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Eataly - Exec.MBA - Strategic Management


Ibrahim Basoglu

on 1 November 2014

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Transcript of Eataly - Exec.MBA - Strategic Management

Exec.MBA - Strategic Management - 1st November, 2014
History and Foundation Story
Mission & Strategies
Entrepreneurial Actions
by Ayla Özgür & Ibrahim Basoglu
Eataly is a high-end Italian food market chain comprising a variety of restaurants, food and beverage stations, bakery, and retail items.

It was founded by Natale Farinetti (known as Oscar) in 2004.
It is an alliance of small-scale producers, who have been making the finest foods and beverages in limited quantities for generations.
As an entrepreneur, Farinetti formerly involved in the consumer electronics business. After selling his retail chain UniEuro his experience persuaded him to invest in a new ambitious project. He drew up plans for
"Eat Italy"
after visiting Istanbul’s Grand Bazaar.
2005-2007 : Eataly and Slow Food collaborated in order to design a sustainable market.

2007 : First location of Eataly was opened in Torino, the birth place of Slow Food Movement.

2010-2014 : New stores were opened in Italy(10), US(2), Japan(13), UAE(1) and Turkey(1).

We love high quality food and drink. We love the stories about it, the people who produce it, the places it comes from

Good food brings all of us together, and helps us find a common point of view.

We believe that one of the greatest sources of joy is what happens around a dinner table.

We've dedicated our daily lives to promoting a real understanding of high-quality food and drink. How lucky are we that we get to do what we love?

By creating and offering the best products, we improve our own lives, and bring added value to yours. Enter a world dedicated to quality: that means quality food, quality drink and ultimately quality time.

Whether you're here to buy a loaf of bread or sit down to enjoy a meal, we want this to be your place. We want you to be comfortable, happy, and enriched by every visit.

This is a store with stories. Here, you won't just discover what you love, you'll also learn about what you love.

When you demand quality products, you support the local farmers, fishermen, butchers, cheesemakers who produce them. You create a better environment—for eating and beyond.

1. Choice: We offer a diverse selection of quality food and drink

2. Accessibility: We are dedicated to offering the best products at the lowest possible price points.

3. Knowledge: We feel that it's not just important that we know everything about what we sell and serve. We also share with you the stories of the people and places behind all that we offer.

In all ways, we promise to be scrupulously honest. We'll never encourage you to buy more than you need or more expensive than you can afford.

Our goal is to have you as our customer for a lifetime. The easiest means to that end is offering the best food and drink as well as the best environment in which to discover and expand your tastes.
Slow Food philosophy played a key role in the business model created for Eataly.

Slow Food is a worldwide organization devoted protecting and supporting food culture. It was founded as counteract
fast food
fast life
, as well as the disappearance of local food traditions by promoting "
good, clean and fair
" food.

Porter Five Forces Analysis
Threats of Potential Entrants
Barganing Power of Suppliers
Threat of Substitutes
Barganing Power of Buyers
Industry Competitors
Prices for most products at Eataly tend to be 25-30% higher than regular supermarkets. Such difference could be acceptable for artisanal products but for meat, fruit, and vegetable customers would not pay higher amounts.

Customer comment : "Many of the items on the shelves and in the cases are of good quality but prices were high and it would take a great deal of costly trial and error to learn what's great and what isn't."

The success of Eataly indicates that there are companies or joint ventures towards this business. However ;

Depending on size, the stores each require an investment of €5-10Mio.

Non-Italian Eatalys would at first focus on foods exported from Italy, making it more like a specialty store. The plan should be buying fresh meats, vegetables and fruits from local producers, but it would take time for those to develop a supply chain of artisanal products.
There are three the key factors that make Eataly formula particularly innovative :

1. Choice of partners
2. Hybrid convergent formula : the three souls
3. Experiential marketing

The Slow Food consultancy was fundamental to establish a model able to harmonize mass market retailing practice with values highly recognized and appreciated by the customers (i.e. the concept of “slow eating”, “local products”, “short supply chain”).
The idea is to offer a place where to buy, eat and learn simultaneously. The business model comes from "different stimuli arising areas".

The three souls of Eataly melt in a single place, create an involving experience that can be defined “eatertainment” an integrated offering system that satisfy needs of entertainment, purchase, socialization and information.
Eataly aims becoming a “all around show”, through a clever balance of training, tastes, fragrances that can transmit emotions to customers.

Thematic restaurants, rooms for training courses are built in order to reproduce the sensation of traditional market place. This creates a playful atmosphere, enlarges the time of customers in shop, and increases the identification with the company’s values and products.
Eataly's objective is to uphold a system of responsible and ecologically-sustainable production, commercialization and distribution. So enterprises in this supply chain is carefully selected.

However, in order to secure its business, Eataly has purchased shares in several suppliers. Today Eataly owns, or is a partner in, more than 19 companies that produce or distribute Italian food. Those companies supply approx. 25% of retail products, while 75% is purchased from more than 2.000 producers.

Strategic Business Units
Pastry & Pantry
Wine / Beer and
Non-Alcohol Drinks
In 2014 Eataly expects to reach a consolidated revenue of €400 Mio. with an Ebitda of €45 Mio.

By 2017 company planning to reach Ebitda € 100-150 Mio.

In 2010-2013 Eataly had an average yearly revenue growth of 30%
and of the Ebitda higher than 70%.
Source : http://www.4-traders.com
In the next three years, Eataly is planning to open 3 stores in Italy in Piacenza, Verona and Trieste, 1 store in London, one store in Moscow and five stores in the continent of America in Los Angeles, Philadelphia, Boston, Sao Paolo and Toronto.
New Stores in Brand Cities
Increasing Revenue & Profit
Italian Culture
Eataly will use direct investment in Italy and US but franchise or joint ventures in other locations.

2015 @ Sao Paulo with St.Marche supermarket chain.
2015 @ Seoul & Hyundai department store.
2016 @ London with Selfridges department store.
2016 @ Paris with Galeries Lafayette.
2017 @ Sydney with Knight Frank group.

Theme Park
In 2015 Eataly is going to Open Disneyland of Food in Bologna.

The theme park called Fico Eataly World will cost €45 Mio and include restaurants, grocery stores, food labs etc. Fico Eataly should be generating the lent of €100 Mio of revenue by 2019.
Corporate Strategies
Global Strategies
Community Involvement
Mr. Farinetti is the public face of Eataly. He says Eataly donates one third of its revenue to charity. A company principle is that no one’s salary is more than five times the salary of the lowest paid employee.

It sounds unlikely but might be possible if you don’t count bonuses, stock options, and other corporate reward plans. He points out that Eataly creates jobs and employs young people, especially in Italy, where high chronic youth unemployment is a problem.
Source : http://www.theglobeandmail.com
Le District @ NYC : French-themed market place and eating zone.
Latin Eataly @ NYC :
Chef & restaurateur R. Sandoval
wants to open a Latin-themed
version of Eataly on Block 37's.

Little Eataly @ Indianapolis
Purple food truck serves pasta, panini, cannoli and other Italian street food since 2011.
Part of products that Eataly is offering like cheese, wine, pasta and pizza is very universal. Eataly differentitates itself with artisanal slogan.

However either "small size market chains" or "big stores" may supply same/similar products from and could compete or substitute Eataly in long term by changing their structure.
As Eataly grows, it will be difficult for them to pitch themselves as artisan producers doing things on such a large scale, especially if they decide to enter markets with an abundance of true specific product artisans.

Company has already positioned itself in Italy in a different way compared with the rest of the world. At the moment the firm is living with a double identity, which will become apparent also to common customers as the company grows.

The suggestion would be separating the holding even more clearly between Italian and a "rest of the world" division with two different aims, mission statement and principle policies.
Strategy Proposal

Entertainment: EAT, PURCHASE,LEARN
Part of Farinettis strategy has been to pull in visitors from the throngs of tourists
The local flavor is what sets each store apart from each other

The name Eataly was coined by Celestino Ciocca, a brand strategy consultant. He first registered Eataly as a domain name and trademark in 2000 and sold Carlo Farinetti in 2004.
Eataly's mission is to offer healthy products, respecting local traditions, products' seasonality and origin not only for niches but also for mass markets.
Brand Identity
One of the most original strengths of the brand's identity is that "what you eat in the restaurant is what you can actually find on the store shelves and easily learn about it".
In order to support wide-ranging project, Eataly has established collaborations with important partners:

Pizzas by RossoPomodoro
Coffeeshop by Lavazza
Chocolate shop by Venchi
Bookstore by Rizzoli and
Promotion of wine and food tourism by Alpitour.
Restaurant chains have significant role in revenue. Eataly's most famous motto is "Eat, Shop, Learn". Thus, the company's business models uses "eat" element as the most accurate instrument in its positioning strategy.
Source : http://issuu.com/alessandropodda/docs/eataly_report
Past Strategies
Current Strategies
Slow Food and Eataly co-operated to design a chain of food distribution with
producers w
ho have been producing in
limited quantities
for generations. Eataly emerged from an ideological alliance and social movements. From the beginning, and before the opening of Eataly, the company sought to introduce the Slow Food counterculture's core values and issues into the new venture's design and implementation process.

In keeping with the
criterion of reducing transportation costs fresh product is sourced from the
surrounding areas.
Source : Market transformation in the food industry / Evidence from the Eataly case
Roberta Sebastini, Francesca Montagnini, Daniele Dalli

Expanding store chain and increasing sales volumes worldwide
Higher production capacity for all product range
More elitist tendency
Not only artisan but also industrialized product sale
Not only Italian but also local food sales (i.e. 25% in New York)

Moreless 20% of total revenue!
(10% Wine + 10% Others)
Source : http://www.thestar.com/life/food_wine/2010/05/20/bain_is_toronto_ready_for_the_eataly_phenomenon_1.html
More than 30% of total revenue!
Moreless 2% of total revenue!
The choice of partners
The three souls
The experiential marketing.
Slow Food and EATALY
Wild Hive Farm Community Grain Project and EATALY
City Harvest and EATALY
IACE and EATALY Sponsor Children's Classes
25% of products are supplied from more than 19 companies that it owns or is a partner of Eataly
75% is being purchased from more than 2000 producers
Eataly also sells local flavours in treir shops
Buyer-Supplier Network Dynamics
Eataly is new form of Market Transformation (Demand-supply, proactivity)
Strong relationship with local vendors
From neighborhood shops to gargantuan food mall
Costumer Behaviours
Authentic Experience
Local foods
Market Penetration-Turkey
Eataly'nin kurucusu Oscar Farinetti, 4 Kasım saat 15:00'te #Brandweek kapsamında "Eataly Marka Hikayesi"ni anlatacak. Kaçırmayın!

Ev sahipliğini yaptığımız;
Serra Yılmaz ile 'İtalyan İşi', yarından itibaren her cumartesi 12:10'da CNN Türk ekranlarında. Bu haftanın konukları Ata Demirer ve Özge Borak! — Eataly Istanbul'da.
(Food) culture and counter-culture

Eataly is a new form of market transformation

It is not conventional supermarket, it is something trendy

Eataly is a sort of exploitation of a cultural movement
Sustainability & Sustainability Management
Human Resources Policy
Market Penetration
"The local flavor is what sets each store apart from each other and prevents the chain from coming off like some gourmet Ikea, a big-box cookie-cutter store that is more or less the same no matter where you go."
A Disney World of Italian Beauty
Museum Like Stores, Stores Like Museum
"Visitors" instead of "costumers"
Eataly marketing itself as a place more about seeing/learning than consuming
Farinetti convince the Romans, who are famously scornful of supermarkets and fiercely loyal to their specialized neighborhood vendors
The main aim of the collaboration is to create a new format where consumers could buy quality products, thus supporting the local farmers producing them and also creating a better environment.
Eataly and Vino Libero, for their wine project, have appointed Smurfit Kappa to help it to expand into new international markets.
What is particularly exciting about this partnership is that sustainable and innovative packaging solutions bring premium, local produce to global markets.
Environmental Sustainability
Sustainability Management
(Strengths & Opportunities)
Full transcript