Eight years ago, Raj Hapi launched Hapi’s Petting Zoo & Café (Hapi’s). Hapi’s is a not-for-profit zoo located in the Annapolis Valley in Nova Scotia. It is a place where people can interact with various animals, including sheep, guinea pigs, ponies, alpacas, chickens, cattle, dogs, pigs, miniature donkeys, monkeys, and kangaroos. Admission to the zoo is by donation. There is an adjoining café where customers can purchase treats, which helps offset some of the costs of the zoo. The café focuses on vegan and gluten-free treats to support the zoo’s love of animals and provide dietary options for all. Hapi’s is open Thursday to Sunday year-round, including holidays. Customers frequently praise Raj for providing a unique, family-friendly experience, and have rated Hapi’s one of Nova Scotia’s top 10 attractions on multiple tourism websites.
Hapi’s would have been operating at a net deficit since inception had it not been for a 10-year government grant of $100,000 per year. That grant is due to expire in two years and cannot be renewed. There are no similar grants, so Raj is faced with a dilemma: find a way to make Hapi’s break-even or shut it down. To secure its future, Hapi’s must be self-sustaining and without debt.
Raj has recently been approached by Petzy, a commercial petting zoo that is looking to expand its operations. Petzy would like to take over operations of the petting zoo, while the café portion of the business would continue to be operated by Raj. Petzy is a for-profit organization that incorporated 12 years ago. It started with just one location but now has petting zoos throughout Western and Central Canada, and it is now looking toward Eastern Canada. Petzy offers monthly specials, such as two-for-one admission and free admission for kids on Tuesdays, and its catchy, ’60s-style radio jingle plays persistently on national radio stations during the morning commute, proclaiming, “We bring the farm experience to you!” The company prides itself on the fact that no matter which Petzy location people visit, they will get a consistent experience.
An alternative would be for Raj to change his current operations and start charging admission. He doesn’t like this idea, as he wants the zoo to be accessible to all, but he would consider it if it allowed him to maintain the zoo.
If Petzy were to purchase the zoo, it would be open seven days a week but only from April 1 to November 30. Raj would retain the café and thinks he would open it on the same schedule as that of the zoo in order to benefit from the zoo’s business. He expects to see an increase in revenue similar to the increase in the number of days of operations.
In addition to this expected revenue increase, Raj expects an increased number of daily visitors to the zoo under the Petzy brand. As a result, he expects his café’s daily sales should increase by 40% in the first year, 20% in the second year, and an additional 10% in year 3. Sales should remain steady after that.