Progress
Flyer Enterprises 2005-2006 Annual Report
2
Table of Contents 3 4 6 8 10 12 12 13 14 15
Guiding Principles Executive Letter Retail Division Coffee Division Café Division Balance Sheet Statement of Cash Flows Income Statement Managers Notes to Financials
VISION To become the national leader for experiential business education.
MISSION To create a competitive advantage for our employees by providing experiential education through the operation of profitable, ethically-focused businesses that serve the needs of our stakeholders.
STRATEGY Flyer Enterprises provides campus employment for a diverse group of students and desired services to the University of Dayton community through its chosen ventures. Flyer Enterprises works to incorporate the University of Dayton community into its ventures, thereby extending the Flyer Enterprises experience to other individuals. This occurs by integrating School of Business Administration curriculum into the management of Flyer Enterprises and maintaining dialogues with campus organizations. In addition, Flyer Enterprises endeavors to enhance the image of the School of Business Administration and the University of Dayton as a whole by emphasizing the Marianist ideals of educating the whole person. The organization works to integrate the motto “Learn, Lead, and Serve” into its daily operations by focusing on learning by doing, leading through example, and providing service to the community. As a result, Flyer Enterprises has achieved national status, being competitively compared to similar programs at Georgetown, Harvard, and Stanford and benchmarked by several nationally recognized higher education institutions.
These are our core VALUES, the code by which all members of our organization will work. These values will help to UNITE our members and to provide a framework for our culture; they are a MEANS through which we will work towards our vision via our MISSION.
3
Teamwork We will work to find commonalities with our peers. We will unite under common goals. We will build respect and trust through collaboration. Tenacity We will have a work ethic second to none. We will always strive to reach our vision through the means of experiential education and smart business decisions. We will go the extra mile to satisfy customers, to help each other, and to create better businesses.
Education We will never lose focus of our true purpose here: To develop future leaders. To be an instrument through which students can gain professional business education. To be a learning laboratory that connects classroom lessons with real world experience. Enjoyment We will create an environment in which all of our members are valued. We will create an environment through which all members may have an enjoyable work experience. We will encourage our members to grow socially
Guiding Principles
4
Executive Letter
Jenna Lafranke, CEO & Adam Buckman, President
5
in the 2005-06 fiscal year. We began by defining our strategies and identifying the core values that characterize our culture. The management team improved operational efficiencies while increasing sales, resulting in admirable financial performance. We continued to develop business leaders and built awareness in the community about the success of Flyer Enterprises. The maturity of the company was reflected in our contribution to the University of Dayton’s image, helping to earn a top 25 national ranking in Entrepreneurship. The Balanced Scorecard management system continued to progress, allowing us to create visual representations of our strategies and providing measures through which we can monitor performance. Equally important, we revised our vision and mission statements in an attempt to reflect our primary goals as an organization. We also surveyed every employee to identify the core values that join our seven operating units into one united company. Progress was evident throughout the year as we stabilized inventory management and standardized processes at ArtStreet Café, utilized detailed sales analysis reports at the Coffee Division, and transitioned the financing and organizational structure of Rudy’s on the Hill into Stuart’s Landing. While Rudy’s continued to struggle, we developed a multi-step plan to eliminate payroll and overhead wastes. Each of these new efficiencies helped to cut operational costs and improve customer service. Another improvement was the development of thematic, innovative marketing campaigns. These developments were reflected in our financial performance as for the third straight year Flyer Enterprises set a new record in revenues and profits. Strong financial results are just one highlight in the achievements of Flyer Enterprises this year. The most important objective of Flyer Enterprises is the development of its employees into strong business leaders. To work towards this goal, we held three sections of the Leadership Development Program. Nineteen of the students that went through the course were freshman receiving academic credit for the course. We also educated third parties about the contribution of Flyer Enterprises to the University of Dayton by hosting informational presentations to the Admissions, Career Services, Public Relations, and other administrative offices. By the end of the year, awareness about Flyer Enterprises increased significantly, and the future opportunities for business development will “We will continue to improve financially by tenaciously driving continue to expand with its awareness. out waste and developing unique In the 2006-07 fiscal year, marketing campaigns tailored we will continue to build towards our customers” on this progress through a number of innovative initiatives. First, we will develop a reinvestment strategy that focuses our retained earnings on improving the performance of each division and developing diverse new business models. We will fully integrate the Balanced Scorecard initiative into our management system. To continue developing leaders, we will create an Executive Development Program and take on a number of academic links in the School of Business Administration. Finally, we will continue to improve financially by tenaciously driving out waste and developing unique marketing campaigns tailored towards our customers. Thank you to everyone who has contributed to our continued success, including Chairman of the Board and recipient of the University of Dayton’s Advisor of the Year Award Dick Flaute, Dean of the School of Business Administration Dr. Patricia Meyers, all of our Board of Directors, our Board of Advisors, Dining Services, all of the University administration, staff, and faculty, each of our managers and executives, and perhaps most importantly, the students.
Flyer Enterprises made great strides in progress
6
Retail Divison Rudy’s Fly-Buy and Stuart’s Landing achieved significant progress during the 2005-2006 fiscal year. One year ago, Stuart’s Landing had not yet come into existence and Rudy’s Fly-Buy was a convenience store with an unclear future. Coming off the 2004-2005 year, Flyer Enterprises was exploring business options to replace convenience products at Rudy’s Fly-Buy. After much research and a few false leads, it was decided to stick to “Hopes are high among staff the original convenience store product line. and other stakeholders for its Management at Rudy’s future prospects” Fly-Buy shifted focus towards development of a consistent marketing image and ensuring operational stability. Although the physical location of the store remains unchanged, today Rudy’s is culturally a very different place. Given that 2005-2006 experienced another decline in sales, combined with setbacks in the clothing department, Rudy’s was not able to match last year’s net income. Rudy’s will continue to face challenges in the coming year. Nevertheless, hopes are high among staff and other stakeholders for its future prospects. A strong management team is in place, rent reductions are agreed upon and future capital investments are planned. Stuart’s Landing, (formerly Rudy’s on the Hill), saw more change than any other division over the past year. It went from being an independently held entity, net ting around $5,000 annually on revenue of less than $100,000, to a joint venture accepting meal plans and enjoying well over $400,000 in annual revenue, while almost tripling year end income. During this transition, Stuart’s Landing, was also forgiven $90,000 of start-up related debt. Flyer Enterprises has been pleased with the partnership with dining services and looks forward to a bright future.
Greg Kaiser
Vice President, retail division
7
IN THE DIVISION Rudy’s Fly-Buy is a convenient store that offers the basic essentials to most college students, including convenient food items, bottled drinks, and magazines. It is located at 438 Stonemill. Rudy’s was the first student-run business at the University of Dayton, opening as a student-owned and operated convenience store in 1990 as a result of an idea Dr. Bill Schuerman, Dean of Students, brought with him from Georgetown University.
Stuart’s Landing is a convenient store that offers the basic essentials to most college students, including convenient food items and bottled drinks. It is located in the lobby of Stuart Hall. Stuart’s Landing originally began as Rudy’s on the Hill in the spring of 2001, but in the fall of 2005 it became the second joint venture between Flyer Enterprises and Dining Services.
division progress The progress at Rudy’s became laying a solid foundation by forming a strong managment team, agreeing on rent reductions and planning future capital investments. The income at Stuart’s Landing tripled since the new partnership with dining services.
8
IN THE DIVISION The Blend is a convenient coffee shop that offers a full line of gourmet coffees, teas, and smoothies, as well as additional pastry and Coca Cola products. It is located in the ltc of Roesch Library. The Blend began as a result of the collaboration between Dayton Student Agencies, a club formed in 1998 under Professor Rebecca Wells to pursue new student-run businesses, and the Office of the Provost under the guidance of Dr. Deb Bickford, Associate Provost for Academic Affairs. The Blend opened on January 21, 2000, thus becoming the second student-operated business on campus. The Blend Express is an extension of the Blend and also offers a full line of gourmet coffees, teas, and smoothies, as well as some additional pastry items and Coca Cola products. It is located in the Atrium of Miriam Hall. The venture began as a result of collaboration with the School of Business Administration in the spring of 2001, and opened in September of 2002. The Galley is a snack bar offering several types of ice cream treats, soft pretzels, other snack foods, and the Blend drip coffees. It is located in the Hangar in Kennedy Union. The Galley was created as a result of KU renovations and opened in August of 2004 as Flyer Enterprises’ first joint venture with Dining Services.
division progress The Blend and Blend Express put forth new marketing efforts to raise awareness of both units and their new extended hours. The successful marketing increased both divisions bottom line. The Galley extended their product line by offering popcorn and iced tea to further satisfy customer needs.
9
Coffee Divison After experiencing a decline in the 2004 revenues for the Blend and the
Blend Express, there was a considerable turnaround in the 2005-2006 fiscal year; both divisions’ operational income increased substantially. This increased success was mainly due to the strong emphasis on marketing coordinated by the Director of Merchandising in cooperation with the rest of the management team. The Blend was not just a coffee shop on campus, but it became a brand. Having Blend coffee available in four Flyer Enterprises’ divisions generated awareness and increased knowledge of the Blend and the Blend Express. Furthermore, strategic “The Blend was not just a decisions were made to increase coffee shop on campus… the bottom line overall for each division. After significant demand it became a brand” from customers for additional operational hours, the Blend extended the hours from 10 pm to midnight and established limited hours on Sunday. Additionally, while the Blend Express experienced a slight decrease in revenues, the management team worked to diminish employee hours in hopes of decreasing payroll cost, causing operational income to increase. The Galley, a continual favorite among the University community, remained strong through its second year of operations. The Galley was Flyer Enterprises’ first joint venture with Dining Services, and the relationship continued to grow. In the second full year of operations, the Galley focused on product development. The management team implemented various new products including iced tea, popcorn, muffins, and specialty shakes and sought out unique marketing tactics to promote the new products. Additionally, the Galley has prided itself on the strong unity generated at the division, striving to maintain the community atmosphere while creating a culture of our own within Flyer Enterprises.
Chelsea DiOrio
Vice President, CoffeE DIVISION
10
Cafe Divison The Cafe Division of Flyer Enterprises began just one year ago with the establishment of the ArtStreet Cafe. In January of 2006, the chill joined the Cafe Division, launching Flyer Enterprises’ third jointventure with Dining Services. While the chill had only four short months of operations before closing for the summer, operations began smoothly with a simple and healthy product line for RecPlex goers. A much smaller operation than any other division, sales were small but steady and profitable. The chill will strongly benefit from future marketing initiatives and new product lines planned for launch when students return to campus in the next fiscal year. Despite the net income figure, ArtStreet Café had a remarkable comeback from losing nearly $14,000 in cash to posting a positive net cash flow in its second fiscal year. Last years’ struggles including overstaffing, inventory instability, unreliable point-of-sale systems, and “We believe that ArtStreet has only low sales volume. These issues were begun to make its mark on the addressed in the final University of Dayton community.”month of last fiscal year’s operations, leaving the ArtStreet Cafe in good position to be successful. An incredibly effective management team executed these projects and led to the overall improvement in operational efficiency. Extreme marketing efforts to develop brand recognition and a regular customer base led to record sales figures. In addition, development of catering services contributed to nearly 5% of the overall revenue. Moreover, the increased sales volume helped to stabilize and control inventory woes. A state-of-the-art point-of-sale system was then installed near the end of the year to more effectively track the increased sales and yet again increase operational effectiveness. This new system will allow ArtStreet to grow revenue more quickly than before and increase customer service levels. All of these changes will prepare ArtStreet for a successful future. We believe that ArtStreet has only begun to make its mark on the University of Dayton community, becoming profitable for the first time, and swinging a 30% increase in average monthly sales revenue. It is our strong belief that ArtStreet Cafe has a bright future and will become an increasingly profitable and stable venture for Flyer Enterprises.
Steven Hileman
Vice President, CAFE Division
11
IN THE DIVISION The ArtStreet Café is a fast casual café that has become the “Kitchen of the Neighborhood” by offering a wide variety of panini and bagel sandwiches, wraps, soups, salads, pastries, and the Blend’s coffee. It is located at 318 Kiefaber Street. The Café was developed in 2000 with the Living Learning Arts Center (LLAC) committee. As plans developed to revitalize the heart of the student-neighborhood, the Café became the cornerstone of the project. The ArtStreet Café was opened on November 1, 2004.
The CHILL is a snack bar that offers fat-free frozen yogurt, fruit smoothies, bottled drinks, energy bars, fresh fruit, and other healthconscious snacks. It is located on the first floor of the RecPlex. The CHILL opened on January 4, 2006 as the third joint venture between Dining Services and Flyer Enterprises.
division progress ArtStreet was able to progress with a strong and innovative managment team solving previous challenges of over-staffing, inventory instability, unreliable point-of-sale systems, and low sales volume. The CHILL as the third joint division with Dining Services opened up for four short months to meet the needs of RecPlex customers.
12
Balance
Sheet
ASSETS
LIABILITIES AND EQUITY
Current Assets
Liabilities
Cash on Hand
$2,600
Petty Cash Loan
Cash on Deposit
$80,760
Total Liabilities
Inventory
$31,195
Office Supplies
$2,216
Total Current Assets
$116,771
$2,600 $2,600
Equity Donated Capital
Property and Equipment Equipment
$139,958
Accumulated Depreciation
$(58,779)
Lease Hold Improvements
$112,059
Accumulated Depreciation
$(11,206)
$81,179
$100,853
Total Property and Equipment
$182,032
Total Assets
$298,803
Retained Earnings 7/1/05
$(9,463)
Net Income
$39,709
Retained Earnings 6/30/06
$296,203
Total Equity
$296,203
Total Liabilities & Equity
$298,803
of Cash Flows
Cash flows from Operating Activities
Three
Year Trend
Revenue
Net Income
$39,709
1200 000
(5,509)
Depreciation Expense
23,093
Increase in Inventory
(21,957)
$1400 000 1300 000
Adjustments to reconcile net income to net cash
Net Cash Provided by Operating Activities
$30,246
Equity (year end)
Statement Gain from Discontinued Operations
$265,957
1100 000
(4,373) $35,336
1000 000 900 000 800 000 700 000
Cash flows from Investing Activities Sale of Rudy’s on the Hill’s Assets
$10,000
NEt income
Net Cash Provided by Investing Activities
$10,000
$55 000
2003–2004
2004–2005
2006–2007
2003–2004
2004–2005
2006–2007
50 000
Cash flows from Financing Activities
$0
Net Increase in Cash
$45,336
45 000 40 000 35 000 30 000 25 000
Cash July 1, 2005
$38,024
Cash June 30, 2006
$83,360
15 000
Income
13
Statement Rudy’s Fly-Buy
The Blend
The Blend Express
ArtStreet Café
The Chill
Flyer Enterprises Corporate
Consolidated Total
Cash Sales
$161,304
$70,656
$27,884
$59,926
$40,784
Credit Sales
$92,237
$15,880
$7,708
$33,657
-
$12,573
$5,905
-
$379,031
-
-
-
Flyer Express Sales
$78,587
$40,867
$24,450
$78,049
$27,136
$149,482
$25,949
$5,650
-
Catering Revenue
-
-
-
$7,669
$280,687
-
-
-
-
Meal Plan Revenue
-
-
-
$7,669
-
$95,865
$385,714
$25,238
-
less: Sales Tax
$(14,686)
$(212)
$506,817
$(120)
$(3,953)
-
-
-
-
Total Operational Revenue
$317,442
$127,191
$(18,971)
$59,922
$175,348
$163,784
$424,235
$36,792
-
$1,304,715
The Galley
Stuart’s Landing
Revenues Operational Revenue
Non- Operational Revenue Grants
-
-
-
-
-
-
-
$48,796
$48,796
Interest Income
-
$994
$166
-
$496
-
-
-
$1,656
Total Non-Operational Revenues
$0
$994
$166
$0
$496
$0
$0
$48,796
$50,452
COGS
$234,273
$50,075
$21,300
$91,153
$70,620
$210,914
$13,086
-
$691,421
Gross Profit
$83,169
$78,110
$38,788
$84,195
$93,660
$213,321
$23,707
$48,796
$663,746
Undergraduate Pay
$37,188
$42,748
$26,400
$65,068
$39,445
$26,151
$16,378
$48,957
$302,334
Staff Benefits Pay
$886
$902
$563
$1,484
$998
$598
$343
$1,076
$6,849
Total Payroll Expenses
$38,074
$43,650
$26,963
$66,552
$40,443
$26,748
$16,720
$50,033
$309,183
Utilities
$10,384
-
-
-
$1,638
$719
-
-
$12,741
Dues & Licenses
$3,065
$232
$141
$250
$116
-
-
-
$3,804
Repair and Maintanence
$5,395
$379
$263
$1,342
$1,963
$901
$393
-
$10,636
Equipment Rental
$306
$306
$306
$306
-
-
-
-
$1,224
Rent Expense
$15,000
$1,650
-
-
-
-
-
-
$16,650
Depreciation
$2,793
$1,723
$3,681
$14,896
-
-
-
-
$23,093
Total Operational Expenses
$36,943
$4,290
$4,391
$16,794
$3,717
$1,620
$393
$0
$68,148
Advertising
$2,895
$983
$415
$1,937
$38
-
-
-
$6,268
Printing for Distribution
$169
$109
$63
$346
$657
$26
$7
$2,813
$4,190
Uniforms
-
-
-
$322
$1,041
-
-
-
$1,363
Office Supplies
$1,103
$726
$186
$1,489
$223
$178
$201
$977
$5,083
IT Expense
$600
$449
$449
$354
$55
$104
-
$1,051
$3,062
Telephone
$1,590
$777
$711
$440
$351
$965
-
$529
$5,363
Employee Incentive
$541
$350
$255
$1,055
$541
$120
-
$5,515
$8,377
Insurance
$684
$42
$23
$768
-
-
-
-
$1,517
Charitable Contributions
-
$301
$128
$179
-
-
-
$892
$1,500
Share of UD Administration
$8,062
$2,533
$1,276
-
$2,544
$1,892
$956
-
$17,263
Share of FE Corporate
$6,000
$1,467
$677
$6,000
-
-
-
$(14,144)
$0
Miscellaneous Expenses
-
$232
-
$8
-
$931
$1,377
$1,130
$3,678
Total General & Administative Expenses
$21,644
$7,969
$4,183
$12,898
$5,450
$4,216
$2,541
$(1,237)
$57,664
Total Expenses
$96,661
$55,909
$35,538
$96,244
$49,610
$32,584
$19,654
$48,796
$434,995
Operational Income
$(13,492)
$22,201
$3,250
$(12,049)
$44,051
$180,737
$4,053
$(0)
$228,750
Less: Distributions
$0
$0
$0
$418
$28,633
$162,663
$2,836
-
$194,550
Operational Income After Distributions
$(13,492)
$22,201
$3,250
$(12,466)
$15,418
$18,074
$1,216
$(0)
$34,200
Cost of Sales
Expenses Payroll Expenses
Operational Expenses
General & Admin Expenses
Discontinued Operations Gain: Disposal of Rudy’s on the Hill
$5,509
Total Gains
$5,509
Net Income
$39,709
14
Managers
2005-2006
OFFICERS Jenna LaFrankie Adam Buckman Matthew Gordon Greg Kaiser Chelsea DiOrio Steven Hileman
Chief Executive Officer President Chief Financial Officer Vice President, Retail Division Vice President, Coffee Division Vice President, Cafe Division
MANAGEMENT TEAM A. Jay Wagner Hannah Einterz Robert Clague Jennifer Hunt Wendy Schreiner Eric Olson Jessica Rodeck Reneé Yama Brandy Bukauskas Bobbi Dillion Stephen VanDorn Tyler Link Dan Ptak David Senkier Tony Blankemeyer Eric Leber Patrick Wiley Matthew Graham Chris Cabanski Patrick O’Grady Lindsey Murphy Katie Wozniak Lauren Hoard Alex Totomanov Katie Przybysz
General Manager, Rudy’s Fly-Buy General Manager, Stuart’s Landing General Manager, The Blend General Manager, The Blend Express General Manager, The Galley General Manager, ArtStreet Cafe General Manager, The Chill Human Resources Director, Rudy’s Fly-Buy Human Resources Director, The Blend and The Blend Express Human Resources Director, The Galley Human Resources Director, ArtStreet Café Director of Merchandise, Rudy’s Fly-Buy Director of Merchandise, The Blend and The Blend Express Director of Merchandise, ArtStreet Café (until January 2006) Director of Merchandise, ArtStreet Café Comptroller Staff Accountant, Rudy’s Fly-Buy Staff Accountant, The Blend and The Blend Express Staff Accountant, ArtStreet Café Information Technology Director Assistant General Manager, Stuart’s Landing Marketing Assistant, Rudy’s Fly-Buy Marketing Assistant, The Blend Marketing Assistant, The Blend Express Marketing Assistant, The Galley
Notes To Financials 1. The ArtStreet Café was funded through a contract with the University of Dayton. Flyer Enterprises was given a $290,000 line of credit from the University to design the venture, cover startup expenses and make capital purchases associated with the development of the Café. In return, Flyer Enterprises distributes 51% of positive cash flow annually to the University and does not pay any University of Dayton Administrative expenses. 2. The Galley, Stuart’s Landing, and The Chill are joint ventures with Dining Services. Dining Services provides all capital and technological investments and accounting responsibilities. Flyer Enterprises is responsible for all daily operational decisions and employee development. Flyer Enterprises retains35% of the Galley’s operational income, 10% of Stuart’s Landing’s operational income and 30% of The Chill’s operational income. (Note: All revenues are also included on Dining Services’ financial statements) 3. Cash on Hand-The amount of cash available in the safe and cash drawers as petty cash at the divisions. 4. Petty Cash Loan- The University of Dayton loans the petty cash to the divisions on a one year renewable basis. 5. Donated Capital- The amount of capital donated from the ArtStreet Café contract. Of the $290,000 line of credit, Flyer Enterprises has spent $265,957, leaving a $24,043 balance on the line of credit. 6. Lease Hold Improvements- The capital attributed to constructing interior improvements to the ArtStreet Café. 7. Depreciation- Calculated on a straight-line basis with no salvage value, with the following basis: Lease Hold Improvements- 15 years, Hardware- 5 years, Software- 3 years, Heavy Equipment- 15 years, Other Equipment 3-7 years.
15
8. Meal Plan Revenue- Revenue collected from student’s Dining Dollars purchased from the University of Dayton. 9. The Flyer Enterprises Corporate account, which consists of the executive salaries, accounting and IT expenses, external marketing, and employee development is funded by the School of Business Administration. 10. Staff Benefits Pay- The University of Dayton collects 3% of total payroll to cover the costs of administering and delivering paychecks. 11. Share of UD Admin- The University of Dayton charges 2% of expected revenue for Flyer Enterprises using the University’s purchasing, accounts payable, and bursar offices. 12. Share of FE Corporate- The divisions that are not participants in a joint ventures are charged 1.5% of expected revenues to the Flyer Enterprises Corporate account to assist in covering corporate wide expenses. 13. Distributions- The amount of operational income that is paid to business partners based on contractual agreements. ArtStreet Café pays 51% of positive cash flow to the university. The Galley pays 65% of net income, Stuart’s Landing pays 90% net income, and The Chill pays 70% net income to University of Dayton Dining Services. 14. Disposal of Rudy’s on the Hill- On August 15, 2005 Rudy’s on the Hill’s assets were sold to University of Dayton Dining Services for absolution of loans and $10,000. From July 1 through August 14, Rudy’s on the Hill lost $4,491 in operations. 15. This fiscal year, Flyer Enterprises worked with the University of Dayton Accounting Department to improve accounting processes and more accurately report financial statements. Due to these changes, the 2004 and 2005 fiscal year financial statements are incomparable.
Board
Of Directors
Dick Flaute Executive in Residence (Chairman) Patricia Meyers Dean of the School of Business Administration William Schuerman vp Student Development and Dean of Students Deb Bickford Associate Provost John Shishoff Director of Undergraduate Programs Paula Smith Director of Dining Services Ken Soucy Director of Purchasing Bob Chelle Director of the Crotty Center Art Santoianni Director of sba Information Technology Rebecca Wells Original dsa Coordinator & Professor of Marketing Don Vince Director of Student Employment Isiah Morgan Business Senator, Student Government Association Jim Kirk Manager of the Center for Portfolio Management Adam Buckman ceo of Flyer Enterprises
FLYER ENTERPRISES 300 College Park Miram Hall Room 303 Dayton Ohio 45469-2226 937 229 4722
FlyerEnterprises.com FLYER ENTERPRISES 2005-2006 ANNUAL REPORT: PROGRESS Design: Stephen VanDorn Photography: Jacquelyn Erbacher