The Apprentice: To the bitter end

Apprentice logoIt’s time to roll out the barrel as the second part of this week’s Apprentice double-header sees the teams tasked with selling a new flavoured beer. But while Endeavour succeeded with a tasty tipple that pleased their punters’ palettes, Evolve – in the words of one of their own number – epically failed. Fundamental errors led to a crushing defeat, forcing Lord Sugar to declare it closing time for project manager Tim Stillwell.

Now what's two plus two again? (Image: BBC)

Now what’s two plus two again? (Image: BBC)

It’s 6am at the Apprenti-Mansion™ and Luisa Zissman answers the first telephone summons of this season, with Jason Leech watching on wearing an alarmingly loud pair of red candy-stripe pyjamas. The candidates arrive at the Old Bank pub in Fleet Street, where Lord Sugar tells them their task is to create a flavoured beer, sell it to trade and the public, and make as much profit as possible.

As Tim Stillwell‘s business idea is to come up with a new form of drink, he is transferred over to Evolve and given the dubious privilege of project managing the girls. Meanwhile Kurt Wilson, a health drink entrepreneur, is assigned as Endeavour’s project manager. (Is this going to become a trend, where Sugar ensures no one can hide by nominating the PMs himself? If so, I like it.)

The world according to Neil Clough

Kurt got away with some odd decisions (Image: BBC)

Kurt got away with some odd decisions (Image: BBC)

Endeavour start by brainstorming flavours. Kurt suggests chilli and caramel, the ever-reticent Neil Clough offers chocolate orange, while Jordan Poulton throws in nettles. Not literally, I hasten to add.

Kurt makes the bewildering decision to send a sub-team of Alex Mills, Zeeshaan ‘Zee’ Shah (who doesn’t drink for religious reasons), Jason (who doesn’t like beer) and Jordan (who doesn’t drink much) to the Banks’s brewery in Wolverhampton to test flavours and oversee the production process. He then overrides them by dictating that they will go for Neil’s chocolate orange flavour, which only goes to inflate Neil’s ego further. (No, I didn’t think that was possible either).

I’d say that behind every good project manager there’s a Neil Clough.

He really does have all the self-effacing modesty of his namesake Brian.

Despite their initial knock-back, the manufacturing sub-team seem to get themselves organised efficiently, getting their ingredient mixes right and producing stock without incident. Which, of course, means we don’t get to see any of it because who wants to see competent teamwork on The Apprentice, right?

What’s two plus two again?

Instead we spend much more time with Evolve, where things run less smoothly. They start by trying to determine their target market. Tim initially wants to target female drinkers but ends up coming back to men after the girls turn his organised brainstorm into a competition to see who can shout the loudest. (Winner: Luisa.)

Scary saleswoman Rebecca Slater, Stella English lookalike Francesca Macduff-Varley and recruitment manager Natalie Panayi join Tim at Banks’s, where they start mixing random flavours in random volumes like one of those white-haired mad scientists you see in those really old B-movies. They eventually settle on rhubarb and caramel as their flavour sensation.

Luisa was never short of opinions (Image: BBC)

Luisa was never short of opinions (Image: BBC)

Meanwhile sub-team leader Uzma Yakoob has her hands full as they try to design their Rhubarb & Riches brand. Leah Totton and Sophie Lau are fine, but Luisa constantly critiques, complains and dominates airtime, questioning why they have to do anything and basically indirectly telling the rather pissed-off graphics designer sat between her and Uzma that he doesn’t know what he’s doing.

Do you remember the film Speed, where the bus was rigged to explode if it didn’t maintain a certain speed? I’m beginning to wonder if Luisa isn’t somehow similar. Does her jaw seize up – or, worse still, her brain start working (remember, she says she has a brain like Einstein) – if she isn’t constantly talking?

Things are even worse back at the factory as Francesca, who has been put in charge of calculating numbers, and the others prove unable to work out what volumes of flavourings they need to add to each keg of base ale. One keg goes to waste after an aghast Banks’s expert warns them that what they have created is far too strong for human consumption – an error known to long-time Apprentice fans as ‘doing a Yasmina’ – and might literally have left anyone drinking it blind drunk. (It has already eaten through the metal keg and is burrowing its way inexorably towards the Earth’s core.) A second attempt also goes to waste before they finally get it right, but not before over £120 of raw materials have been rendered useless. Frankly, it’s a miracle they manage to produce anything at all. I’m beginning to understand how horse meat gets put into lasagne.

The black art of sales negotiation

The following morning both teams get to examine their stock and then have 12 hours to sell as much as they can: kegs to the trade, pints to the public.

Zee found Jason's contributions to his negotiations less than helpful (Image: BBC)

Zee found Jason’s contributions to his negotiations less than helpful (Image: BBC)

For Endeavour, Alex heads up a sub-team of Zee and Jason to pursue trade sales for their brand A Bitter This, with Jason firmly frozen out of selling. When he complains about this, Alex minces no words in ordering the “silly shit” to be quiet. That doesn’t stop Jason butting in to negotiations at every opportunity, continually undermining Zee just as he is on the point of closing sales and costing his team valuable money and burning away already thin profit margins.

Mind you, their day had gotten off to an even worse start after they pitched up at their first appointment, a specialist pub, without a sample for their potential customers to taste. As Alex admits:

I know it’s completely random and stupid …

Well, it’s certainly the latter.

Meanwhile Kurt, Neil, Jordan and Myles Mordaunt head to the St Albans Beer Festival – that places the filming of this episode in late September, fact fans – where Kurt makes the executive decision to go for a premium price of £4 per pint, more than their competitors. It’s a risky move but one which is also generally wise in a volume-constrained, profit-dependent task such as this one: start by pricing for profit, then gradually drop your price as the day progresses and once you have gauged the level of demand. Sales are steady without being stellar – but all at a strong profit – and as business starts to dwindle in the afternoon they decide to relocate to the Real Food Festival on the South Bank, two hours’ drive away.

They arrive with two hours remaining to shift 300 pints’ worth of stock and immediately start selling at attractively cheap prices. As Jordan astutely observes, the morning was all about profit for them, whereas the afternoon is all about volume.

Location, location, location

Evolve also choose a beer festival to target retail sales: the Kent Beer Festival in, er, Putney. Now Putney is in south-west London, while Kent is to the south-east of … oh, never mind. When they turn up, Tim, Luisa, Sharon and Francesca discover to their horror that it is basically a glorified pub beer tent. They make a decent fist of the hand they’re dealt, but as locations go it’s nothing short of disastrous, like busking in an abandoned railway station. On a Sunday. At 3am.

Tim stumbled from one blunder to another (Image: BBC)

Tim stumbled from one blunder to another (Image: BBC)

Fortunately their trade sales team, headed up by Rebecca, is racking up the sales. She negotiates well at the same specialist pub the boys stumbled at, meeting the customer halfway to offload four casks at £78 each, but her relationship with Uzma becomes increasingly fractious as the day goes on. Faults on both sides, I think – both are strong-willed and unwilling to back down, and Rebecca wants to hog all the selling herself. (My initial impression is that she is a strong saleswoman but absolutely not a team player and very possibly a one-trick pony.)

Having exhausted sales in Putney, Tim decides to relocate to a busy wine bar in Richmond. Curiously, most of the drinkers there aren’t particularly interested in sampling a new beer and sales are hard to come by despite the high footfall. Wine drinkers wanting to drink wine – who’d have thought it?

Fortunately the trade team is still going strong. Leah charms her way to a lucrative sale at a pub, selling their last two casks for a whopping £90 each. (Contrast that with Rebecca’s £78 and Zee, whose sales are made between £70 and £75.)

Boardroom brouhaha™

Task complete, it’s back to the boardroom. Sugar starts by quizzing Endeavour, where Kurt’s division of resources comes under scrutiny and Alex sticks a knife into Jason over their shambolic sales pitches, while in between Neil (channelling the spirit of Adam Corbally) tells everyone how everything was his idea.

Evolve’s interrogation leaves them feeling more than a little punch-drunk. Francesca in particular is criticised for her poor grasp of numbers, to which she responds with a rather tame excuse:

I’m not a mathematician. I have GCSE maths.

Francesca is unlikely to ever be mistaken for Carol Vorderman (Image: BBC)

Francesca is unlikely to ever be mistaken for Carol Vorderman (Image: BBC)

Let’s be fair, she was only being asked to multiply a few numbers together – no one was asking her to prove Fermat’s Last Theorem or anything, were they?

On to the results. Evolve spent £648.67 (about a fifth of that going to waste). They sold £492 to the trade (Rebecca £312, Leah £180) and £555.69 to the public, so their overall profit was £399.02. Endeavour’s costs came to £601.40. Their trade sales were an abysmal £284.98 – cut to Luisa grinning smugly – but their retail sales an outstanding £1,147.98, giving them a profit of £831.56 – more than double Evolve’s. It’s a crushing defeat for Evolve, their second in as many tasks.

Endeavour’s treat is to travel to Brussels, where they get to sample Belgian beer around the Grand Place. Evolve’s punishment is to travel to the Cafe of Broken Dreams™, where they get to sample overbrewed tea out of cracked mugs and everyone decides they’re going to gang up on Rebecca for picking the wrong location, even though in reality all she did was suggest it as an option.

Back in the boardroom the team are criticised for wasting £123 of materials because they couldn’t calculate their ingredient mix properly. Rebecca and Uzma’s feud comes to the surface. And Sugar can’t resist making the “couldn’t organise a piss-up in a brewery” joke.

Karren Brady pretty much sums it up:

The whole thing went badly from start to finish. Two reasons: numbers and location.

Tim brings Francesca (numbers) and Rebecca (location) back to face Sugar’s final decision. We’re reminded that Rebecca sold more than anyone else, Tim had no real control over the task and that you wouldn’t trust Francesca to count to one. Indeed Francesca’s range of chewing-on-a-lemon facial expressions would have made her doppelganger Stella English – who wasn’t dubbed the ‘Ice Queen’ for nothing – look positively jovial by comparison.

Tim blames Rebecca for the failure of the task. Rebecca and Francesca both blame Tim – as does Sugar, who directs the Digit of Doom™ at him and sends him on his way.

It’s hard to argue with that decision. Tim seemed to be a nice guy prone to allowing others to make the tough decisions for him, and he got pretty much everything wrong that he could get wrong in this task.

In the Taxi to Obscurity™, he was still upbeat:

The team was all partly responsible for the failure of this task but at the end of the day I did mess up big time and I have to be accountable for that. I do feel that you haven’t seen the last of me. This new drinks business will be launching, so watch out.

Like I said, a nice guy. And while it’s not always true that nice guys finish last in business, they certainly tend to get discarded pretty quickly in the cut-throat world that is The Apprentice.

How the task was won (and lost)

A lot was made about the importance of numbers and location in this task. Both are true, but what is never mentioned is that there is an underlying assumption that trade sales and retail sales are equally important to the success of dual trade/retail selling assignments such as this one and last year’s condiments task. That is patently not the case. Retail sales are far more important (and of course location is a big part of that), which explains why the abject failure of Endeavour’s trade sub-team had virtually no impact on the final result.

In the real world, selling to the trade gives you high volume but low profit (as the seller has to add on their own profit margin), whereas selling directly to consumers yields lower volumes but higher margins. When you have a relatively low volume of stock to shift, the best solution is to focus on retail sales as much as you dare, to the almost total exclusion of trade sales.

Here’s the maths. Early in the episode, Zee states that each cask holds 40.9 litres, which is 72 pints. During the episode, we see casks being sold to trade for between £70 and £90, which equates to between 97p and £1.25 per pint. The boys’ casks cost £53 each to produce (74p per pint), meaning profit margin per pint on trade sales for the teams was between 23p and 51p (assuming Evolve’s production costs were similar to Endeavour’s).

Selling direct to the public, we saw pints being sold at the beer festivals at £4 per pint – a profit of £3.26 each. In other words, retail sales generated between six and 14 times as much cash profit per pint as trade sales. Even at £2 per pint, which is what Endeavour started at on the South Bank, the retail to trade profit multiple is at least 2.5 times. Put another way, even at a starting price of £2 per pint, a team dealing exclusively in public sales which sold only half its stock would still have made more profit than a team selling all its inventory to the trade. (I realise that the unseen task rules probably dictate you have to produce X number of casks for trade and make a minimum of Y sales calls, but the basic principle is the same: worry more about your public sales than your trade sales.)

Here endeth the lesson.

Next week the teams must devise an innovative piece of flat-pack furniture. How about something that doesn’t require a PhD in engineering to understand the assembly instructions?

The Apprentice continues on Wednesdays on BBC1, with companion show You’re Fired following immediately afterwards on BBC2.

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10 Comments on The Apprentice: To the bitter end

  1. Well argued, Tim, especially about the profits in retail over trade.

    I am also curious about Sugar appointing the PMs and wonder how long it will continue. This also led to the boys and girls mixing much earlier than in previous series.

    For me, much as Kurt came across as autocratic, he managed the egos and got his strategy more or less right. Both teams were stuck in Storming mode, but Tim’s nice guy approach was too weak.

    You can read my thoughts at http://markdecosemo.com/2013/05/08/the-apprentice-2013-week-2-flat-beer/

    • Agreed, Mark. Particularly early on, while the teams are still in forming/storming mode, you need strong direction to cut through all the egos and get everyone on the same page. Of course, what we often see instead is a more dictatorial, autocratic approach. Kurt certainly started out this way, but we also saw at the St Albans Beer Festival a moment where he took soundings from the others about when to move on. And certainly he was strong in his pricing decisions – start out on the high side, then adjust downwards when they reached South Bank.

      He received less attention and praise than he should have done on this task, with the focus being on what he did wrong instead. Plus the fact his sub-team were so effective meant we saw little of them – people will accuse him now of being boring (especially having been invisible on task 1), but actually he was rather competent. Early days, but he’s one to watch.

  2. Brilliant analysis of trade versus retail. I was doing the maths in my head and it became clear pretty quickly that to make a profit in one day there was little point in selling to trade. Unfortunately, it feels like for these sorts of tasks the teams are led in particular directions whether they like it or not.
    I thought both teams were pretty rubbish, but were also set up to fail. Flavoured beer is quite often horrible, so they did well to create beers that were drinkable (much to the producers’ dismay I imagine).
    I will miss Tim – I think the programme works best when there is a mix of the obnoxious and the likeable. Unfortunately, there aren’t many likeable candidates as far as I can see.
    However, the “silly shit” comment was a great TV moment. Is it me or is there more swearing this year?

    • I actually thought Kurt’s team did pretty well, despite his odd choice of manufacturing team. But then he wasn’t asking them to actually make the flavour decision, so it didn’t matter as much other than the fact it put the sub-team’s noses out of joint. The combination of profit margin and obvious high footfall at the beer/food festivals meant that the PM needed to focus on getting the public sales part of the project right.

      The teams are definitely constrained in what they are and aren’t allowed to do – use of the internet, for example. For all we know both teams had decided to focus on retail and opted to take the minimum number of casks (six, it would appear) to the trade. If so, that’s fair enough. But Tim also needed to have a clear strategy for public sales, and his careless choice of locations showed that he hadn’t given this enough thought. As I observed in the review, who’d have though wine bar drinkers might not be interested in beer?!?

      I don’t remember any real swearing in previous years, so this seems to be a first – and, of course, it was pure comedy gold. To be honest, if I’d been Alex I’d have been inclined to say/do a lot more to Jason than we were shown.

  3. Thanks for your analysis Tim, it is excellent as ever. And the retail v trade analysis is particularly interesting. The conclusion is very clear – the cask at around £70 is selling at £1 a pint trade and even at the top end at £90 a cask £1.25 a pint which is way below any retail price. I think that the Endeavour sales price was too high to start and the differential between a pint and half pint costs was too great – a lot of people go to festivals to drink a variety of beers so halves are not unusual. A small reduction in both prices I think would have had a big impact on volumes and the overall margin could have been increased as less would have been sold at £1 at the end.

    I also am struggling to warm to any of the candidates. They seem to have been selected exclusively for their tv value and not for any business ability. The series has taken over from Masterchef in terms of tv slots and there we had exceptional performance, humility and genuinely likeable contestants. I think that the beeb has got it wrong and the level of bickering and the egos are becoming a turn off and that is not helped by the repetitive nature of the tasks. I am beginning to wonder whether this is a series too far.

    • Hi John! How’s things?

      I think they’ve gone a bit too extreme with the edit as much as with the actual candidates this year (except for Luisa, Jason and Neil, who are clearly numpties of the highest order). We’re no longer really seeing any of what the candidates do right, only what they get wrong. For example, Kurt last night got a lot of things right but all the episode focussed on was his sub-team selection which, when you look back on it, wasn’t actually that stupid as they made the decision about flavours in the branding team not the manufacturing one, which was clearly his plan all along. He probably did price a bit too high to start with, but it’s much easier to price for profit and then reduce for volume than the other way round too. And his/his team’s selection of retail sites – the most important part of this task alongside the pricing – was spot on. Tim simply didn’t grasp the importance of location, and his careless choices cost his team dear. Seriously, a WINE BAR?!?

      Last year (condiments task, week 3) it wasn’t quite as obvious that retail was the way to go (although it was the way to go), but the numbers are compelling and given the high footfall at places like beer festivals, it was always going to be the key driver. Of course, what we don’t know is what stipulations were placed on the team in terms of minimum volume the trade team had to take and how many sales calls they had to do, but regardless of that the point remains that the PM needed to focus on getting the retail side of the business right. Kurt did that, Tim didn’t.

  4. Adam Stone // May 13, 2013 at 8:58 pm // Reply

    Francesca should have gone for me out of the three of them. I don’t think that Rebecca should have been in the bottom three on this task but I do think that she may struggle on a non-selling task.

    I preferred Evolve’s idea than Endeavour as that was more appealing to me as a flavour.

    I do agree that a wine bar is an odd choice to see beer like trying to sell beef burgers at a vegan convention.

    • I do agree that Sugar would have had ample justification to fire Francesca, although you have to wonder why Tim or any of the other team members were incapable of offering help. At one point we see them all poring over the numbers like a kid with some really hard maths homework.

      Having said that, remember that Yasmina Siadatan made a similar miscalculation with how much sandalwood to add to a mixture – she survived and went on to win the whole thing!

      • Adam Stone // May 16, 2013 at 9:45 pm // Reply

        Good point, Tim. I am not sure that Francesca is likely to win, I don’t think he would let a Stella English lookalike win after what happened.

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