Retail Little Red Roaster Case Study
Little Red Roaster’s Growth Strategy
To expand business and increase profits for Little Red Roaster’s catering and/or wholesaling services, while maintaining quality goods and customer experience.
Expansion of Catering Services: Facts and Analysis
1) Fact: In order for Gordon Green to increase her catering services she must expand her Wortley Village store location to accommodate the space needed for ordering preparations. This renovation would cost LLR a total of $22,350.
Analysis: The annual net income ending October 31, 2002 was $23,561. LLR has the ability to cover the $22,350 expenses needed for the catering …show more content…
They currently keep 50 percent of the profit on wholesale orders for coffee beans.
Analysis: Gordon Green estimates that the yearly cost of hiring a wholesale staff, a driver, and the promotions would be around $19,500, a 13% increase of her total sales and benefits expenses. She estimates that the delivery truck will cost $13,995. If she estimated this accurately, LLR’s total annual cost will be $33,495, which would be $9,934 over current net income. The benefit is they gain an asset by purchasing a truck. If Gordon Green purchases a 5-year-old truck that she plans to keep for 10 years, the total depreciation will cost $2,799, with an average annual cost of $279. This gives LLR an $11,196 return on assets. The benefits of investing in a delivery truck, a driver, and more workers, are the ability to use these employees in conjunction with increased catering services. These investments would increase the value of the company’s assets.
The benefit of Gordon Green expanding her catering service and wholesale operation is that the equipment, additional staff, and renovations can be used in conjunction with each service. The company would further benefit by maintaining their quality customer-relationship by electing for self-delivery versus outsourcing, a core component of the competitive marketing for LLR. Promotion of the company will continue via word-of-mouth advertising and benefit both the catering and wholesale services. This