INTRODUCTION When theinvitation arrived, Joe Thompson and Cathy(Cat) Ober were not sure what to do. The event looked promising, but the last time they agreed to attend a similar special event, they had barely broke even. They had left the event reminding themselves, "We don't need to say 'yes' to every opportunity." Joe and Cat were an engaged couple who had been running their food truck, Cat \& Joe's Pig Rig, for several months. Their truck specialized in pulled pork and southern- style barbecue. "Slow and low 1" was the cooking philosophy of the food truck, which was based in Kamloops, British Columbia, Canada, a city of 100,000 . Business had been brisk, the truck was outperforming projections, and their customer base was growing. They had also supplemented their day-to-day business by attending local events and doing catering jobs. The couple had just received a request to bring their truck to an event called "Bullarama"-a rodeo held in the nearby town of Barriere, located 70 kilometers north of Kamloops (Exhibit 1). Bullarama looked great on paper: the promoters noted that 700 attendees were expected, Cat \& Joe's Pig Rig would be the only food option, and rodeo fans would be a great market for the company's southern- style barbecue. Tempering their enthusiasm for the event were a few mitigating factors: (1) event promoters tended to be optimistic with promises and projections, (2) the 70-kilometer drive to Barriere added a number of costs that may be significant, and (3) perhaps most importantly, business was good in Kamloops, and if they did the Bullarama event, they would forgo one day's revenues in their home market. The couple couldn't be sure of what to do until they fully analyzed the opportunity. 1. List and briefly describe the advantages and disadvantages inherent tothefood truck business model as compared to traditional restaurants. 2a. On a typical day in Kamloops, how many "Ripped Pig" sandwiches must be sold in order to break even? 2b. Comment on Cat and Joe's breakeven point (calculated in Part a). Should this number be relevant to the entrepreneurs? 2c. If Cat and Joe wish to make a $100,000 profit for the year (after tax), how many pulled pork sandwiches must the Pig Rig sell each day? Assume all days are in Kamloops at regular prices. 3. Preparea contribution-format incomestatement for one day's business at the Pig Rig based on optimistic, realistic, and pessimistic projections for a regular, non- event day in Kamloops. 4. Preparea contribution-format incomestatement for the Bullarama event based on an optimistic projection (no onsite competitors), a conservative projection (one onsite competitor), and a pessimistic projection (two onsite competitors). 5. What are the nonfinancial advantages and disadvantages of attending Bullarama? 6. Assume Cat and Joe were told that they should expect one onsitecompetitor. Would you recommend they stay in Kamloops for the day or go to Bullarama? Justify your answer with both financial and nonfinancial data
