Net Profit
LIVORIA SANDWICHES
November 14, 2013
STRATEGIC AND OPERATIONAL OPPORTUNITIES
FORECASTED YEARS: 2013 -2015
Prepared by Dev Das, CMA
Memorandum
November 14, 2013
TO: Paul and Sam Livoria
From: Dev Das, CMA
Subject: Strategic and Operational opportunities
Livoria Sandwiches faces major changes within the food industry in Dawkins. The city is in continuing growth and expansion, being ranked as the fastest growing number of vegetarians in the country.
Currently Livoria faces a cash shortfall due to a lawsuit. The menu has to be adapted to the market demand fast to keep up with the changes. The owners expressed the desire of having 1.1M in net profit by 2015. The goal can be reached ONLY by changing and adapting the menu to a vegetarian one. Some loyal customers will be lost, because the veal cutlet sandwich will basically disappear from the menu by 2015. Nevertheless contribution margin is increased by giving advantage to products that have more contribution margin per limited resource. Analysis shows that vegetarian sandwiches are the future key success factors for the restaurants.
Livoria cannot reach the 1.1M in net profit unless it adapts the menu to the vegetarian produce.
Situation analysis
Sam and Paul Livoria are facing significant changes on the market. Their goal is to address changes by either improving and adapting the menu to the current market demands or franchising the name. Livoria brothers have a 1.1 million net profit goal to achieve by 2015.
The two stores face capacity limitation ( number of employees) in order to address market demand.
Financial Assessment
Livoria has in 2012 a contribution margin of 53%
, = 53%
The operating profit margin , = 0.29%
The net profit margin in 2012 is very low due to the provision instated of $500K payable until May 2013. = 0.23%
Factoring out the provision of $500K Livoria performed with 24% net profit margin Livoria outperformed the industry grow
November 14, 2013
STRATEGIC AND OPERATIONAL OPPORTUNITIES
FORECASTED YEARS: 2013 -2015
Prepared by Dev Das, CMA
Memorandum
November 14, 2013
TO: Paul and Sam Livoria
From: Dev Das, CMA
Subject: Strategic and Operational opportunities
Livoria Sandwiches faces major changes within the food industry in Dawkins. The city is in continuing growth and expansion, being ranked as the fastest growing number of vegetarians in the country.
Currently Livoria faces a cash shortfall due to a lawsuit. The menu has to be adapted to the market demand fast to keep up with the changes. The owners expressed the desire of having 1.1M in net profit by 2015. The goal can be reached ONLY by changing and adapting the menu to a vegetarian one. Some loyal customers will be lost, because the veal cutlet sandwich will basically disappear from the menu by 2015. Nevertheless contribution margin is increased by giving advantage to products that have more contribution margin per limited resource. Analysis shows that vegetarian sandwiches are the future key success factors for the restaurants.
Livoria cannot reach the 1.1M in net profit unless it adapts the menu to the vegetarian produce.
Situation analysis
Sam and Paul Livoria are facing significant changes on the market. Their goal is to address changes by either improving and adapting the menu to the current market demands or franchising the name. Livoria brothers have a 1.1 million net profit goal to achieve by 2015.
The two stores face capacity limitation ( number of employees) in order to address market demand.
Financial Assessment
Livoria has in 2012 a contribution margin of 53%
, = 53%
The operating profit margin , = 0.29%
The net profit margin in 2012 is very low due to the provision instated of $500K payable until May 2013. = 0.23%
Factoring out the provision of $500K Livoria performed with 24% net profit margin Livoria outperformed the industry grow