Eight years ago, Raj Hapi launched Hapi's Petting Zoo & Caf (Hapi's). Hapi's is a not-for-profit zoo

Eight years ago, Raj Hapi launched Hapi's Petting Zoo & Café (Hapi's). Hapi's is a not-for-profit zoo located in the Annapolis Valley in Nova Scotia. It is a place where people can interact with various animals, including sheep, guinea pigs, ponies, alpacas, chickens, cattle, dogs, pigs, miniature donkeys, monkeys, and kangaroos. Admission to the zoo is by donation. There is an adjoining café where customers can purchase treats, which helps offset some of the costs of the zoo. The café focuses on vegan and gluten-free treats to support the zoo's love of animals and provide dietary options for all. Hapi's is open Thursday to Sunday year-round, including holidays, which he has found is better for the animals' well-being than being open seven days a week in the summer and closing over the winter. Customers frequently praise Raj for providing a unique, family-friendly experience, and have rated Hapi's one of Nova Scotia's top 10 attractions on multiple tourism websites.

Hapi's would have been operating at a net deficit since inception had it not been for an annual government grant of $100,000 per year which is due to expire in two years and cannot be renewed. There are no similar grants, so Raj is faced with a dilemma: find a way to make Hapi's self-sustaining and without debt or shut it down.

Raj has recently been approached by Petzy, a commercial petting zoo that is looking to expand its operations. Petzy would like to take over operations of the petting zoo, while the café portion of the business would continue to be operated by Raj. Petzy is a for-profit organization that incorporated 12 years ago. It started with just one location but now has petting zoos throughout Western and Central Canada, and it is looking toward Eastern Canada. Petzy offers monthly specials, such as two-for-one admission and free admission for children on Tuesdays. Brand awareness is high due to its catchy, '60s-style radio jingle that plays persistently on national radio stations during the morning commute. The company prides itself on the fact that no matter which Petzy location people visit, they will get a consistent experience.

An alternative would be for Raj to change the current operations of the zoo and start charging admission. He doesn't like this idea, as he wants the zoo to be accessible to all, but he would consider it if it allowed him to maintain the zoo.

Raj has shared with you the vision and mission statements that he originally drafted:

• Vision: Hapi's will bring joy to children.

• Mission: Through its pairing of zoo and café, Hapi's connects the world with animals, creating an environment where humans and animals can co-exist in a peaceful and cost-effective way.

Task #1

a) Analyze Hapi's current vision and mission statements and provide revised statements that reflect your critique.

b) Analyze how the Petzy offer would fit with the current mission and vision of Hapi's and suggest revised statements for Hapi's, assuming the Petzy offer is accepted.

Task #2

Currently, the zoo sees 40,000 visitors a year. Of this, approximately 22,000 are children. If admission is charged, Raj would like to offer a 50% discounted rate to children. There will be an initial fixed cost of $2,000 for a cash register and turnstile.

Raj anticipates that charging admission will cause a 25% decline in visitors to both the zoo and the café in the first year but that this will rebound the following year and remain stable. He does not think this will result in any savings on operational costs. He would prefer to not change the dates he is open, as he finds the animals do best with a cycle of busy days and quiet days year-round as opposed to constant visitors in the summer and then no visitors for the rest of the year.

If Raj continues to operate the zoo, he needs to understand how much he would have to charge in order to break-even over a five-year period. Ignore any time value of money.

Task #3

If Petzy were to purchase the zoo, it would be open seven days a week but only from April 1 to November 30. Raj would retain the café and would open it on the same schedule as that of the zoo in order to benefit from the zoo's business. He expects to see an increase in revenue similar to the increase in the number of days of operations.

In addition to this expected revenue increase, Raj expects an increased number of daily visitors to the zoo under the Petzy brand. As a result, he expects his café's daily sales should increase by 40% in the first year, 20% in the second year, and an additional 10% in year 3. Sales should remain steady after that.

He would like to know if it makes sense to continue operating the café from a financial perspective. Assume the café continues to operate as a not-for-profit.

Task #4

Petzy has offered Raj a lump sum to purchase the petting zoo. Raj is satisfied with the amount of the offer, but he is still unsure if it is the right decision. Provide an analysis of the two alternatives. Assume that if Raj does not sell the zoo he will break even by charging admission. Provide a supported overall recommendation to Raj on how to proceed.

Answer rating: 100% (QA)

Task 1 a Analyze Hapis current vision and mission statements and provide revised statements that reflect your critique Current Vision Hapis will bring joy to children Critique The current vision state... View the full answer