2220 words 9 pagesEataly 1. Would you invest in Eataly?
Eataly’s successful integration of eating, shopping and learning has achieved great rewards, as its 50,000-square-foot Madison Square Park location does approximately $85 million in annual revenue. Its even larger counterpart in Chicago, which opened in late 2013, was on pace to hit $50 million last year (Carr, 2015). Eataly opened its New York store in 2010 with an initial investment of $20 million and by 2012, investors had recouped their initial investment (Collins, 2012). In 2012, Eataly accounted for about a third of Batali & Bastianich Hospitality Group’s $250 million annual revenues (Collins, 2015).
Eataly opened its first store in 2007, in a highly competitive, low-margin industry, …show more content…
When choosing new locations, the quality of the building and its past history are the key factors affecting decision making (Nacamulli, 2013). The presence of big stores and the way they are designed to engage the guests in unique food experiences through small stores and restaurants is the key element of Eataly’s operating model (Curtis, 2015).
Eataly’s employees are educated about the brand, the philosophy and the company’s preference for its guest. Servers are trained to use their product expertise to guide guests with their shopping experience (Terenzio, 2015). Eataly’s high-end ingredients and foodie culture helps make Eataly feel special. Eataly customizes itself in each new city, by making it feel more like a destination, which could explain why 40% of Eataly’s guests in New York are tourists (Carr, 2015). 3. What are the economics of this business?
Eataly’s gross revenues for its first year was $70 million. The global grocery retail industry was estimated to be about $6 trillion in 2013. In the U.S., the industry had $650 billion in revenues in 2013, up from about $630 billion in 2012. Exhibit 3 in the case shows that Eataly’s liabilities drastically increase due to its accounts payable. An increase in supplier cost is due to an increase in demand, and an increase in demand leads to more revenue for Eataly. Eataly helps its partners manage their growth. When