AUNTIE ANNE'S PRETZELS: A KNOTTY PROBLEM

Journal of the International Academy for Case Studies, 2008 by Robinson, Sherry, Finley, John T

CASE DESCRIPTION

This case involves growth and management issues, and is appropriate for small business and management courses. A secondary issue is the owner's social motives for the business, thereby making this case appropriate to a discussion of entrepreneurial goals and social responsibility. It traces the birth and growth of a new business into an international franchise system. It is a level 2 case designed to be covered within one class period and is appropriate for small business or management classes. The purpose of this short case is to expose students not only to real-world questions of strategic management and franchise development, but also the way an entrepreneur's personal goals can influence business decisions.

CASE SYNOPSIS

Auntie Anne's is a family owned and operated snack eatery business that holds a strong commitment to customer satisfaction. The company focuses on product quality, strong support to its franchisees, and a commitment to relationships that will help in the long-term growth of the franchise system. Auntie Anne's success can be seen in its growth from a farmers' market stand to the expanded franchise system it offers today. Founder Anne Beiler started the business as a means to fund charitable work, and now Anne is considering selling the business in order to focus on her charitable projects. In addition, there has been an expansion of Auntie Anne's to include a new caf� format as well as the furthering of the charitable aspect of the business. This case study will examine Auntie Anne's past and possibilities for the future from a corporate and franchisee perspective.

INTRODUCTION

Auntie Anne's Pretzels started selling soft pretzels at a single stand at a farmers' market in Pennsylvania. Mainly via its franchise system started in 1989, this private enterprise offers customers its products at more than 900 outlets in 43 states and 12 countries including Japan, Thailand, Malaysia, Saudi Arabia, the Philippines, and the United Kingdom (as of January 2007). As with many franchises, outlets are primarily located in high-traffic areas, such as malls, transportation hubs, and stadiums. (Hoovers, 2007) The company's sales have grown every year as has the price of a franchise outlet, paving the way for Auntie Anne's current status as a segment leader.

BIOGRAPHY OF ANNE BEILER

The story of Auntie Anne's begins with founder Anne Beiler, whose overall goal for the business was to make enough money to fund a counseling center that would help people of Amish background find psychological help and healing. Anne and her husband, Jonas, had become interested in mending people's lives after their daughter died in a tragic accident. They wanted to help people in the same way their friends and neighbors had helped their family. As a family business, Auntie Anne's Pretzels' goals have been closely intertwined with the goals of the founders, so it is important to understand the Beilers in order to understand the company.

According to her autobiography (Beiler, 2002), Anne's story begins on January 16, 1949, on a farm in Lancaster County, Pennsylvania. Born to Amish parents, she grew up without using electricity. A horse-drawn buggy was the only means of transportation. As the third of eight children, Anne gained a lot of experience baking and loved doing it. When she was 12 years old she baked her own cakes and pies for a Philadelphia market stand where she worked with her parents. By the age of 14 she had her first job as a waitress in a truck stop, where she developed her philosophy that "kindness and a smile would open the door to anyone's heart"(Beiler, 2002).

Anne met her future husband, Jonas Beiler, at a friend's birthday party and they were wed in 1968. They moved to Texas and lived there for 20 years. Upon returning to Pennsylvania in 1987, Anne managed a soft pretzel stand at a farmers' market in Maryland. After seven months, she and Jonas purchased a booth at the farmers' market in Downington, Pennsylvania, where they sold pizza, stromboli, ice cream, and hot hand-rolled soft pretzels.

As she worked with the stand, Anne noticed the pretzels were the most popular item and they appealed to people of all ages. She set out to develop her own pretzel, and for two months Anne tinkered with the recipe but with disappointing results. Just when she was about to give up, Jonas suggested some ingredients his mother used when he was a young boy. They added them to the pretzel mix and a "new" recipe was created-the Auntie Anne's pretzel. The hot, salty treat was a hit with customers. Long lines of people who wanted only pretzels and fresh lemonade formed in front of the stand. Within a year they opened a second stand and then a third and fourth. The Beilers' garage became an office and family and friends helped her mix batches of pretzels, paint signs, construct booths, and deliver ingredients, in addition to working at the market stands. The original pretzel logo on the Auntie Anne' s signs came from a photocopy her sister Becky made of one of the actual pretzels.