DO & CO: Crafting Luxury in the Fast Lane (A) Custom Case Solution & Analysis

1. Evidence Brief

Financial Metrics

• Revenue: 411.55 million Euros for the 2010/2011 fiscal year.
• EBITDA: 43.14 million Euros in 2010/2011.
• Net Profit: 19.31 million Euros for the same period.
• Division Weighting: Airline Catering represents 71.3 percent of total sales. International Event Catering accounts for 13.9 percent. Restaurants, Lounges, and Hotels contribute 14.8 percent.
• Growth: Revenue increased from 352.74 million Euros in 2009/2010 to 411.55 million Euros in 2010/2011, representing a 16.7 percent increase.

Operational Facts

• Headcount: Approximately 4,200 employees as of early 2011.
• Geography: Operations centered in Vienna, Istanbul, London, New York, Milan, and Frankfurt.
• Turkish Airlines JV: Turkish DO & CO is a 50/50 joint venture managing catering for the entire Turkish Airlines fleet and nine lounges.
• Event Portfolio: High-profile contracts include Formula 1 Paddock Club, UEFA Euro 2008, and ATP Tennis Masters.
• Vertical Integration: Controls the entire value chain from purchasing and food preparation to logistics and service staff training.

Stakeholder Positions

• Attila Dogudan (Founder/CEO): Maintains a hands-on approach to quality. Views DO & CO as a gourmet entertainment company rather than a catering firm.
• Turkish Airlines Management: Partnered with DO & CO to differentiate their brand through superior in-flight service, moving away from low-cost industrial catering.
• Executive Board: Focused on maintaining the premium brand identity while managing the logistical complexity of rapid international expansion.

Information Gaps

• Unit Costs: Specific per-meal production costs compared to industrial competitors like LSG Sky Chefs or Gate Gourmet are not disclosed.
• Contract Duration: Expiry dates and renewal terms for major airline contracts beyond Turkish Airlines are absent.
• Customer Retention: Detailed churn rates for corporate event clients are not provided in the case text.

2. Strategic Analysis

Core Strategic Question

• How can DO & CO scale its artisanal, high-touch gourmet entertainment model across global markets without diluting quality or losing the operational control that defines its premium brand?

Structural Analysis

The airline catering industry is dominated by large-scale industrial providers focused on cost-efficiency. DO & CO operates in a niche where the bargaining power of buyers (airlines) is high, but the threat of substitutes is low for premium carriers seeking differentiation. The value chain is the primary source of competitive advantage; by controlling preparation and service (on-board chefs), DO & CO neutralizes the commoditization of airline food.

Strategic Options

Preliminary Recommendation

DO & CO should pursue Geographic Hub Expansion. The success of the Turkish Airlines joint venture proves that the model is portable when anchored by a major carrier. The company must focus on 3 to 5 global mega-hubs where premium demand justifies the investment in local production facilities. This maintains the vertical integration necessary for quality control while achieving the volume required for margin stability.

3. Implementation Roadmap

Critical Path

• Phase 1 (Months 1-6): Identify the next anchor airline partner in a Tier-1 global hub (e.g., London Heathrow or JFK). Secure a long-term joint venture agreement modeled on the Turkish Airlines partnership.
• Phase 2 (Months 7-18): Construct or acquire local kitchen infrastructure. Deploy a shadow team of Vienna-trained chefs to establish the DO & CO culture and standards.
• Phase 3 (Months 19-24): Launch operations. Implement the Flying Chef program on long-haul routes to establish immediate brand differentiation.

Key Constraints

• Talent Pipeline: The artisanal model requires highly trained staff. Scaling is limited by the speed at which the company can recruit and indoctrinate personnel into the Dogudan philosophy.
• Logistical Friction: Maintaining fresh, gourmet standards in markets with different regulatory environments and supply chain reliability poses a constant threat to consistency.

Risk-Adjusted Implementation Strategy

To mitigate execution risk, DO & CO must avoid simultaneous multi-region launches. The expansion should follow a sequential hub-and-spoke rollout. Each new hub must be 70 percent staffed by local hires but led by a 30 percent core of veteran DO & CO managers for the first two years. This ensures cultural continuity while managing labor costs.

4. Executive Review and BLUF

BLUF

DO & CO must transition from a founder-led boutique to a process-driven global premium player. The current reliance on Airline Catering (71 percent of revenue) is a structural vulnerability. The path forward is to replicate the Turkish Airlines joint venture model in three key global hubs over the next five years. Success depends on codifying the Gourmet Entertainment philosophy into a repeatable operational manual that does not require the founder’s personal intervention for every quality check. Speed is secondary to the preservation of the premium price point.

Dangerous Assumption

The most consequential unchallenged premise is that the Gourmet Entertainment culture can be successfully replicated in labor markets with significantly different work ethics and culinary traditions than Central Europe and Turkey. The model assumes that the DO & CO spirit is a product of training rather than a specific regional talent pool.

Unaddressed Risks

• Concentration Risk: A significant portion of revenue is tied to the success and stability of Turkish Airlines. Any geopolitical or economic downturn affecting the Turkish market would have a disproportionate impact on DO & CO’s balance sheet.
• Input Cost Volatility: The commitment to high-end ingredients makes the company highly sensitive to food price inflation, which cannot always be passed on to airlines with fixed-price multi-year contracts.

Unconsidered Alternative

The analysis overlooked a Pivot to Retail. Instead of managing the logistics of airline catering, DO & CO could transition into a high-end food brand providing premium ready-to-eat products for luxury retailers. This would remove the massive logistical burden of airline delivery and on-board service while utilizing existing production facilities to reach a broader consumer base with higher margins.

Verdict