Case Study - Rick's Cafe Americaine

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  • Topic: Price, Sales, According to Jim
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  • Published : December 29, 2010
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GEMBA 2011 – TEAM 2
CASE STUDY: RICK’S CAFÉ AMERICAINE

GENERAL ASSUMPTION:
1) Period considered: 01/06/2001 - 31/05/2006 (as to include period of no invoicing during permit inquiry – on the contrary if he go back to work he will be full-cashing from the first day) 2) No NPV calculated

3) Initial stock of RM is not considered in the initial investment 4) Depreciation period for investment = 5 years
5) Spanish VAT = 16%
6) Spanish Corporate Tax =35%
7) Spanish Public Holydays = 11 days/year

MAIN ALTERNATIVES
A1) NO BAR
SUB-ALTERNATIVES
a) Cost of Life = €900/month
b) Cost of Life = €900/month +50% = €1,350/month

Assumptions:
* Apartment pay-off considered as a profit

A2) ESTAMBUL’S CAFE
Only 1 alternative
Assumptions
* The shop will be located in downtown, so it will catch 100% of the tourist population during the peak months. Therefore, July/August will have 31 days/month opening with daily invoicing increased by 306,97% (132,000 additional habitants vs. 43,000) * We will calculate revenues according to the information we have for Rick’s café. * Coffee supplier will be Estambul’s café

* coffee cost = €12 for Regular coffee / €24 for special coffee * coffee sale price = €0,80 for regular - €2,40 for special * COS for other consumables = 22% (anyway, we should calculate breakeven as to understand whether it is far from the daily sales amount of €450 forecasted by franchisor’s salesman). * No sales in the first 8 months (6 months for spirit permits + 2 months for building work) A3) RICK’S CAFE

SUB-ALTERNATIVES
a) Rent 1 local near Station = €450/month

* Coffee supplier will be Torres Quindós
* Daily Sales will be in the low range
* coffee cost = €9 for Regular coffee / €18 for special coffee * coffee sale price = €0,55 for regular - €1,40 for special * COS for other consumables = according to corresponding margins * COS for soft-drinks + no alcohol = according...
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