Post #2: Our First Mentoring Call
Learn about Mercado Fresco and the Social Sector Franchise Accelerator in our Get To Know Us post, here!
On November 7th, we had our first mentor/protégé interaction between Beth Meadows, CEO of Supply Hope and Mercado Fresco; Claudia Lopez, Mercado Fresco’s in- country Program Manager, and their mentors, Greg Starbird and Ferenz Feher. For this call, the top priority was bringing all parties up to speed on what current challenges and opportunities are facing the organization. In this video conference, the group framed their collective ideas and critiques to help develop the next steps for Mercado Fresco.
Shifting Focus to Outside the Home…
Diving right into the call, Beth brought us up to speed on business decisions that fall under our critical issue number 4: Target Population. Considering the majority of the population for which Mercado Fresco directly supports are women earning $2/day, there are several challenges that may arise, some of which include domestic violence and commitment to employment. This may be discouraging women from achieving success for themselves and their families, and, in return, creating challenges in the success and stability of Mercado Fresco. Beth reported having 25 successful model franchises for which she can count on for growth in the future; however, she has decided to focus primarily on growing the Mercado Express mobile cart business. Aside from having a higher profit margin, the mobile carts take the business out of the home, thus avoiding some of the domestic challenges facing women at the bottom of the pyramid.
In discussing several objectives for Mercado Fresco’s growth, including the establishment of 250 Mercado Fresco franchises within the city of Managua by 2018, and expanding in the development of 6–8 Community Centers in Managua, the group focused on some of the critical issues that may require strategic assistance, perspective, and creativity. The following are a few more of the critical challenges discussed:
Risks with Nicaraguan Government
As Mercado Fresco grows, and plans on expanding their public-facing presence with the Mercado Express carts, they are likely to capture the attention of the Nicaraguan government. While many of the area vendors utilize street carts informally, Mercado’s consistent branding and aggressive expansion plan may result in the government putting additional pressure on them to obtain expensive licenses and permits. The group realized that they need a more solid understanding of the regulations and requirements, and which type of incorporation would best work with their business model and meet requirements for compliance. Currently, Mercado Fresco is a non-profit organization but this enhanced attention from the government might force them to incorporate as a for-profit business, which would result in much higher taxes and therefore a decrease in profit. They decided to wait until their pilot phase was completed, then develop a plan to strategically negotiate their business’ status with high-level government officials
Operations and Logistics
As we discussed in the action plan, a critical issue for Mercado Fresco is finding a technological solution to tracking sales and inventory. Due to a lack of availability and affordability, they do not have a point-of-sale (POS) system at each franchise location. For many franchise owners, calculating cost is done by hand versus utilizing technology, for which may hinder the overall operation’s accuracy in determining budgets and accountability. Beth received tablets from the Inter-American Development Bank (IDB), however, she was unable to utilize them due to the prohibitive costs of installing internet in each franchisee’s home. As of now, the Mercado Fresco warehouses, or “bodegas”, are utilizing Excel to track sales, which seems to work well. As they are planning on shifting away from the in-home stores and focusing on Fresco Express Carts, the need for a POS system is reduced. Fresco Express franchisers will be given a specific count of each product, and will have to return either the product or its sales value on a daily basis.
Changing Food Culture
The last, but certainly not least of the critical issues we discussed today, is the perception of food within the Nicaraguan culture, a topic quite familiar to Ferenz in the Mexican culture as well. Based on experience, Beth shared with the group that some of the most desired grocery items are in fact soda, chips, and candy. This creates challenges in itself in advocating for and providing healthier food options. Ferenz’ insight into this topic brought forth the idea that people may believe that the Pepsi and Colas give them energy, thus why many may reject the idea of nutritional foods. He offered to connect Beth to MUPLS (Mujeres Unidos por la Salud or “Women United for Health”). MUPLS helps to create a culture of how people should eat healthy, considering, specifically, how a mother can take care of her children and teach them how to eat more nutritiously. This organization could help Mercado Fresco with outreach to promote a nutritious food culture, but added, “It’s going to take time”.
Moving Forward
It’s an exciting time for Mercado Fresco’s team as they launch their expansion in introducing food carts! Many of the critical challenges and opportunities to come are dependent on the success in the franchise operations of the near future, giving the group some time to allow for the franchise to speak for itself. We look forward to hearing back from the team in regards to the most recent evaluation as well as interpretations from both Greg and Ferenz. Beth and Claudia were very thankful for the advice and support from both Greg and Ferenz at their first teleconference. Greg and Ferenz were highly impressed with the work that Mercado Fresco has accomplished thus far and can’t wait to see how the launch of the Mercado Fresco Carts plays out in the near future!
Read about our next call here!
