Consider the owners
Consider the area
Consider the industry
Consider their current offerings/situation
Consider a completely different option
Consider the current situation.
Demonstrated critical thinking through their observations of and recommendations for the company. Question and analyzing the data provided, and making additional recommendations based on your observations and research
thank you
Background: The Birch Bench is a caf located in Campbell, California operated by husband and wife team Leo and Jerry Bernard. The couple emigrated to the region from Europe in 1971 and brought with them their family recipes for delicious quiches and fruit pies. Their caf has been a community staple since it started in 1981 with the majority of its business coming from repeat, local, elderly customers. The caf operates in the morning only from 6:00am-12:00pm when it serves hot beverages, its popular breakfast quiches, and slices of its fresh fruit pies. The sales mix and financial data for its offerings are as follows: Percent of Sales price Variable cost Total Sales per unit per unit Beverages (hot coffee) 25% $3.00 $0.60 Breakfast quiches (slice) 60% $11.50 $3.45 Fruit pies (slice) 15% $5.00 $4.00 100% The majority of customers are dine-in customers, but the caf does offer orders to-go when requested in person or over the phone. Of those customers dining in, they have an average dine-in time of 50 minutes. Order placing and service takes no more than 15 minutes, the rest of the time the patrons spend enjoying their meal and chatting with other regular customers or staff. The caf has fixed costs of $205,000. In 2020, the caf generated net income of $107,000. To increase profitability, the owners are considering the following options for 2021. Option 1: Limited Delivery Program As more and more of its customers age, they are less likely to come in for dining or picking up a to-go order. Because of this, the owners are considering hiring some part-time drivers to deliver food to its regular customers within a 10-mile radius. This limited delivery option would require customers to place their orders by phone the day before. Delivery would occur the day following the order, during the time window requested by the customer (still falling between the normal business hours of 6am to 12pm). This option would increase variable costs by 8%, have no impact on total fixed costs, and increase the sales volume by 10% but not impact the sales price per item or sales mix. Option 2: Expanded Delivery Program Under this option, the caf will hire a full-time manager to run the company's new delivery program. Delivery, under this option, will be expanded to all interested individuals (not just current, loyal customers) and would reach beyond a 10-mile radius. Customers can place their order by phone or the company's website for same day for delivery. This option would increase variable costs by 10%, increase fixed costs by $65,000 per year, increase the sales volume by 25% but not impact the sales price per item or sales mix
