KOKO BLACK“Koko Black captures the authentic and timeless qualities

inherent to the art of fine European chocolate making. Through it’s fine handcrafted chocolates, luxurious

surrounds and superlative service – Koko Black offers moments of indulgence far beyond the every day”

Source Koko Black Chocolate website www.kokoblack.com

A successful small business case study

Shane Hills the founder of Koko Black, was born in Tasmania and began his career at the ANZ bank. After studying for a diploma at Deakin. He later commenced a business degree with Monash.  Most of his learning came from reading lots of business related books. 

It was while Shane was studying at Monash University that he met the owner of Suga, a specialised confectionary retail shop, whom he approached with ideas for growing the business.

Within ten days, Shane was operating his first business by operating the Chadstone franchise of Suga. Twelve months later the opportunity arose to purchase the other two Suga stores and so Shane joined forces with his father in law. Suga has now expanded to 5 stores and on the 12th December 2003 Shane started up his new niche business, Koko Black.

Shane Hills in front of a presentation of his two companies “Suga” and Koko Black.

Shane has a passion and love for chocolate as well as an innate sense of adventure, enjoying the challenge and rewards of taking a risk. On average he works 50 – 60 hours a week.

The warehouse where the raw ingredients are delivered to in Coburg

In opening up the Koko Black business, Shane was fortunate and incredibly grateful for a small business grant from the City of Melbourne to start up the business.

His aims with Koko Black was to create a world class chocolate experience one that:

clearly differentiate his product and service from any competitors

maintain production on site so that customers could appreciate the freshness and quality of the chocolates ( his truffles only have a shelf life of 7-14 days),

to have a seating area which allows customers to really enjoy the experience of the chocolate,

to specialise in making hot chocolate,

and for the whole of the business to reflect the sumptuous and indulgent experience of European chocolate shops.

The manufacturing “creative” centre where the higher volume blocks and truffles are made. Each of the individual “salons” (the individual retail shops) still undertake 40% of the total chocolate production on site and are much more than just an entertaining window display.

The chocolates from the manufacturing site are briefly stored in the warehouse before being distributed to each of the individual salons in the Royal Arcade (in the CBD), Lygon street, Bourke Road, Chadstone & Camberwell.

A cabinet display in the store in Carlton

Koko Black is run with a minimal marketing budget, instead marketing to customers through the very powerful “word of mouth” experience that customers pass on to their friends, the visual and very enticing shop front displays, and through relatively free exposure in media articles, and their own website and customer newsletters e.t.c.

The front serving area in the Lygon street store, Carlton.

The attention to detail in the customer service in the store.

Shane believes that his staff are vitally important to the success of Koko Black. He selects on “attitude and passion” rather than purely from their Curriculum Vitae and is looking for someone who can complement the team and reflect the very high levels of customer service he expects from them. As evidence of how well revered the company now is, over 1000 applicants applied for just 12 positions in his new Chadstone and Camberwell stores.

Store manager receive a quarterly appraisal which includes a “silent shopper survey” conducted by customers. A key component of this survey is the service standards Shane expects and when these are achieved staff are rewarded with a corresponding bonus.

Preparing the trademark hot chocolate with pure chocolate in every cup rather than cocoa powder.

The objective of the whole Koko Black experience is to go back in time where “high quality service” was the norm and not the exception. Shane makes a deliberate decision to be professional in all that he does and maintain a standard of excellence which he expects from himself and all his staff.

The selection of gift boxes and speciality chocolates that can be bought within the store.

The target audience for Koko Black and their chocolates is females in the 25-45 age group. Approximately 70% of the Koko Black’s customers are female.

Koko Black Case Study QuestionsHaving gained an initial understanding of Koko Black from this photographic slide show, now construct

and analyse a business profile of Koko Black trying to understand how and why it has been so successful.

• Describe the skills, experiences and attitude that Shane Hills appears to bring to Koko Black.• Outline the advantages and disadvantages of maintaining 40% of production within the

“salons” as well as at the manufacturing “creative” centre.• Analyse the advantages and disadvantages of maintaining such a minimalist approach to

marketing the business.• Describe the layout and appearance of the “salons” from these photographs. What feelings,

impressions and image are created?• Explain why Shane Hills would select staff more on the basis of their “attitude and passion”

than their CV (curriculum vitae).• Research what is meant by a “silent shopper survey” and then analyse the advantages and

disadvantages of using this technique as part of a staff appraisal. • Identify the macro and operating factors that may impact on this business in the future.• Construct a basic SWOT (Strengths, weaknesses, opportunities, threats) analysis of Koko

Black as a result of your initial case study analysis.• In your opinion as a result of your analysis what are the key factors that you believe make

Koko Black successful?• As an extension exercise conduct further research into this companies success. Sources of

information and website questions are provided shortly, or alternatively organise an excursion to one of the salons to understand more about this company.

Additional case study research material can be researched from the Koko Black website www.kokoblack.com, and Shane Hills and Koko Black are also reviewed amongst a group of other successful small business owners on the CPA DVD “Lets Plan A Business” 2004.

Website questions – www.kokoblack.com

1. Open up the company website, www.kokoblack.com, and click on the link to “Our Heritage”. Develop a short profile of the skills, qualities and experiences the three main employees bring to the business

• “Our Founder”- Shane Hills, • “Master Chocolatier”- Arnos Backes, • “Our Service” – Nillanka Nanayakkara,2. Explain why you believe these three individuals would complement

each other so well in the success of the Koko Black business.3. Click on the link to “Our Salons” and write down the locations of

the four main stores and their opening times. Now try to work out why these locations were chosen and why their opening times may differ?