For nearly two years, The Daily Grind has had contracts with three different companies for all its stores service needs, including one for HVAC, another specically for brewers and espresso machines and a third, more general one for everything else (such as plumbing, ice machines, refrigerators, etc.). Since the companys service contracts are coming up for review soon, the executive team wants your input on the options for servicing equipment in its stores. Of the following choices, which would you recommend?

1.Renew all existing service contracts. The Daily Grind hasnt had any major issues with any of their providers, but also hasnt been thrilled with the service theyve received, either. Contracts with large service providers like these typically include discounted hourly rates that are anywhere from 15-30% lower than those of independent contractors. They also receive wholesale prices on any parts needed, and even though they do charge a markup on parts, the nal cost to The Daily Grind is still less than buying parts at retail. However, two of the three companies (the HVAC and the general service provider) plan to increase their hourly rates by 5% and 10%, respectively, at the end of the current contractwhich is up in four months.

2. Work with several independent contractors. With this option, The Daily Grind would build up a pool of independent contractors that they could call upon on an as-needed basis. This would likely include a few contractors who specialize in each of the areas in which The Daily Grind needs service. The company has worked with independent service providers in the past, so it already has relationships with several contractors. It could also inexpensively evaluate additional technicians by trying them out on a single project, to see if they have the potential to be put into regular rotation.

3. Staff a service person full time. The Daily Grind could also choose to hire a single service person full time. Doing so would require The Daily Grind to create a new position within the company and, based on how much experience the chosen candidate has, pay a salary ranging from $30,000 - $38,000, plus benets. Additionally, due to the specialized nature of the brewers and espresso machines, the Daily Grind would have to either keep that specic service contract, nd an independent contractor who is a certied coffee/espresso machine technician or pay to train the full-time service person (via a four week, 40-hour certication course).