Document:                       QT-399
Date of Publication:          October 26, 2007
Number of Pages:             5
Lead Author(s):                M. Koenig
Price:                              $195 USD

QuickTake Summary:

Designed from ground up as a SaaS solution, Birch Street Systems focuses on a narrow niche market – optimizing purchasing for the food and beverage services of large hotel chains. This operation presents a complex problem since it must balance orders of non-perishable products such as hard cheeses that are best ordered in aggregate ze for a region or entire chain with orders of fresh food items such as mushrooms with very short shelf lives, that are best ordered locally and used as soon as received, and are usually seasonal. 

Birch Street has carved out a unique market niche in part because hotel chains live and die not on back-end savings but by optimizing their occupancy rate. Thus the focus of automation and analysis in the industry is the front-end reservation system rather than back-end purchasing. 

Birch Street’s initial challenge was to get the hospitality industry to recognize the potential of back-end optimization to provide significant improvement to a hotel’s bottom line. Its client list – including Hilton, Marriott International, Global Hyatt, Omni Hotels, Carlson Hospitality, Interstate Hotels and Resorts, Marcus, and Cipriani – shows its success. Today the company’s major challenge is that the growth potential of this market is limited. Once it has sold its services to the limited number of large and medium-sized hotel chains, it will need to either expand its services to its existing customers or move into new markets (such as hospitals, restaurant chains, institutional food services, high-end retirement residence chains).

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