Case study

You are a convenience store owner.

Your current hours are 6:00 AM to 10:00 PM.

You are considering expanding these hours to be open 24 hours per day.

Key Considerations

Revenue

oOn a trial run, you find that you sell about $50 worth of merchandise per hour during the night.

oYou buy merchandise at half the sale price so your net revenue is $25 when you sell $50 worth of merchandise.

oDuring the 6:00 AM to 10:00 PM shift, you sell about $200 worth of merchandise per hour.

Rent for store

o$3000 per month.

Utilities (heat/electric/AC)

oCost $7 per hour at night if you are open.

oCosts $2 per hour at night if you are closed.

Labor

oYou need to hire 1 worker for the night shift if you expand the hours.

Assume that your convenience store is in a safe area so there are no security considerations.

Discussion questions

How much should you pay the night employee per hour?

Do you think you should expand your hours? What does this depend on?

Make sure that your explanation discusses revenue, rent and utilities.