Tonnie Minis

Break-even Calculation

Operating Costs

Rent @ $100 a day

Labor @ $180 a day

Electricity@ $75 a day

Insurance @ $7 a day

Maintenance @ $10 a day

Office supplies @ $5 a day

Phone @ $6 a day

Marketing @ $4 a day

Owners salary @ 150 a day

Total

Cost of Goods Sold per cupcake (labor not included)

Food + Packaging + Waste @ $ 0.38/cupcake $0.38

Selling Priceper cupcake $2.5

Number of Cupcakes Needed to be Sold

Daily

Break-Even Point = Total Operating Costs/(Selling Price Cost of Goods Sold)

= /(2.5 0.38) = cupcakes a day

Weekly

*6 days = cupcakes a week

Yearly (roughly 52 weeks in 2017)

*52 weeks= cupcakes a year

The Profit, Season 3: Tonnie's Minis

In a desperate effort to keep his doors open, the owner of a New York cupcake shop has burned through his wife's retirement fund. If Marcus Lemonis can't turn the situation around, Tonnie Rozier could lose both his business and his marriage. This case illustrates the importance of proper operational and financial planning, as well as the dangers of growing the business too fast.

1. What are Tonnies strengths?

1.

2.

3.

2. How does the appearance of the store influence the business? What could have been done better considering the low budget (before Marcus intervention)?

3. What planning challenges does Tonnie have? What could he have done in the past to plan his business better in the:

a) operational aspects

b) financial aspects

4. How much is likely the business worth if somebody wanted to buy it? We do not have a whole lot of information, but try to make a rough estimate. Do you consider Marcus offer fair?

5. How would you assess Tonnies sales skills? Is he a good salesperson? Why, or why not?

6. How can Tonnie grow his business after Marcus intervention?

7. Do you think Tonnie has learned from this experience? Explain.

8. What do you think would have happened if Marcus was not called to help Tonnie?

7. Have you known a person with similar business problems, who never asked for help, or was completely unaware why the business did not work? Why do you think this was the case?