Retail Little Red Roaster Case Study Essay

1054 Words Dec 4th, 2012 5 Pages
Guinevere Jagiello RCSC 214 Case Paper 2 10/29/12

Little Red Roaster’s Growth Strategy

Objective

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
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With larger orders, prices are more spread out and thus lower fixed costs are incurred, giving LLR an increase in profits.
Based on LRR’s statement of earnings alone, if revenue were to be doubled from 5.35% to 11.70% at $55,238 then the cost of goods sold would be doubled to $25,270. Company's gross profit for catering services would then be $29,968, and overall gross profit of $295,454. Add in the additional expenses of a delivery truck and the 13% increase in her salaries, benefits, and expenses, and LLR comes to a profitable net income of $19,045.

3) Fact: LLR can choose to outsource their delivery service to FLD for a flat fee of $6 per order.

Analysis: The pros of outsourcing to FLD are that the company is well established with an integrated communication system. The con of outsourcing is that Gordon Green has differentiated herself from her competition through excellent customer service, which can be potentially compromised when handled by a third party. The catering business relies heavily on the word of mouth marketing of its retail customers. Being able to deliver directly from the company maintains a loyal customer relationship. The cost of resources used and spent towards FLD could also go into building assets for the company. If LLR were to outsource this would decrease company assets.

Expansion of Wholesale Services: Facts and Analysis

1) Fact: It would cost LLR an additional 15 to 25 per

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