino’s Pizza, Abner’s Cheesesteaks, Lee’s Hoagie House, Cosimo’s Pizza, Everything Yogurt & Salad, Fiesta Jr., and Wawa, students benefited from more variety, and it cost them less money than did the cafeteria plan.

In addition, the cafeteria wasn’t open on the weekends. We knew this left a void that QuakerCard could easily fill. After all, students were going to be eating at the restaurants anyway, so this was a way for their parents to pay for the meals. It was especially appealing to freshmen parents, who wanted the peace of mind of knowing their students would always have enough money set aside for food, and any deposits would be used exclusively for that purpose.

The importance of achieving a high penetration rate with the freshmen class was enormous. Each student represented a potential four-year customer. It was because of the freshmen class that we came up with the idea of our “safety” and “snack” plans. We wanted to give freshmen parents a reason to try our program. Once a student used QuakerCard, we were confident he would be hooked.

The four of us also began to think ahead, and explore our personal contacts. Mark’s girlfriend’s father was an attorney. He offered to draw up our merchant contracts and customer agreements for free. Jake’s mother was a CPA, and she offered to assist us with our accounting system. She also suggested that her firm hold the deposits in trust for our cardholders, in case people were wary about sending their money to a student-run company.

Everything was coming together and the result of our research was a well-structured business plan. Our mission statement was simple: “To honorably serve the needs of the University of Pennsylvania community by providing a quality dining alternative, linking students to University City restaurants, while promoting safety.” By the end of the semester, our attitude towards the project had totally shifted. We were proud of the work we had done, and we were excited about the results. We believed QuakerCard was a viable business opportunity.
 

Copyright  2005 by Chris Cononico
All rights reserved. No part of this manuscript may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the author, except by a reviewer who may quote brief passages in a review.