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MGT 431 – Fall 2017     1

MGT 431 Case Study Competition

The University of Tampa

Fall 2017

Trash Butler, LLC

 

All the information in this case is confidential. Students and faculty in MGT 431 are bound by the non-disclosure and non-compete agreement

Introduction

Trash Butler TM

was founded in 2014 in Tampa, FL as a company that sells services to

apartment buildings and owners of other multi-family housing complexes. The service is

sold to the owners or landlords as an amenity that is provided to the residents. On a regular

schedule, Trash Butler provides door-to-door collection of trash and recycling from all the

residents in the complex. Shared dumpsters are also emptied and cleaned. Instead of taking

their trash to the dumpster, residents can leave it outside their doors for regular collection.

Trash Butler provides a 13-gallon plastic trash can for each resident.

The company has about 75 “butlers” who are responsible for servicing the property or

properties in their territory. Fifteen employees in the corporate headquarters near Tampa

International Airport handle the sales, marketing, HR, accounting, and finance functions.

Since its founding, the company has grown to annual revenue of about $3 million by serving

customers in 25 states. See Appendix 1 for full financial statements.

The Multi-Family Housing Industry

The target market for Trash Butlers is large multifamily buildings that are either renter-

occupied (like the typical apartment complex) or owner-occupied (like a condominium or

townhouse building). Figure 1 illustrates the typical distribution of housing choices made

by renters and owners (JCHS, 2013:4). Owner-occupied housing is usually in the form of a

single-family detached house while renters slightly prefer large multifamily complexes

instead of detached single-family homes.

 

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According to the National Multifamily Housing Council, there are about 44,000 large

apartment buildings (i.e. complexes with 100 or more units) in the USA. Collectively, they

include about 9 million apartment units, which is about 43% of all apartment units in the

country. See Table 1.

Figure 1: Housing Choices in USA (2013)

Table 1:

Distribution of Apartments by Size of Property

Number of Rental Units on Property

Number of Properties

% of Total Properties

Number of Apartments

% of Total Apartments

2 to 4 1,417,781 71% 3,700,716 17%

5 to 9 321,600 16% 2,029,033 10%

10 to 24 116,262 6% 1,796,042 8%

25 to 49 57,712 3% 2,059,035 10%

50 to 99 37,460 2% 2,579,204 12%

100 or more 44,097 2% 9,085,308 43%

2 or more 1,994,912 100% 21,249,337 100%

5 or more 577,131 29% 17,548,621 83%

Source: http://www.nmhc.org/Content.aspx?id=11464

 

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Since the recession of 2008, multi-family construction has rebounded strongly. During

2009, the industry started construction on the fewest number of housing units anytime in the

last 35 years. Two years later, during 2011, the fewest number of completed units became

available since 1993. By 2013, the industry had returned to its pre-recession average

construction activity. That year, about 300,000 units were under construction in the US.

See Figure 2 for a summary (FreddieMac, 2016).

Figure 2: Multi-family Housing Construction in USA

The largest competitor in the industry is Valet Living. It is also headquartered in Tampa but is much older and larger than Trash Butler. Valet Living was founded in 1995 under the

name Valet Trash, but recently changed its

name to reflect its broader range of services.

It currently serves customers in 35 states and

has contracts with apartment complexes that

contain about 900,000 units nationwide. It is

privately held and received private equity

financing from Ares in 2015. According to the Association of Corporate Counsel (2017), it

has total 400 full-time employees, 3000 independent contractors, and revenue exceeding

$100 million. Plans call for revenue to triple in the next few years.

 

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Strategy of Trash Butler

Trash Butler serves customers in 25 US states. See Figure 3. Its strategy has been to

differentiate itself by providing personalized and tailored service to each property under

contract. Many of its contracts have come from former customers of Valet Living who are

looking for higher quality and more responsive service. According to Carey Ann Harness

(accounting manager at Trash Butler):

“Trash Butler hires a dedicated butler to service the property each night but

Valet Living has employees servicing multiple properties at a lower rate and

longer hours. We also service properties from 8-10pm. However, we will

alter the schedule if the client requests it. We have found that the property

managers usually like the 8-10pm schedule. Trash is not out during business

hours, and our butlers are not there too late which might be to disturbing

residents.”

Figure 3: Trash Butler Customer Map

In spite of the company’s rapid growth and success at winning contracts from Valet Living,

the senior managers acknowledge that company performance is slightly below their goals.

The 2017 goal was to double revenue to about $2.4 million, which looks to be on target as of

July 2017. However, another goal was to double the number of existing contracts from 65

to 130 but at the end of July, there were only 82 clients under contract. The average

contract duration is 36 months.

The main improvements they hope to see are an increased rate of new contracts and

reduced rate of non-renewals (customers who decide not to renew a contract when it

expires).

x What strategy will your team devise to help Trash Butler compete with Valet Living?

 

MGT 431 – Fall 2017     5

Schedule ¾ Kick-Off Event – Friday, Sept. 08, 6:30 – 8:00pm, Falk Theater

¾ Q&A #1 – each team will have a 15 minute appointment with executives from Trash Butler x Wed Sept 27 from 9:00am – 3:00pm x Thur Sept 28 from 1:00pm – 7:00pm

¾ Q&A #2 – each team will have a 15 minute appointment with executives from Trash Butler x Wed Nov 8 from 9:00am – 3:00pm x Thur Nov 9 from 1:00pm – 7:00pm

¾ Case Competition Finals – Friday, December 08, 9:00am – 12:30pm. Finalist team presentations in Reeves Theater with judges from Trash Butler.

References

Association of Corporate Counsel (2017). http://jobline.acc.com/jobs/9142042/general-

counsel

FreddieMac (2016). Multifamily Outlook 2016. http://www.freddiemac.com/multifamily/pdf/freddieMac_mf_outlook_2016.pdf

Accessed 8/21/17.

Joint Center for Housing Studies of Harvard University (2013). America’s Rental Housing: Evolving Markets and Needs. www.jchs.harvard.edu Accessed 8/20/17.

This case was written by Jody Tompson in the Sykes College of Business at The University of Tampa. Thanks to Dean Akers, Roman Cowan, and Carey Harness of Trash Butler LLC, for providing information for the case.

 

MGT 431 – Fall 2017     6

Appendix 1: Trash Butler P&L 2017 (see the Blackboard site for additional information)

Jul 2017 Jan - Jul,

2017 (YTD) % YTD Income

4005 Trash Butler Franchise Service

$4,898.60 $108,484.70 4.52%

4010 Trash Butler Contractor Service

$186,961.37 $1,094,826.75 17.08%

4015 Bulk Removal Serivce

$2,750.00 $6,400.00 42.97%

4020 Bins

$3,220.00 $6,724.76 47.88%

Total Income

$197,829.97 $1,216,436.21 16.26%

Cost of Goods Sold

5080 Franchisees

$3,824.85 $98,316.45 3.89%

5090 Contractors

$84,424.00 $553,496.00 15.25%

5095 Cost of labor - COS

$3,230.50 $3,230.50 100.00%

5130 Bulk Removal Cost

$2,490.00 $6,420.00 38.79%

5140 Bins and Supplies Costs

$552.32 0.00%

Total Cost of Goods Sold

$93,969.35 $662,015.27 14.19%

Gross Profit

$103,860.62 $554,420.94 18.73%

Expenses

6000 Contract Labor

$26,011.47 $116,755.15 22.28%

6001 Office Staff Payroll Expense

$35,086.98 $155,305.17 22.59%

6100 Truck Expenses

$125.27 0.00%

6150 Shipping, Freight & Delivery

$4,277.85 $21,155.90 20.22%

6200 Supplies & Materials

$9,583.73 $118,322.64 8.10%

6300 Advertising Expenses

$9,017.89 $80,749.55 11.17%

6400 Rent & Utilities

$1,160.01 $5,866.95 19.77%

6500 Travel & Entertainment

$6,257.24 $34,571.69 18.10%

6600 Insurance

$4,418.08 $16,947.14 26.07%

6700 Legal & Professional Fees

$1,021.00 $6,861.91 14.88%

6701 Office/General Administrative Expenses

$10.64 $10,559.36 0.10%

6800 Employee Development

$2,386.34 $14,078.12 16.95%

6850 Employee Incentive

($96.00) 0.00%

6900 Repairs & Maintenance

$94.00 $94.00 100.00%

6970 Depreciation Expense

$552.08 $3,864.56 14.29%

6990 Additional Services (Labor) Expense (not flow thru)

$384.79 0.00%

7100 Other Miscellaneous Expenses

$838.44 $2,813.43 29.80%

Total Expenses

$100,715.75 $588,359.63 17.12%

Net Operating Income

$3,144.87 ($33,938.69) -9.27%

Other Income

Total Other Income

$0.00 $0.00 0.00%

Net Other Income

$0.00 $0.00 0.00%

Net Income

$3,144.87 ($33,938.69) -9.27%