RX Coffee Apothecary and Kitchen Café Shop — SME Case Study (UAE)

RX Coffee Apothecary and Kitchen Café Shop

Dubai has experienced a boom in the restaurant industry over the last decade and this immense growth has been attributed to its position as one of the fastest growing economies in the Middle East. According to research RX Coffee Apothecary and Kitchen Café Shop RX Coffee Apothecary and Kitchen Café Shop by Euromonitor, it is projected that the UAE had about 19,000 restaurant outlets as of 2019, and the number has been growing ever since (Ali & Ahmad, 2019) . The statistics point in a direction to the increasing customer base that will sustain the industry.

RX Apothecary and Kitchen is a restaurant that has a success story intertwined with diverse beverages, as well as efficient management. The factors below have been pivotal for RX in Dubai as a location for both local

and international customers

¡ Dubai enjoys diverse customers coming from all over the globe, including Asians, Americans, Europeans, Africans, and the Middle East.

¡ It has also positioned itself as a major global destination.

¡ There is a strong commitment from the government to offer incentives to SME in a bid to grow the economy.

RX serves as a specialty café that is inspired by old- school apothecary. It is located within Jumeirah and has enough space to occupy two floors. It also has spacious seating arrangements that can accommodate both large and small groups and is inclusive of the amazing outdoor area that has a bar set-up and windows that peel back in response to the weather.

Vision Statement Figure 37: Rx Apothecary and Kitchen Rx Apothecary and Kitchen (Figure 37) has a vision of bringing individuals together through the charm of a cup of coffee. The company name pays respect to the fact that it has been used for many years by doctors.

However, it comes from the Latin word “recipe” that means “take” that was used for prescription of medicine and now it represents prescription.

The company encompasses a blend of traditional apothecary with the infusion of modern café elements. It serves both local residents and is a leading coffee house for tourists from all parts of the globe. The restaurant believes in passion when serving clients. The restaurant also connects with individuals through expertise, art, culture, and coffee.

In its vision, it believes coffee to be a fuel for innovation and inspiration for the coffee community. In addition, the glass bottles on the shelves are designed to have quotes that are inspirational, and they have up to 30 languages which can be interpreted by the diverse nature of clients coming from different cultures globally.

As a leader in the company, RX has a diverse clientele that caters for all professions such as, doctors, business leaders, artistes, and designers among others. All those who visit RX embrace the slogan “together we can achieve more.” The restaurant also supports a movement that is aimed to position Dubai as a happy city globally by radiating attitudes of gratitude, positivity, and motivational quotes.

RX has a strong belief that it takes pride in moments that are memorable and not the days. This has spearheaded its vision to ensure all food served and coffee prepared will nourish a customer’s mind, body and soul as well as reflect on personal moments that are dear to the customer.

Organizational structure

Organizational structure is a set of benchmark indicators that cannot be ignored. It illustrates the hierarchical order of an organization and how the different components interact and it is a tool used with an aim of attaining a set strategic objectives (Saabeel, 2002). For maximum efficiency, RX has a promising organizational structure that has been pivotal for the restaurant’s continued success. The restaurant uses a formal organizational structure. It is basically the hierarchical relationship that exists between different jobs within the business. It also highlights the relationship of one department to another.

It is an important aspect as it defines relationships, processes, competencies, liability, and mutual ties to the business.

The organizational structure is adaptive as it gives different personnel within the business specified functions to perform. RX has specific departments such

as those in Figure 38

HUMAN RESOURCES PURCHASING ACCOUNTING Figure 38: RX’s specific departments They are all being managed independently. This model allows for managers from different departments such as procurement and marketing to collaborate when making orders and doing planning to maximize efficiency. The main benefit of this structure is that it has separated functions of RX based on expertise. However, it is important to note that the executive management oversees all other departments. This is to ensure that different functional areas do not turn into silos by solely focusing on their areas of responsibility. They should also offer support to other functional departments.

Leadership Figure 39: Promotional Photo The business (Figure 39) was initially envisioned by Saeed AlGaz, an Emirati national after he realized he spent more time in cafes compared to home. He had travelled the world and the café scene had influenced him, having visited some of the leading tourist destinations globally. His passion for coffee and quiet places for people to hangout and have their favorite coffee was the brainchild of the company. Through his leadership and the executive management team, he has managed to stir the business successfully by making it to be among the most sought out places by both locals and international coffee lovers.

Traditionally, many coffee houses within the developing countries faced major challenges starting 2020, due to the COVID-19 pandemic. The main areas of restructuring dealt with employees being laid off, reduced salaries, and reduced clients. This move was inevitable due to the stringent regulations hurting the business profit making model. Despite the reduced number of clients during 2020, RX managed to utilize its ecommerce platform where clients could make orders to be delivered. Coffee houses such as RX have majorly been packed in the far afternoon and early evening experience (Figure 40).

Figure 40: Promotional Photo The main reason for this is that it offers a place where business people can meet and do business, and it is also a place where one can order other meals alongside coffee after a busy day. It is important to note that the company shifted more on the online market as part of the restructuring program, making more sales using the company app. It was also observed that consumer spending was low as most clients did cut their expenditures due to job loss or the fear of uncertainty.

This gives the implication that sales would still remain at a low even if the restrictions are lifted.

Figure 41: RX Apothecary and Kitchen RX Apothecary and Kitchen (Figure 41) implemented a number of measures based on Dubai laws in regard to Covid-19 restrictions. For instance, aspects such as social distance were observed. Despite the challenging economic situation, it was observed that most RX clients switched to takeaway coffee.

RX’s success is attributed to its rich product catalogue.

It has differentiated its product to suit both the tastes of the locals as well as international clients, bearing in mind that Dubai is a major tourist attraction. Its diverse product catalogue has elevated the restaurant to a must visit status among many tourists who are coffee lovers.

MIND SOUL BODY (Above) Figure 42: Promotional Photos of RX Apothecary and Kitchen The restaurant offers its products to consumers in a holistic manner, focusing both on well-being and health.

First, it starts with the body, where there is an extensive menu of the best drinks from different cultures .For instance, the menu may include Japanese sandwiches and Turkish eggs, among others. The second focus of the product is the mind. The mind will be lively by the different coffee varieties offered and lastly, the soul will be taken care of by the amazing sweets such as the must-try Parklane Cheesecake.

Also, RX restaurant focuses more on product differentiation to satisfy the different tastes by different global clients. For instance, it introduced new dishes during its second anniversary. Among other delicacies and drinks included in the product catalogue are the black truffle khachapuri, parmesan, mozzarella, and Georgian–style flatbread packed with feta and quivering egg yolk. The product catalogue also includes the locally inspired mahalabiya toast and umm ali with crushed pistachios and karak sauce.

While the food attracts customers, the coffee is the main star of the show. The owner, through the procurement manager, has strived to source light roast fuglen beans from Norway and Japan, and to have the best filter coffees and espressos. The restaurant itself is a part of the product, it has the apothecary theme that is visible across the interiors. The ground floor is filled with small wooden drawers similar to those found in old pharmacies.

Further, the arrangement of the coffee filters is like that of old-school medical equipment, giving the restaurant a touch of class and antique-like appearance.

Having an effective business strategy is essential for small coffee shops. Local coffee shops that serve both international and local clients are known to attract large volumes of clients, some of whom are daily patrons. Before embarking on marketing strategies, it is important to note that these types of businesses are mainly reliant on word-of-mouth advertising mainly through recommendations from other satisfied clients.

Below are some of the key business strategies employed

by RX in its marketing activities

Availability of WiFi Figure 43: Promotional Photo (WiFi Access) Product and service development are a core part of RX.

The restaurant benefits from creating a customer-friendly environment. This is bearing in mind that word-of-mouth is also a vital tool in its marketing endeavors. This method can turn many individuals who have recommended the business into loyal customers. The businesses tries to create a conducive environment by having wifi installed (Figure 43), this can lead to customers spending more hours at the establishment. This approach is necessary due to the cut-throat competition that exists among coffee houses in Dubai.

Loyalty and Incentive Programs Figure 44: Rx Coffee Loyalty Program It is necessary to have loyalty programs in coffee shops.

RX Apothecary and Kitchen (Figure 44) has taken this approach to the next level by offering one to its clients.

It keeps proper records of clients and occasionally gives them bonuses in relation to the amount spent at the restaurant. Customers are usually attracted by freebies and this has in the long run assisted the business to attract long-term clients that spend with the hope of discounts and freebies in the future (Wijaya, 2005).

On-Premises Advertising Figure 45: Rx Coffee On-Premise Adverstisement It is critical for advertisements (Figure 45) to be made both on and off premises. The first aspect of advertisement is the location of the facility. RX was established in a prime location to attract both local and international clients and has an added advantage to competing businesses within the coffee and restaurant business. The restaurant has a unique antique appearance on the inside, which creates curiosity among clients. Further, other aspects of on-premises advertising are attached to the customer relations team and mainly deals with how clients are treated.

Promotion and Advertising Aspects such as promotion using coupons and offers for couples during memorable days such as Valentine’s Day also play a significant role in the overall marketing strategy. To promote the offers, the business social media accounts are updated on a daily basis.

Digital and Social Media Figure 46: Promotional Photo (Social Media) RX has constantly promoted its store events as well as customer sales through platforms such as social media (Figure 46). The business ensures to update the content daily and notifies clients through apps of offers and discounts.

Expansion /Growth RX Apothecary and Kitchen’s growth has been spearheaded by the immense growth in the overall coffee industry both locally and internationally. Competition for this industry is mainly geared at attaining new clients.

For this reason, RX had to expand its business during its second-year anniversary. This was in the form of adding more dishes and preferences for clients. RX plans to grow by having a bigger audience of loyal customers.

By cementing itself as the best destination for steamy coffee, it will have the chance to open more branches throughout the UAE.

Product and Service Innovation Figure 47: Promotional Photo (Product Innovation) Product innovation (Figure 47) is a very important part of a business depending on the dynamic nature of the industry. RX is constantly keeping up with the technology and trends of coffee consumption globally.

It has invested in state-of-the-art coffee machines for efficiency and better-quality coffee. Further, it imports its coffee beans from both Norway and Japan, and this is crucial for comparison of the coffee beans quality. Other aspects that can be updated in relation to technology and innovation including updated menus. This is because most of the leading coffee-based restaurants offer clients with a broad selection of the menu compared to the traditional cup of coffee. For example, the menu may include pastries, hot chocolate, and teas. RX already has an updated coffee menu offering different other delicacies.

Image and Lifestyle Figure 48: Promotional Photo (Branding) For many RX clients, it is the lifestyle offered by the comfortable environment that motivates clients to visit more frequently. This means that most customers visit RX because it has become a brand (Figure 48). This is true because it has become a place where customers no longer visit to take coffee, but to spend their personal time. This was in the vision of its founder as he loved spending most of his personal time in coffee shops.

Extensive and Intensive research on the industry Figure 49: Promotional Photo With the continued changing market dynamics (Figure

• within the restaurant industry, it is very important

for industry players such as RX to study and understand the market. This will provide the management team with information pertaining to both strengths and weaknesses. The research done include coffee prices and coffee beans sourcing globally, it also entails new trends in coffee business. The research will not only highlight customer trends by all, but show the changing pattern dealing with product delivery. Also, it will show other factors such as the intensity of market rivalry among other similar businesses. Further, aspects such as government regulations are catered for. For instance, the updated regulations during the COVID-19 pandemic are up-to-date.

From the discussion above, it is evident that the coffee industry is an attractive marketplace. This is owed to the fact that there is always a growing demand for the product with high profit margins. Among other global brands that have established themselves that RX could strive to emulate include Starbucks or Dunkin, among others.

Case Study Questions

• What made your coffee special?
• Was achieving your goal hard?
• How did you manage to face the challenges?
• Why did you name the coffee shop Rx?
• What is the company vision?
• How did you start your business?
• What are the business strategies that the shop has?
• Tell me about the products?
• From where do you provide coffee beans?
• What is special about the coffee shop that makes

customers come daily? Describe the atmosphere of the place?

• Due to the COVID-19 situation, how did you manage

to control the business?

• Is it necessary to have loyalty programs in coffee

shops?