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Cool Moose Creamery Case Solution
To summarize, Cool Moose has done pretty well over the years, and now since it is moving towards serving soft ice cream as well, this looks like a good decision, considering the changing trends and customer requirements. But Cool Moose must be able to select which type of machine would suit them well and be financially sound. And it is pertinent to acknowledge that the soft-serve ice cream might just cannibalize some of the existing scooped ice cream revenue, but since Cool Moose is known for providing excellent customer service and their staff dedicated to listening to the customers and their requirements, it looks like the company could do wonders, given that it can sustain the quality of the ice creams and the taste is better than that of the competitors and that there is no compromise done on the existing customer service that is delivered.
Following questions are answered in this case study solution
Perform a business size-up of Cool Moose
Analyze Cool Moose’s customers and perform a contribution analysis of each.
Examine Cool Moose’s competitors. What is Cool Moose’s competitive advantage?
Qualitatively analyze the Cool Moose opportunity
Of these, which are recurring costs and which are one=time costs?
Perform a differential analysis for the parties and events options. Calculate the Return on investment and payback period for this option. (ROI = Net cash flow / total long term investments) (Payback = total long term investments / net cash flow) for each.
Make recommendations on the situation
Case Analysis for Cool Moose Creamery
1. Perform a business size-up of Cool Moose
Cool Moose is established in Allison, Ontario and it has been operating for the past year. It offers around sixteen flavours of ice cream, milkshakes, and other items. Cool Moose is set up at one of the major intersections which allow big audiences to visit the store. The company also has a store in Tottenham which has been running successfully since 2008. It has a very dedicated consumer base and that is due to strong brand recognition established by the company enabling it to stand against its competitors. And also due to unparalleled customer service provided by the stores. The company also follows three of its values very diligently which are: “helping communities, making customers smile, and inspiring employees.” The company experienced more than 233 percent growth in its revenue in the year 2008. It has dedicated four employees to specifically cater to the needs of the customers and to elevate the customer service offered.
And recently the company was able to grab the award for student entrepreneur in Ontario, which shows the quality of service it has promised to serve. The company does have direct competition, and one of its direct competitors is Dairy Queen. This is also established at an intersection, which means it is also able to attract a huge potential customer base. It is known for serving soft vanilla ice cream and other related food items. In terms of the annual revenue, Dairy Queen has earned over $0.5 Million in the previous year. Dairy Queen is much bigger in terms of its size and operations and has been operating in more than twenty-two countries with over 5900 outlets throughout. And in terms of pricing of the products, Dairy Queen’s products are more pricey than Cool Moose’s. Overall, there has been healthy competition, Cool Moose is more in a growing stage and has performed well recently to sustain its market share.
2. Analyse Cool Moose’s customers and perform a contribution analysis of each.
Perantinos wanted to expand its product range and was looking to introduce soft-swirled ice cream which was smoother than normal scooped ice creams. And so, to produce the soft ice cream would cost more than $12,000 or a triple head machine, which produces three different flavours of ice cream. Whilst he also had the option of using a single-head machine which was costing around $2,000. This would allow the company to attract those customers who like soft served ice creams and also Cool Moose might be able to capture some of the audience of Dairy Queen, and this could be permitted because of lower prices offered by Cool Moose and its unmatched customer service, which the consumer base acknowledges a lot. So, firstly for the single head machine, it was estimated that 2800 servings will be sold and for the “triple head machine” company could be able to sell 4000 servings. And $2.50 will be charged for every serving offered. Furthermore, the use of a soft-serve mix would cost an additional $0.25 for each serving.
While the useful life for the single head was three years and for the new triple head it was seven years on a straight-line basis. The costs for cone, cup and tissue paper were estimated to be $0.08 per serving. The costs for cleaning would be around $10.9 for old single head whilst triple head it was $21.8. the utilities were estimated to be $150 for a single head and $350 for a triple head. The cost for the fridge in any of the cases would be $150. And to acquire the new triple head machine would cost $12,000 which will be financed through an 8% loan, paid through monthly instalments. Peranatinos need to understand that the introduction of soft-served ice creams would enable the cannibalization of already growing scooped ice creams, and what would be the estimated financial loss and then take a decision accordingly.
3. Examine Cool Moose’s competitors. What is Cool Moose’s competitive advantage?
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