Team Project: Starting a Business The Tuff N’ Chewy Pizza chain has been growing by leaps and bounds since it was established by three members of the food and nutrition faculty at Foodstuff University. The primary selling point of the pizza is the exceptionally thick and succulent crust that keeps its flavor five times longer than other brands and takes much longer to chew. As a result, consumers can enjoy real pizza flavor while consuming fewer slices, thereby ingesting far fewer calories. Many repeat customers even order Tuff N’ Chewy pizza with no toppings at all.

At present, the Tuff N’ Chewy Pizza Company gives the right to operate a Tuff N’ Chewy Pizza Palace for a franchise payment of $50,000 a year. For this payment, the operator, called a franchisee, receives (1) the right to sell pizza under the Tuff N’ Chewy trade name and to use the Tuff N’ Chewy special trademark, (2) the right to send three people each year to a special training program designed to teach participants how to operate a Tuff N’ Chewy franchise efficiently, and (3) the special Tuff N’ Chewy recipe and a year’s supply of the two vital ingredients that give Tuff N’ Chewy pizza its unique characteristics.

Assume your team is a group of friends who are interested in the possibility of opening a Tuff N’ Chewy Pizza Palace near your campus. Prepare a report, written or oral, as designated by your instructor, that addresses the following issues:

a. Competition is an important factor in determining whether to start a business. Make a list of pizza places located within about one mile of your campus. How many other types of food places are located within that area? Make a list of the other types of food places and decide whether they are likely to compete for the same customers you would be likely to attract.

b. What additional information relating to costs would you need before deciding whether or not to enter the pizza business? Where would you go to gather each type of additional information?

c. What is the average price charged by your competition for a large, medium, and small pizza with cheese and one topping? How would you approach setting the price for Tuff roject Part 1 The purpose of this project is to provide you with the opportunity to apply what you learn about accounting by examining and analyzing the financial statements of a real company. As specific topics are discussed throughout the text, you can apply what you have learned to understanding the financial statements of the company you have chosen. Along with gaining a better understanding of the company you are analyzing, you will gain valuable insight into how accounting principles are applied in practice.
INSTRUCTIONS 1. Select a manufacturing or merchandising company (not a financial institution or service provider) that has securities (stocks or bonds) held by the public.
Virtually all well-known companies have issued seCurities to the public. To be sure that the company you choose has publicly traded securities outstanding, look for your company’s name in the security-price listings of The Wall Street Journal (Money & Investing section) or any major newspaper. Be sure to select a company based in the United States unless directed otherwise by your instructor. Some well-known foreign companies such as Toyota prepare financial statements for issuance in the United States, but the accounting principles and reporting practices are not always the same as for U.S. companies and, therefore, may not be consistent with what you are studying in the text. Alternatively, your instructor might provide a list of companies from which to choose.
2. Obtain a copy of the company’s latest annual report. As discussed in the chapter, company annual reports (and filings with the U.S. Securities and Exchange Commission, such as proxy statements and Form 10-Ks) can generally be obtained by calling the shareholder relations department of the company. They also can often be obtained by downloading directly from the company’s home page; sometimes a paper copy can be ordered directly from the home page. Annual reports for many companies also can be ordered free through N’ Chewy pizza, assuming the company gives you that option?