Rufus and Emma Belcastran, CoffeeVille’s owners, have approached you for assistance. The business has been profitable and steadily expanding for the last 4 years. However, recently expenses have started to climb and sales are dropping. In the last 3 months they have started to address the issue of rising expenses by evaluating and updating procedures and work practices in an effort to reduce costs. So far, their efforts have not had a significant impact on expenditure and their sales revenue continues to be below budget forecasts.
It’s January 2016 and all four stores are closed for a summer break. Emma and Rufus are using the down time to assess their business’s operational and financial status in preparation for the year…show more content… ● Menus for all stores have been updated in the last 12 months, keeping old favourites and introducing new dishes from around the world.
● Hot dish options in the external catering menu have been modified to reflect these changes while cold options have remained essentially the same.
● Utility expenses have risen steadily over the last 18 months due to regular price rises. The business is currently implementing cost saving measures.
● Wages have gone up 15% due to the need to pay higher wages for trained, experienced baristas due to skills shortages.
● Rents for each of the properties has rise between 10 to 18% in the last 12 months and is expected to rise again early in 2016.
● Coffee bean prices rose rapidly in early 2014 and stayed high until the end of the year. Prices eased slightly in early 2015 but are expected to rise again later in the year due to lower worldwide production and increased demand. The retail price for all coffee menu items in all stores has been raised twice in the last 12