This week I continued my cost-cutting measures. First, I cut manager wages $25 a week (from $650 to $625) and cut server wages $.25 per hour (from $9.25 to $9.00). Also, I completely eliminated all advertising we had, feeling that the Chandler name had gotten out well enough since I had aggressive advertising campaigns every week previous.
I was pleased with one minor decision I made this week when I raised the price of a small cup by $.25 (from $2.75 to $3.00) and cut the price of a large cup $.25 (from $4.00 to $3.75). Thus, there was no total price hike, but it did encourage patrons to order larger, more-expensive cups of coffee. It worked, as for the first time small cups were not the most purchased variety. Also, this led to the highest earnings I have had since I closed weekends.
The effect of customer satisfaction, however, was negative. I am not disappointed because when I had the highest comparative satisfaction level I had a net revenue in the red on the balance sheet. I have turned that tide and am now making some money, which is very pleasing.
Saturday, October 31, 2009
Monday, October 26, 2009
Week Eight
I continued to pull back the reins so to speak with my coffee shop in attempt to lower the high input costs that were leading to red numbers on the balance sheet. However, I did add one server because one did quit. I wanted to remain steady at 16 servers (because I want two servers available per hour).
I did cut back on advertising as I eliminated the $.50 off coupons that I had been running since the start of simulation. This is because not only does it cost money to advertise but now with small cups being the most popular $2 is not enough to receive for a cup of premium organic coffee.
Other than these minor details all decisions remained constant, as I do not wish to be too drastic in cutbacks (which would decrease customer satisfaction) and did not wish to add costs.
I did cut back on advertising as I eliminated the $.50 off coupons that I had been running since the start of simulation. This is because not only does it cost money to advertise but now with small cups being the most popular $2 is not enough to receive for a cup of premium organic coffee.
Other than these minor details all decisions remained constant, as I do not wish to be too drastic in cutbacks (which would decrease customer satisfaction) and did not wish to add costs.
Sunday, October 18, 2009
Week Seven
Thanks to new ways of showing productivity that were not originally provided by Biz Cafe but instead were posted on Moodle, I realized just how inefficient my coffee shop was. Basically, I was making customers happy, but in doing so was spending way too much and receiving way too little and was sinking deeper and deeper into the red every week.
This week came with the most drastic changes of any week thus far. I felt that not enough revenue was being made on weekends to justify the extra labor hours that were needed, so I closed weekends. I fired the weekend manager and seven servers, bringing me down to two managers and 16 servers. I felt 16 was an appropriate number of servers because I wanted two available per hour and the shop is open 80 hours a week now, with each working 10 hours per week. I also lowered wages of managers from $700 to $650 and the servers from $9.75 to $9.25. This is a decrease but is still significantly above average according to the labor report.
I was unsure how this would affect the amount of coffee since this was such a drastic change in hours and service potential. I ordered 60lbs of organic coffee and 7lbs went to waste. Also, small and large cups are now available along with the medium, so I ordered 5,000 of each of these cups and priced them at $2.50 for small, $3.25 for medium, and $4.00 for a large.
This week came with the most drastic changes of any week thus far. I felt that not enough revenue was being made on weekends to justify the extra labor hours that were needed, so I closed weekends. I fired the weekend manager and seven servers, bringing me down to two managers and 16 servers. I felt 16 was an appropriate number of servers because I wanted two available per hour and the shop is open 80 hours a week now, with each working 10 hours per week. I also lowered wages of managers from $700 to $650 and the servers from $9.75 to $9.25. This is a decrease but is still significantly above average according to the labor report.
I was unsure how this would affect the amount of coffee since this was such a drastic change in hours and service potential. I ordered 60lbs of organic coffee and 7lbs went to waste. Also, small and large cups are now available along with the medium, so I ordered 5,000 of each of these cups and priced them at $2.50 for small, $3.25 for medium, and $4.00 for a large.
Tuesday, October 13, 2009
Week Six
After looking over my first monthly statement I found that my revenue was not doing nearly as well as I thought I had been. Although my gross statistics that show up in comparative results (cups sold, total sales, customer satisfaction) they do not factor in just how much I have paid in to get those results. Basically I have bought my great comparative results as I have taken the most expensive route (high wages, new furniture/espresso-maker, organic coffee, many ads) yet am charging a below-average cost for a cup of coffee (just $3.25). So the comparative results mask an overall problem at Chandler's.
For this week I decided to begin cost-cutting, not wanting to make drastic or immediate changes that may drive customers away. I simply cut ad space and radio spots this week, as I do not want to raise prices or reduce wages. In the future weeks I may begin to eliminate some servers or slowly reduce wages until I get the shop going back in the right direction. I am optimistic since Chandler's has gained such a large customer base and has done so well in terms of gross sales that if I make gradual changes then revenue will surely follow.
For this week I decided to begin cost-cutting, not wanting to make drastic or immediate changes that may drive customers away. I simply cut ad space and radio spots this week, as I do not want to raise prices or reduce wages. In the future weeks I may begin to eliminate some servers or slowly reduce wages until I get the shop going back in the right direction. I am optimistic since Chandler's has gained such a large customer base and has done so well in terms of gross sales that if I make gradual changes then revenue will surely follow.
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