As if food processing wasn’t complicated enough, now there’s the whole “share ownership” angle. With so many restaurants and cafes to choose ‘we sell what we own’ marketing models, it can be hard to understand just what this means for the average merchant. In the simplest terms, a CSA Share is a valuable lesson in the seasonality of food. If you’re not sure what that means exactly, you’re definitely in for a treat.
What exactly is a CSA Share? Simply put, it is a contract between the vendor and the marketer whereby the vendor agrees to sell a set number of shares of his or her restaurant or cafe for a fixed price each year. The marketer has the option of selling their shares at any time, which is basically their option. Essentially, this contract establishes a partnership between both parties, with one taking on all of the risks of loss while the other takes on the risk of potential gain. This means that all of the revenue generated from the food sales goes to the company that owns the market share, with the vendor retaining their profit.
So, why is this type of business model attractive to small businesses? Small business owners typically have very little capital to invest in the opening and operating a restaurant or cafe. However, with this type of business model, the vendor’s share in the success of the business means they are able to offer patrons discount meals or discounted beverages, which is something most small businesses struggle to attain.
Are you wondering how food vendors decide what food items to offer? After all, isn’t that why restaurants and cafes choose to sell the same food all year round? Well, the answer actually lies in the contracts themselves. In essence, the vendor purchases a CSA Share and uses it as their means of entering into a marketing agreement with the restaurant or cafe.
Now, before you jump out and yell “Ala form a deejay, ala form a CSA Share”, there are a few things you need to know. First of all, it’s important to understand that a CSA Share doesn’t grant the restaurant or cafe owner free reign to choose whatever food they want to sell. The market share that you purchase does restrict how your food is showcased, however. That’s because the vendor still needs to maintain a minimum number of customers at any given time.
So what exactly is the market sizing? Market sizing refers to the number of people that must patronize your business in any given month in order for you to receive that share of the CSA pie. A higher market share means a higher number of sales, but it also means that you will need more people to visit your establishments in order to break even. So, what are some of the factors that affect the market sizing formula for CSA Shares?
First of all, it’s important to realize that market size will be determined by the type of business that you have. Are you selling primarily frozen and convenience food items or are you offering a full range of different food selections? When you’re looking at getting a CSA share, you should look at what type of market share the market is currently being served by the sharing member and then consider how large of a portion that market can be satisfied by your business. If you are trying to get a market share that is too small for your business, you may want to think about whether or not the market share is something that your business can sustain.
Another thing to keep in mind is seasonality. Some companies offer their shares in the spring and some in the fall. You should consider what time of year will give your business the best opportunity for growth. If you see a share price that is close to the low end of its seasonal range, it may be a good time to purchase the stock. If the price is too high, however, you should think about whether the seasonality has negatively affected the price of the stock.