prepare a case analysis for both the cases given

Prepare a case analysis for 2 cases below. Use the questions related to your chosen cases as a guide in preparing your case analysis. Your analysis should be no longer than 3 pages, typed, and double space. Exhibits do not form part of the page count.

Cool Moose Creamery
1.
Identify one of each of the business’ strengths, weaknesses, opportunities and threats.
2.
Analyze the addition of the soft-serve ice cream from a qualitative standpoint.
3.
Using the excel template file, identify which of the cash flows associated with the opportunity are relevant? Of these, which are reoccurring costs versus one-time costs?
4.
Prepare a differential analysis to determine the return on investment for the purchase of both the single-head ad triple-head machines.
5. As Greig Perantinos, would you purchase a soft-serve ice cream machine? If so, which one? Explain.

Sugar and Spice

Perform a business size-up of Sugar and Spice Bakery by completing the following:
1. Analyze the expansion opportunities of closing the storefront to cater events from a qualitativestrategic perspective.2. Using the excel template file, identify which of the cash flows associated with the opportunityare relevant. If the cash flow item is relevant, identify if the item is recurring or a one-time cashflow.

3. Prepare a 1 year differential analysis for both the low and high sales projections to determine return on investment for closing the store. (Hint: if the cash flow item is relevant and recurring, it should be included in your analysis to determine incremental net cash flow. ROI would be your incremental net cash flow divided by your total of one-time cash flow items.)

4. Would you recommend to close the store? Explain.

Cool Moose Creamery
Flow
Machine cost
Installation and delivery
Depreciation
New soft-serve sales
Soft-service mix (COGS)
Cones
Cups & spoons
Napkins
Lost scooped ice cream sales
Cost of lost scooped ice cream (COGS)
Employee training
Cleaning labour
Inventory
Fridge
Utilities
Bank loan
Interest charges
Relevant (yes
or no)
Recurring or
One Time?
Sugar and Spice Bakery
Cash Flow item
Employee wage savings
Kilbourne’s salary
Lost bakery sales
Catering sales
Bakery COGS
Catering COGS
Campany van
Van Depreciation
Fuel and insurance
Van Logo
Advertising
Renatl savings
Utilities savings
Refrigerator
Refrigerator depreciation
Home Utilities
Interest payments
Relevant
(yes or no)
Recurring or
One Time
UW BUS-2010 F2023
Lori Novak; Dennis Ng
September 5, 2023 – December 4, 2023
NOTICE REGARDING COPYRIGHT
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Resale or further copying of anything in this package is strictly prohibited.
Unless otherwise stated, Copyright ©2023, Ivey Business School Foundation. Ivey Business School
is the leader in providing business case studies with a global perspective.
Table Of Contents
Darlarna Furniture Ltd.
4
Parsons’ Garden Centre
9
Sugar and Spice Bakery: The Catering Opportunity
14
Textbooks for Change
18
Cool Moose Creamery
23
S
w
9B10B002
Dan Thompson wrote this case solely to provide material for class discussion. The author does not intend to illustrate either
effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying
information to protect confidentiality.
Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of
this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to
reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of
Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2010, Ivey Management Services
Version: (A) 2010-02-19
When Fredrik Blix got Darlarna Furniture’s 2008 financial statements back from the accountant in midJanuary 2009, he became quite concerned about the dramatic drop in profits, as he knew the venture
capitalists were looking to sell their investment soon. He was also alarmed by reports in the media that a
number of investment firms in the United States had failed and required government bailouts to continue
operating. Could a severe recession be soon to follow? How would this influence demand for his
products? Would the Bank of Montreal still be prepared to provide needed financing?
In response to these concerns, Blix retained Sally Delaney, chartered accountant, to conduct an analysis of
Darlarna Furniture’s operations and to make recommendations for future action within the week.
COMING TO CANADA
Fredrik Blix immigrated to Canada in 2003 after meeting his wife, Cathy, a Canadian, on a Mediterranean
holiday. Blix was born in Darlarna province in Sweden, but moved to Stockholm after completing the
Canadian equivalent of high school, called gymnasium. While in Stockholm, Blix earned a diploma in
commercial design and apprenticed with Arlanda, a furniture manufacturer that supplied the IKEA chain
with innovative new products.
After working for Arlanda for eight years and acquiring a reputation as a very inventive young designer,
Blix moved to Winnipeg, Manitoba, his new wife’s hometown, and secured a design job with Palisar,
Canada’s largest furniture manufacturer. Initially, Blix enjoyed his job at Palisar, became involved as a
hockey coach in the local community and was an avid curler, but after a few years, he became frustrated at
work. Although he had a very friendly relationship with his colleagues and received a number of raises
and promotions, he longed to return to designing furniture with more of a Swedish influence as he had at
Arlanda back in Sweden.
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DARLARNA FURNITURE LTD.
Page 2
9B10B002
A NEW VENTURE
After preparing a detailed business plan and raising $180,000 in financing from friends and family in the
Mennonite community in Winnipeg and Steinbach, the Crocus Fund agreed to make a matching
investment for a 40 per cent share in Darlarna Furniture. By October 2005, Blix had purchased a small
factory and the necessary manufacturing equipment and had recruited skilled furniture makers he knew
from working at Palisar. Darlarna began shipping products in January 2006, and quickly built up sales in
its target market with its unique designs.
EXPANSION
After a very successful 2006, Blix found that his current factory could not keep up with demand so he
began purchasing additional manufacturing equipment. Instead of buying used equipment for which there
was an active market in Winnipeg with Palisar’s large manufacturing operations, Blix felt new equipment
might help impress customers when they came for factory visits. By late 2008, the factory was becoming
too small, due to growing sales and large inventories of raw materials and work in process, so a search
began for new facilities in Winnipeg.
In 2008, the Winnipeg economy was booming and it was very difficult to find skilled furniture makers,
given opportunities in the building trades and the Tar Sands oil developments in northern Alberta. As a
result, Darlarna was forced to give its workers a significant increase in wages and benefits to retain them.
Also, key production inputs, such as fine leathers and foam cushioning materials, rose dramatically in price
due to a rapid expansion of the Chinese furniture industry.
By 2008, Blix felt that Darlarna was ready to expand into the U.S. market, so he began taking out ads in a
number of American design magazines to test the market, and prepared an expensive new catalogue
displaying its many products. With the prospect of increased orders from the United States, the company
expanded its order processing, shipping/receiving and accounting functions despite industry reports of a
possible deep recession in the United States in the coming year due to excesses in the mortgage, consumer
and corporate lending markets.
FINANCIAL STATEMENTS
The financial statements for Darlarna’s first three years of operation are shown in Exhibit 1.
Blix was also able to attain average ratios from the Bank of Montreal (see Exhibit 2), which the bank
considered typical of operations in the high-end furniture manufacturing industry.
Page 5 of 29
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In early 2005, Blix approached the Crocus Fund, a labour-sponsored venture capital firm located in
Winnipeg, about financing a new “boutique” furniture manufacturer. His new company, Darlarna, would
design and manufacture high-end Swedish-style furniture for distribution in Canada initially, but he hoped
eventually to “crack” the U.S. market. Instead of distributing his product through the large chains, such as
The Brick, Dufresne, Leon’s or department stores, such as Sears or The Bay, Blix hoped to sell his
products through high-end, independently-owned furniture retailers who provided interior design services
along with an extensive selection of home furnishings.
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9B10B002
Darlarna was able to secure both line of credit and term loan financing with the Bank of Montreal. The
line of credit had a limit of $300,000 and was secured by both inventory and accounts receivable. Since
Darlarna’s customers were small retailers with more limited access to financing compared to the large
chains or department stores, the Bank of Montreal was only prepared to lend 40 per cent of the value of the
accounts receivables that were not yet past due. Also, because the inventory was composed mostly of raw
materials and partially completed furniture and was consequently difficult to sell, the bank agreed to lend
only 20 per cent of its value. The line of credit was non-committed, which meant the bank was not
obligated to lend to the company under the loan agreement if it felt the company was in financial
difficulties or if the bank had a shortage of loanable funds.
All loans required that the company maintained a current ratio of 2.0, a cash flow coverage ratio of 4.0, and
a long-term debt to total capitalization ratio of 55 per cent. The loan agreements also specified that Blix
could withdraw no more than $70,000 a year for living expenses, and that he had to receive the bank’s
permission to make capital purchases. Financial statements were to be provided when Blix met with his
loans officer in July and January each year.
Darlarna sold all products Net 60 and purchased most of its inputs 2/15, Net 60. These terms were typical
of the high-end furniture manufacturing industry.
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FINANCING
Page 4
9B10B002
Exhibit 1
FINANCIAL STATEMENTS
Net Sales
Cost of Goods Sold
Gross Profit
Marketing
General Administration
Depreciation
EBIT
Interest
EBT
Income Tax (31%)
Net Income
2006
2007
2008
$1,304,000
781,000
$523,000
135,400
151,000
35,695
$200,905
45,000
$155,905
48,331
$107,574
$1,507,000
952,000
$555,000
149,670
151,200
49,805
$204,325
57,000
$147,325
45,671
$101,654
$1,791,000
1,210,000
$581,000
220,245
219,560
60,345
$80,850
70,000
$10,850
3,364
$7,487
2006
$55,000
220,000
388,124
25,000
$688,124
356,950
$1,045,074
2007
$43,500
261,000
437,139
28,000
$769,639
498,050
$1,267,689
2008
$11,000
376,337
545,000
28,500
$960,837
603,450
$1,564,287
$127,500
51,000
61,500
$196,500
69,860
51,300
$301,523
79,499
130,200
32,500
$272,500
325,000
42,800
$360,460
428,000
57,850
$569,072
578,500
360,000
87,574
$1,045,074
360,000
119,229
$1,267,689
360,000
56,715
$1,564,287
Balance Sheet
Cash
Accounts Receivable
Inventories
Prepaid Insurance
Total Current Assets
Fixed Assets, Net
Total Assets
Accounts Payable
Other Payables
Revolving Credit Agreement
Current Portion of Long-term
Debt
Total Current Liabilities
Long-term Debt
Shareholders’ Equity
Common Shares
Retained Earnings
Total Liabilities and Equities
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Income Statement
Page 5
9B10B002
Exhibit 2
Ratio
Current Ratio
Cash Ratio
Inventory Turnover in Days
A/R Turnover in Days
A/P Turnover in Days
Cash Conversion Cycle
Fixed Asset Turnover Ratio
Total Asset Turnover Ratio
Long-term Debt to Total Capitalization
Ratio
Cash Flow Coverage
Effective Interest Rate
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
ROA
ROE
Page 8 of 29
Industry
Average
2.5
.5
90 days
60 days
15 days
135 days
4.01
2.21
30%
3.21
8%
45%
25%
10%
22%
31%
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Use outside these parameters is a copyright violation.
INDUSTRY AVERAGE RATIOS
S
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9B05B003
Elizabeth Grasby revised this case (originally prepared by Raymond Leduc under the supervision of Richard H. Mimick) solely to
provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial
situation. The authors may have disguised certain names and other identifying information to protect confidentiality.
Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of
this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to
reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of
Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.
Copyright © 2004, Ivey Management Services
Version: (A) 2009-09-24
Parsons’ Garden Centre (Parsons) was a relatively large gardening business located outside Brockville,
Ontario. Parsons sold a full line of plants and accessories. Following the operating year-end in November
2004, Randy Parsons, owner and manager of the proprietorship, spent the first part of January reviewing
the past year and planning for the upcoming season.
“Looking at our income statement, I’d say 2004 was a good year,” Parsons mused (see Exhibit 1). “We
had good sales, very little inventory left over and the bank loan was paid off with quite a bit of cash left
over as well.” With these thoughts in mind he proceeded to evaluate the planned activities and cash
requirements for 2005.
SALES
The company’s annual net sales growth had been six per cent for the past number of years, and Parsons
expected this trend to continue in 2005. He commented:
With the low interest rates encouraging more people to buy homes (as opposed to renting)
and with all the new housing developments going on, more and more people are doing
home improvements and landscaping, so the market as a whole should continue to
increase as will the size of purchases so everyone should benefit.
He planned to keep a similar product mix and anticipated the same margins as those experienced in 2004.
Sales in the garden centre business were seasonal with 80 per cent of the sales recorded during the period
from April to June. May accounted for half of these sales, while the remaining sales during April and June
were split equally. The remaining 20 per cent of annual sales occurred fairly evenly during the July to
November period with the exception of August. August sales were 10 per cent of this remaining 20 per
cent since it was too late to plant the summer sprouting plants and too early for the fall planting products.
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PARSONS’ GARDEN CENTRE
Page 2
9B05B003
The business was susceptible to the climate; a late spring or an early fall or early winter could seriously
affect sales. If April or May sales were lost, Parsons believed he could recover half of the sales in the
following month. If August, September or October sales were missed, half of the sales would be realized
in the month following the loss. If November sales were lost, the sales would not be recovered. It was
also very important that the inventory be available when the customer wanted it; otherwise, customers
would buy elsewhere.
PURCHASES
Most greenhouses made the bulk of their plant purchases in March since it was more economical to buy the
stock and keep it during the summer than to buy in small lots throughout the summer. Parsons was no
exception. The stock for fall sales (about one per cent of total purchases) was procured in August. The
normal purchase terms were 2/10, net 30 but most garden centres, including Parsons, did not make
payment for 90 days.
LABOR
Parsons handled all the administrative work and helped with the garden centre duties. He planned to hire
seasonal help during the busy April to June period and estimated that overall labor costs would increase
three per cent above the 2004 level. These labor costs would be spread evenly over each of these three
busy months, although he wondered how he should manage labor if poor weather occurred. Parsons
planned to draw $4,500 monthly over the nine-month operating period. The laborers and the owner were
paid on a monthly basis for work performed in the same month.
ADVERTISING AND PROMOTION
Since Parsons believed that advertising was very important to the business’s success, he typically spent a
great deal of money to promote Parsons. “If I don’t sell this stuff while people are in the ‘gardening
mood,’ I could end up with a lot of plants rotting in my yard.” The main advertising methods included
catalogues mailed to past customers, planting instructions and point-of-purchase materials. Parsons
estimated that each catalogue would cost $3 to print and $0.85 to mail. The company’s mailing list
consisted of 4,000 names, but an extra 1,500 catalogues were printed to be used as handouts throughout the
season. The point-of-purchase material and the planting instructions would each cost $2,000 to be printed.
Parsons had the printing done in February and mailed the catalogues in April. While purchase terms were
2/10, net 30, payment for the catalogues and other materials was made when sales began in April.
Another form of advertising used was the local newspaper, with most of the ads running during March,
April, May and June ($1,750, $7,500, $15,200 and $10,500, respectively). Some minor advertising was
also planned for September, October and November in order to capture some of the fall planting market
($875, $2,450 and $175, respectively). There was no money budgeted for July or August advertising
because, as noted earlier, these months were too late for spring planting and were too early for fall
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Thirty per cent of Parsons’ customers paid for their purchases with cash (or debit card), while the other 70
per cent of the customers paid by credit card. Parsons was required to pay a two per cent fee to the credit
card companies, but received payment for the balance of the sale within that month.
Page 3
9B05B003
planting. As with most of his expenses, Parsons paid for the advertising during the month the benefit was
received.
RENTAL CHARGES
As a result of an agreement with his landlord, Parsons could rent the land and building for his nine-month
operating season. The business required a spacious area that could accommodate a lockable shed, an office
and a fenced yard that provided a semi-shaded area for some of the plants. Parsons believed he could rent
the same location used in 2004 but estimated that rental costs would increase by 10 per cent.
The only other rental charge incurred was the lease of two cash registers. The estimated cost was $210 per
month for both machines from April to November.
EQUIPMENT
Parsons’ equipment included a shed, boards, a greenhouse and store equipment. Each year during March,
the equipment was repaired and serviced before the busy spring sales started. Based upon past experience,
Parsons estimated that the repairs could be done for about $1,000. The amortization charges on the
equipment would be the same as the previous year.
UTILITIES AND WATER
Due to the nature of the business, utility charges were minimal during the operating season. In order to
heat and light the rented building as well as run the cash registers, Parsons estimated utilities would
increase three per cent over the past year and would be incurred evenly throughout April to November.
Utility bills, like all minor expenses, were paid within the month incurred.
As in the past, Parsons would be able to draw all the water needed from a well situated on the rented land.
As a result, there was no charge for the water used.
GENERAL/ADMINISTRATION
This category included general expenses, such as phone, insurance, etc, which were spread evenly over the
nine-month operating period; December, January, February had virtually no expenses. The expenses were
paid one month after they were incurred and were expected to increase five per cent in 2005.
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Another promotional vehicle was the April annual trade show. The show gave Parsons an opportunity to
meet wholesalers and other retailers and to distribute catalogues. The cost of the booth needed for the
show was expected to be $3,000, and was paid one month in advance of the show, but Parsons concluded
this would be money well spent.
Page 4
9B05B003
BANK LOAN
Parsons planned to start March 2005 with no cash. He used and repaid the bank’s line of credit as needed,
on a month-to-month basis, hoping he could repay it in full by the end of the operating season. He
wondered if he should continue to draw all the cash out of the business at the end of each operating year.
Parsons realized that his success would depend upon the weather, and he was concerned that his estimates
might be susceptible to large changes. With these notes, he proceeded to estimate the 2005 cash needs
under both ideal and unfavorable weather conditions.
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CONCLUSION
Page 5
9B05B003
Exhibit 1
INCOME STATEMENT
For the year ending December 31, 2004
$ 533,334
266,667
$ 266,667
Operating Expenses:
Wages
Interest1
Land building/rental
Repairs/maintenance
Utilities
Cash register rental
Amortization
Advertising
Trade show
Planting instructions
Credit card charges
General/administration
Net income
91,429
499
7,895
831
4,831
1,680
4,375
44,226
2,625
2,100
7,460
16,667
1
184,618
$ 82,049
Parsons had a line of credit with his bank, which allowed him to withdraw up to $100,000. The interest rate was six per cent
per annum based on the outstanding balance at the end of each month, and payment was due two days after the end of the
month.
Page 13 of 29
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Net sales
Cost of goods sold
Gross margin
9B17B011
Jessica Welsh wrote this case under the supervision of Elizabeth M. A. Grasby solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2017, Richard Ivey School of Business Foundation
Version: 2019-10-29
On May 5, 2016, Rosetta Kilbourne, owner of Sugar and Spice Bakery (Sugar and Spice), was planning
for her business’s future. The lease on Kilbourne’s bakery, located in Strathroy, Ontario, Canada, would
expire at the end of August. Operating the bakery had become expensive, and Kilbourne wondered if it
would be financially feasible to close the bakery and focus on catering events full time.
STRATHROY-CARADOC
Strathroy was located 40 kilometres west of a major southwestern city, London (population 367,000), and
was the largest community within Middlesex County outside of London.1 The town of Strathroy and the
township of Caradoc amalgamated in 2001 to form the municipality of Strathroy-Caradoc (Strathroy). Of
its 20,000 residents, 12,000 lived in the urban centre. Strathroy supported urban and rural areas with a
range of businesses and industries, including agri-business, manufacturing, and logistical operations. With
direct access to rail and trucking routes to the rest of southwestern Ontario and approximately 71
kilometres to the U.S. border, businesses had easy access to regional and international markets.2
Strathroy was home to Cuddy Farms, a global leader in producing and delivering commercial turkey eggs
and poults.3 Each June, the town hosted Turkey Fest, a weekend event including a midway, carnival
games, a turkey-calling contest, a battle of the bands, an antique car show, and a poult petting zoo. A
popular event for the residents of Strathroy, the festival also attracted visitors from London and other
towns within Middlesex County.
1
A county was a geographical region of a country used for administrative or other purposes.
“Doing Business: Home/Doing Business,” Strathroy-Caradoc: Urban Opportunity—Rural Hospitality, accessed January 24,
2017, www.strathroy-caradoc.ca/en/Doing-Business.aspx?_mid_=29211.
3
A poult was a young domestic chicken, turkey, pheasant, or other fowl being raised for food.
2
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SUGAR AND SPICE BAKERY: THE CATERING OPPORTUNITY
Page 2
9B17B011
SUGAR AND SPICE BAKERY
Rosetta Kilbourne
The Purchase
While Kilbourne contemplated her next steps, a small bakery, Sugar and Spice, was for sale in her
hometown of Strathroy. The bakery served classic desserts, soups, and sandwiches and was open Monday
to Friday from 7 a.m. to 4 p.m. Kilbourne decided she had put her dream on hold for long enough; with
financial help from her father, Kilbourne purchased the bakery and opened in September 2007 as a sole
proprietorship. The bakery was well known and had a good reputation within Strathroy, so Kilbourne kept
its existing name and hours of operation, but altered the menu to include a wider variety of lunch and
dessert options. Kilbourne also continued to employ the bakery’s existing full-time employees.
Customers
Sugar and Spice was a popular morning destination for local retirees of the Strathroy community. Several
regular groups of customers would arrive together for their morning coffee and a pastry. These customers
typically would visit with each other at the bakery for approximately an hour and a half. On average, the
retirees spent less than $54 per visit. Kilbourne knew all of their names and regular orders—a personal
touch that she believed kept the retirees coming to the bakery.
Aside from the retirees, the bakery rarely had customers who stayed to consume their purchases. Sugar
and Spice’s main revenue came from take-out orders, made either in person or over the phone. It was
common for phone orders to be received early in the morning for pick-up during the lunchtime rush
between 11 a.m. and 1 p.m. These phone orders were primarily large orders over $150 from local
businesses or community groups. Sugar and Spice did not offer delivery.
Operations
Kilbourne had two full-time employees who were paid $12.50 an hour and two part-time employees who
were paid $11.25 an hour. Both full-time employees worked from 6 a.m. to 2:30 p.m.5 each weekday, and
one of the two part-time employees worked from 2 p.m. to 5 p.m. each weekday. During the morning and
lunchtime rushes, Kilbourne desperately needed help to fill all orders, but often, for several hours in the
afternoon, the part-time employee on duty did not help a single customer; in fact, the bakery’s sales were
frequently less than the total cost of wages for this employee’s three-hour shift.
4
5
All currency in Canadian dollars unless specified otherwise.
Full-time employees had one thirty-minute unpaid break during their shift.
Page 15 of 29
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Kilbourne had always had a passion for baking. From a young age, she had created her own recipes,
which her family thoroughly enjoyed taste testing. Her dream had always been to open a bakery of her
own, but she feared financial instability and the risks of becoming self-employed. After graduating from
college, Kilbourne accepted what she thought was a secure position working as an administrative assistant
for a security company based in London, Ontario. During the spring of 2007, Kilbourne was laid off.
Page 3
9B17B011
Since opening Sugar and Spice, Kilbourne had drawn a $40,000 annual salary. Sugar and Spice reached its
cash break-even point each year, but after all long-lived assets had been depreciated, the bakery had not
been able to earn a profit over the last three years.
THE COMPETITION
A number of large retailers and grocery stores including Wal-Mart, Canadian Tire, and Food Basics were
in Strathroy. These retailers provided Strathroy’s residents with everything they needed without the need
to travel to London. Strathroy also housed several fast-food restaurants and coffee chains, including two
Tim Hortons locations, a McDonald’s, and a Coffee Culture. All of these businesses offered in-store
seating, free Wi-Fi, and were open long hours.
Only one caterer in Strathroy specialized in fruit and dessert platters. If Sugar and Spice were to enter the
catering market, it would offer fruit and dessert platters as well as its current lunch offerings of soups and
sandwiches. Since catering was typically planned well in advance for large orders, the caterer’s proximity
was not as important to potential customers. Consequently, Sugar and Spice would be able to target
customers beyond Strathroy, but it would then also be competing with caterers outside of Strathroy.
Kilbourne expected the majority of Sugar and Spice’s catering orders would come from customers in
London. London and Middlesex County listed over 30 companies that provided catering.
THE CATERING OPPORTUNITY
Kilbourne thought that she could improve profitability by reducing costs if she closed the bakery and
became a full-time caterer. Kilbourne expected to handle the catering preparation and delivery completely
on her own. Would she also be able to improve her work-life balance by closing the bakery and only
offering catering? Kilbourne believed catering alone would let her complete some of her household tasks
while her children were in school, and she would work only when she had a catering customer.
If Kilbourne pursued only catering, and it was successful, she hoped to take drawings annually to start
saving for her children’s education on top of her annual salary of $40,000. Her salary alone was the bare
minimum she required to meet all of her personal obligations each year.
Projections
If the bakery remained open, Kilbourne projected its revenues would be similar to fiscal 2015’s revenues
of $170,000. At this sales level, the cost of goods sold was 30 per cent of sales. If Kilbourne closed the
bakery to focus on catering, she projected filling between 84 and 120 catering orders annually. Each
catering sale would average $750. Since she would purchase most of the ingredients needed and bake the
exact amount required for each order, she predicted there would be much less waste than currently
experienced at the bakery; consequently, cost of goods sold would decrease to 25 per cent of sales under
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Each day, Kilbourne arrived at the bakery by 5 a.m. to make fresh goods in time for the bakery’s opening
at 7 a.m. Throughout the day, she continued baking as the goods were needed and prepared customer
orders. Kilbourne left the bakery each day at 3:15 p.m. to pick up her two young children from school,
and then returned home to complete a number of household tasks. Kilbourne was unsure how much
longer she would have the energy to maintain this hectic schedule. The bakery was making her feel
overworked and underpaid.
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9B17B011
the catering opportunity. All catering clients would be required to pay a 50 per cent deposit when ordering
and would be granted credit terms of net 14 on the outstanding balance.
For $800, Kilbourne planned to advertise the business, Sugar and Spice Catering, on both sides of the
van. She would allot another $1,200 annually to advertising—something she had not deemed necessary
for the bakery. Kilbourne had exhausted all external financing opportunities; therefore, for all initial
investments for the catering option, she would have to use her personal line of credit at an interest rate of
5.5 per cent per annum with interest payments due on the first of each month.
If she opted for the catering option, Kilbourne would no longer need to rent the building that Sugar and
Spice currently occupied for $1,350 a month plus utilities averaging $200 a month. Kilbourne would
operate the business entirely out of her home, but she would need to purchase an additional refrigerator
for $1,600.6 Kilbourne projected her home’s monthly utility bill would increase by $25 a month.
CONCLUSION
Kilbourne was eager to determine whether closing the bakery and running Sugar and Spice solely as a
catering business would be financially feasible. She knew it would be difficult to continue working the
number of hours she had been working, but she needed to draw at least the same salary from the business
as she had the last three years. If she were to close the store, Kilbourne would need to provide written
notice to her landlord by the end of the month that she would not be renewing her lease at the end of
August.
6
The refrigerator would be depreciated using the straight-line method over a useful life of 10 years with no residual value.
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Kilbourne would purchase a used van for $7,000 to deliver the orders. The van would have a useful life of
five years with no residual value and would be depreciated using the straight-line method. Fuel and
insurance costs for the van were projected to be $225 and $150 per month, respectively. If her high
catering order projections were met, Kilbourne expected to spend an additional $100 on fuel per month.
9B16B004
Shannon Wright wrote this case under the supervision of Elizabeth M.A. Grasby solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2016, Richard Ivey School of Business Foundation
Version: 2021-10-15
It was May 2015, and Chris Janssen, chief executive officer of Textbooks for Change (T4C), was evaluating
the success of T4C’s April textbook drive. In addition to T4C’s textbook drives in Southwestern Ontario and
the Greater Toronto Area (GTA), for the first time, Janssen’s team had run a textbook drive through a student
group at Queen’s University (Queen’s) in Kingston, Ontario. This new drive had been successful, and
Janssen was considering developing a more permanent presence at Queen’s.
This new endeavour would involve establishing relationships with student groups, professors, and university
administration so that textbook-collection boxes (dropboxes) could be permanently located in central areas
on campus. The boxes would then be monitored so the textbooks could be picked up regularly and shipped
to the T4C headquarters, where the books would then be donated to schools across East Africa, sold online
to fund shipping and implementation costs, donated to student clubs at Canadian universities, or recycled
appropriately. While considering this eastward expansion, Janssen also wanted to investigate the viability of
undergoing similar expansions to Carleton University (Carleton) and the University of Ottawa (uOttawa),
both located in Ottawa, Ontario. He wanted to evaluate the financial feasibility of each of these proposed
locations before making any final decisions.
TEXTBOOKS FOR CHANGE
History
T4C was inspired by a trip Janssen took to East Africa in 2013. While teaching at the University of Rwanda
School of Finance and Banking, Janssen noticed a deficit in the educational materials available at the
institution. He knew there were thousands of textbooks in Canada that were no longer being used, which
could be redistributed to students in need in East Africa. After graduating from Western University with an
honours degree in business from the Ivey Business School (London, Ontario) in 2013, Janssen partnered
with classmate Tom Hartford to found T4C in London, Ontario.
In the beginning, T4C collected textbooks from the Western University campus and soon expanded to other
schools in Southwestern Ontario and the GTA. A list of campus locations with T4C dropboxes can be found
in Exhibit 1. To be more central to the GTA and Eastern Ontario textbook collections, Janssen and his team
were in the process of moving T4C’s headquarters from London to Hamilton, Ontario. The move would be
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TEXTBOOKS FOR CHANGE
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9B16B004
complete by August 2015, before textbook collections from the 2015-16 school year would begin. Textbook
collections had grown by over 200 per cent, so Janssen was optimistic about T4C’s future.
Post-secondary1 textbooks were inserted by their owners into dropboxes or given to student representatives
through student-club textbook-collection drives on behalf of T4C. Canada’s academic school year ran
primarily from September to April, so the majority of textbooks were collected in April. The textbooks were
collected and transported to T4C headquarters at a cost of $0.202 per kilometre and $14 per hour for the
drivers’ wages. Six hundred books could be shipped in a single shipment, although the average shipment
consisted of only 250 books. Drivers were located in Hamilton and were compensated for the round trip from
the collection school to headquarters, as well as for one hour of time at the collection school. After reaching
T4C’s warehouse, the books were sorted by warehouse workers. Warehouse workers were paid $11 per hour,
and they scanned, sorted, shelved, and tracked 30 books in an hour.
Twenty-five per cent of the textbooks collected were sorted for listing on Amazon; half of those books listed
had been sold at an average price of $40. After a period of time, any listed unsold books were deemed
unsalable and were then donated to schools in East Africa. Fifty per cent of the textbooks collected were
immediately categorized for donation to East Africa. Donated textbooks were shipped to East Africa once
24,000 books (deemed appropriate for donation) had been collected. Shipping costs fluctuated widely due to
a variety of factors (e.g., distance from the East African coast and the number of border crossings required)
and averaged $16,000 per shipment. The remaining 25 per cent of books collected were too out of date to
sell online or to donate, so they were recycled. Since textbooks were difficult to recycle responsibly, all
textbook recycling was done through an eco-reliable partner in the United States at a recycling cost of $15
(including transportation) for every 500 textbooks.
Management Team
T4C had five members on its management team, including Janssen and Hartford, who assumed corporate
financial officer roles. These members were employed full time by T4C. All were recent graduates of
Western University, McMaster University, or Wilfrid Laurier University. All five management team
members had travelled to Africa to witness T4C’s impact on the post-secondary education system, and to
learn how they could maximize their contributions on behalf of T4C.
Outcomes
As of May 2015, T4C had donated 24,000 books to East African universities, provided $69,300 in micro
loans, donated $37,600 to Canadian non-profits,3 and reused or recycled 37,000 textbooks. In the 2014-15
post-secondary academic year, 88,000 books had been collected. Janssen was proud of the contribution his
team was making to their local and global communities, but he was eager to further that impact through more
growth and expansion.
1
University or college level.
All currency amounts are in Canadian dollars unless otherwise specified.
3
Non-profits that received donations from T4C included Shinerama, a fundraiser that supported cystic fibrosis research, and
Get Real, a movement promoting LGBTQ equality. In the future, Janssen planned to focus these donations towards
entrepreneurs in East Africa.
2
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Operations
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9B16B004
EXPANSION OPPORTUNITIES
Any expansion to a new location would follow the same collection process, and textbook collections would
be similarly shipped to T4C’s warehouse. In order to manage additional student ambassadors and
relationships with collection schools, Janssen planned to hire a campus community manager if the eastern
expansion was pursued. The campus community manager would work full time and earn an annual salary of
$40,000. Seventy-five per cent of the manager’s time would be spent on managing the eastern expansion,
and 25 per cent would be spent on managing existing dropbox locations where T4C presence was lacking.
Janssen expected that historical proportions of textbooks sold, donated, and recycled would be the same for
all new locations. An expansion would be considered successful if T4C could break even and increase its
exposure and book donations; however, Janssen and Hartford would consider an expansion a financial
success if T4C could earn a 5 per cent profit.
T4C’s new warehouse would have the capacity to sort and store textbooks from all three proposed universities.
However, Hartford was concerned about potential roadblocks to transporting textbooks from the collection
universities to T4C’s warehouse. The textbooks would need to be stored at the collection universities until
enough books had been collected to warrant the driver’s pickup time. If pickups took longer than anticipated,
the driver might need to stay overnight in the region due to regulatory requirements. Hartford was unsure how
this constraint would affect the financial feasibility of the expansion, so he wanted to ensure that any expansion
that T4C pursued would have a healthy margin of safety.
Queen’s University
Queen’s was located in Kingston, Ontario, approximately 330 kilometres east of Hamilton.4 Queen’s was
home to 17,400 full-time, undergraduate students and over 4,000 graduate and post-graduate students. These
students studied at one of the university’s six faculties, the largest of which was the Faculty of Arts and
Sciences. Queen’s was known for its school spirit, its long history, and its attractive waterfront campus.5
Queen’s student government, the Alma Mater Society (AMS), included the Campus Activities Commission
(CAC). CAC was responsible for running campus events and programs to promote school spirit and social
awareness (including mental-health awareness initiatives)6 at Queen’s. If T4C decided to start an on-campus
textbook collection at Queen’s, Janssen thought CAC would make a good partner. T4C had hosted a textbookcollection drive in April 2015 with AMS members and potential campus ambassadors. Based on this
experience, Janssen was optimistic about Queen’s students’ support of on-campus dropboxes, so he estimated
that 12,250 books could be collected in the 2015-16 school year at Queen’s.
4
Driving from Queen’s to the T4C headquarters took approximately three hours and 15 minutes.
Queen’s University website, Quick Facts, accessed March 8, 2016, www.queensu.ca/about/quickfacts.
6
Queen’s University Student Government website, About AMS, accessed March 8, 2016, www.myams.org/about-us.
5
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T4C had already executed successful expansions into the Kitchener-Waterloo Region, the GTA, and the
Niagara Region. Eventually, Janssen wanted to expand T4C textbook collections to other provinces, but he
understood that achieving successful local expansion should be the first step. Expansions were executed by
forming relationships with student clubs, school administration (staff), and faculty departments and members.
Through these relationships, T4C obtained permission to place dropboxes in central locations and hired
student ambassadors at each institution to monitor the dropboxes. The majority of student ambassadors were
volunteers, but T4C paid one student ambassador at each school an annual salary of up to $1,750.
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9B16B004
Carleton University
Carleton’s undergraduate students were represented by the Carleton University Student’s Association
(CUSA). CUSA did not have a committee similar to CAC at Queen’s, but CUSA regularly funded and
supported over 250 student clubs.10 Since T4C had not yet performed any on-campus marketing at Carleton,
Janssen estimated that 5,500 books could be collected in T4C’s first year.
The University of Ottawa
Located in Canada’s capital city of Ottawa, uOttawa was the largest bilingual (English-French) university in
the world, and it was situated 540 kilometres east of Hamilton.11 The campus was also within walking
distance of Canada’s government buildings on Parliament Hill. The school was known for its co-operative
education program, bilingualism, and research. Over 36,000 undergraduate, 4,500 masters and 1,900
doctorate and post-graduate students studied on uOttawa’s campus. At uOttawa, the largest faculty was social
science, which registered almost 25 per cent of the student population. The balance of the students studied
at one of uOttawa’s nine other faculties.12
The Student Federation of the University of Ottawa (SFUO), the university’s student council, managed over
250 clubs and organized awareness campaigns, philanthropic initiatives, and on-campus social events.13 The
federation was committed to advocating for affordable post-secondary education in Canada; therefore,
Janssen believed that T4C’s mission to support education in developing regions would align with the
interests of uOttawa’s students. Since uOttawa was larger than Carleton, Janssen estimated that 12,250 books
could be collected from uOttawa in T4C’s first year.
DECISION
T4C had already established partnerships with students at Queen’s while conducting its April textbook drive,
so Janssen was confident that T4C would be able to do the same at Carleton and uOttawa. It would, however,
take time to gain permission to place the dropboxes around each campus. Janssen was open to expanding to
all three schools eventually, but he wanted to select one school to expand to first, if at all. This approach
would give Janssen and his team time to improve the textbook collection and transportation model without
expanding too quickly. Since T4C management would not be able to visit campuses very often, it would be
important to hire a dedicated team of volunteer campus ambassadors. Janssen was anxious to make a decision
about his next steps so that T4C’s team would have time to place dropboxes on the campuses during the first
semester of the 2015-16 academic year.
7
Driving from Carleton to the T4C headquarters took approximately five hours.
Carleton University website, Quick Facts, accessed November 30, 2015, https://carleton.ca/about/facts/.
9
Carleton University website, University Admissions Viewbook, accessed November 30, 2015, http://admissions.carleton.ca/
guides/GeneralViewbook.pdf.
10
Carleton University Students Association website, Clubs, accessed November 30, 2015, http://cusaonline.ca/clubs/.
11
Driving from uOttawa to the T4C headquarters took approximately five hours.
12
University of Ottawa website, accessed March 8, 2016, www.uottawa.ca/institutional-research-planning/resources/factsfigures/quick-facts.
13
University of Ottawa Student Federation website, accessed November 30, 2015, http://sfuo.ca.
8
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Carleton was located just south of Ottawa, Ontario, 520 kilometres east of Hamilton.7 The university enrolled
24,100 undergraduate students and 3,700 graduate students.8 Carleton was known for its interdisciplinary
and flexible degree program options, a global focus, and its self-contained campus that fostered a sense of
campus community. Carleton offered more than 65 degree programs across a wide range of disciplines.9
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9B16B004
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Western University
Fanshawe College
Wilfrid Laurier University
Wilfrid Laurier University –– Brantford Campus
University of Waterloo
University of Guelph
Sheridan College
McMaster University
Niagara College
Brock University
Humber College
University of Toronto –– St. George Campus
York University
Source: Company files.
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EXHIBIT 1: CAMPUS LOCATIONS WITH T4C DROPBOXES
9B10B013
Ian Dunn wrote this case under the supervision of Elizabeth M.A. Grasby solely to provide material for class discussion. The authors
do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain
names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveypublishing.ca. Our goal is to publish
materials of the highest quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs
Copyright © 2010, Richard Ivey School of Business Foundation
Version: 2018-04-26
In March 2010, Greig Perantinos, owner of Cool Moose Creamery (Cool Moose), was considering expanding
his product line by purchasing a soft-serve ice cream machine for one of his stores. The business in Alliston,
Ontario, had been in operation for a year and sold scooped ice cream, frozen yogurt, milkshakes and floats.
Perantinos believed the addition of soft-serve ice cream would increase sales and improve the company’s
market share in Alliston. Perantinos wanted to continue growing the business, and he wondered whether
this was the best way to do so.
ALLISTON, ONTARIO
Alliston was a small community of approximately 13,000 people, within the town of New Tecumseth,
Ontario, home to 28,800 people.1 As part of Simcoe County, Alliston was approximately 60 kilometres
north of the Greater Toronto Area. See Exhibit 1 for a map of Cool Moose locations. Alliston was home to
the largest employer in Simcoe County, Honda of Canada, an automotive manufacturing operation that had
two plants located in the area.
One of the county’s tourist attractions was the South Simcoe Railway’s historic steam train. The restored
railway coaches from the 1920s lured people from across Canada to see Canada’s oldest operating steam
train. Alliston was also well known as the birthplace of Sir Fredrick Banting, the co-discoverer of insulin.
The community’s Annual Potato Festival, begun in 1974 and held in June each year, attracted thousands of
people annually to the area.
Although a small community, Alliston had a vibrant downtown area, and local residents and tourists
regularly frequented the restaurants and shops. Victoria Street was the centre of this downtown district, and
Cool Moose was located at the Victoria and Church Street intersection.
1
Town of New Tecumseth Community Profile.
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COOL MOOSE CREAMERY
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9B10B013
COMPETITION
Dairy Queen, a wholly owned subsidiary of Berkshire Hathaway Inc., was a large multinational corporation
with over 5,900 restaurants in 22 different countries.4 The first Dairy Queen location opened in Joliet,
Illinois, U.S.A., in 1940, the result of a father and son experimenting with a soft frozen dairy product. Their
recipe and process developed into what is now referred to as soft-serve ice cream, immensely popular since
its inception.
In 2010, the Dairy Queen brand was well known throughout North America for its signature soft-serve ice
cream and for its focus on customer satisfaction. The company’s current slogan was “We Treat You Right.”
Dairy Queen’s pricing model was considered slightly high for the industry (e.g., $3.35 for a large vanilla ice
cream cone). In spite of this pricing, Dairy Queen became the destination for little league teams celebrating
a victory, business professionals taking their lunch break and families taking time out to enjoy fast food and
a variety of soft-serve ice cream products.
COMPANY BACKGROUND
Perantinos was searching for summer employment after his first year at The University of Western Ontario,
London, Ontario. He decided an entrepreneurial venture would be a rewarding experience and would help
prepare him for his education at the Richard Ivey School of Business, as well as his future career. Since
there was no scooped ice cream parlour in Tottenham,5 Perantinos founded the first Cool Moose Creamery
in Tottenham in the summer of 2008. The ice cream parlour opened in May of each year for a four-month
period, operating throughout the summer until Labour Day. Cool Moose currently offered 16 varieties of
hard, scooped ice cream, as well as frozen yogurt (which could be mixed with fresh fruit), milkshakes, floats
and other frozen treats.
Perantinos experienced moderate success in his first year and was able to develop strong brand recognition,
and a loyal customer base in the community of Tottenham. Cool Moose was known for its excellent service
to customers –– Perantinos and his staff were friendly, outgoing, fun and enthusiastic, and they attempted to
provide service beyond customers’ expectations. Perantinos established three core values for the business:
helping the community, making customers smile and inspiring employees. He believed these business
practices allowed him to carry his success into the summer of 2009. In the second year of operations,
Perantinos opened a new location for Cool Moose in nearby Alliston, Ontario. Summer 2009 sales increased
at the Tottenham store, and the successful launch of the parlour in Alliston helped Perantinos achieve sales
growth of 233 per cent over fiscal 2008. The Alliston Cool Moose store currently had four full-time
employees who strived to know each customer personally.
Dairy Queen’s Blizzard was a combination of vanilla soft-serve ice cream mixed with the customer’s choice of candy
toppings and served in a cup.
3
www.profilecanada.com/companydetail.cfm?company=2343676_Dairy_Queen_Alliston_ON, October 5, 2010.
4
www.dairyqueen.com/ca-en/history, October 5, 2010.
5
Tottenham, Ontario, was approximately 15 minutes south of Alliston.
2
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Prior to the opening of Cool Moose in the summer of 2009, the only other business in Alliston that offered
ice cream was Dairy Queen, also located at an intersection on Victoria Street. Dairy Queen’s ice cream
offering was limited to its famous vanilla soft-serve flavour. This location also sold several treats, such as
the Blizzard,2 as well as cakes, hot dogs and hamburgers. Throughout the summer months, long lineups
were commonplace at the Alliston Dairy Queen. This store generated over $500,000 in annual sales.3
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9B10B013
THE SOFT-SERVE OPPORTUNITY
Perantinos thought that expanding his product line would increase same-store sales and grow the business.
One way to do this was to invest in a soft-serve ice cream machine at one of the Cool Moose locations. Softserve ice cream was very common in fast-food restaurants such as McDonald’s and Dairy Queen. The
machines produced a frozen dairy product that was smoother than scooped ice cream and dispensed the
product in a swirl pattern. Most machines had a single head that produced only one flavour, vanilla.
However, Perantinos had considered a triple-head machine that would produce vanilla, chocolate and a
vanilla-chocolate swirl flavour. See Exhibit 3 for a picture of each soft-serve machine. Perantinos had found
a used single-head machine available for purchase at a cost of $2,000. If he wanted a triple-head machine,
he would need to buy it new at a cost of $12,000.6 Perantinos’ research had found that some store owners
had success with used machines, while others had been greatly disappointed and lost money due to repairs
costing thousands of dollars. He estimated the useful life of a used machine to be three years while a new
machine should last seven years. Cool Moose used the straight-line method of depreciation for all its fixed
assets. Given the large investment, Perantinos wanted to assess the feasibility of adding soft-serve ice cream
to the Alliston store and to calculate the anticipated return on investment.
Purchasing one of these machines would attract new customers, who preferred soft-serve over scooped ice
cream. Specifically, several of these new customers could be current Dairy Queen customers who would
switch to Cool Moose because of its lower prices, variety of ice cream or its pleasant experience. If softserve ice cream was offered, Perantinos would charge $2.50 per serving. Each serving was approximately
90 grams of ice cream and the customer could choose to have the ice cream on a cone or in a cup for the
same price. Sales were estimated to be 2,800 servings of the vanilla flavour per operating period. If Cool
Moose purchased the triple-head machine, 1,200 more servings would be sold annually.
The soft-serve mix used in the machines was sold by the bag, and Perantinos estimated one serving of ice
cream would cost $0.25. Each cone cost $0.07 and, if the customer chose a cup, the cup and spoon combined
were also $0.07. One napkin was provided with each serving. The napkins were purchased in packages of
500 for $5. Cool Moose kept 10 days of inventory7 in the store at all times.
Since some existing customers would choose soft-serve instead of scooped ice cream, Perantinos was unsure
of the impact cannibalization would have on his profitability. Although he did not want current scooped ice
cream sales to decline, soft-serve ice cream did offer much better gross profit margins. Perantinos thought
that approximately 980 servings of scooped ice cream would be cannibalized if he sold soft-serve ice cream
using the single-head machine, and 1,400 servings of scooped ice cream would be cannibalized if he sold
6
Delivery of each soft-serve machine would cost an additional $150. Installation by a certified electrician was required at an
additional charge of $650.
7
Inventory included ice cream products, as well as the cones, cups, spoons and napkins.
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In early 2010, Perantinos received the Student Entrepreneur Champion award for Ontario from a not-forprofit organization called Advancing Canadian Entrepreneurship. See Exhibit 2 for a newspaper article
highlighting Cool Moose’s success and this award. The summer of 2010 was critical to Perantinos future,
since he would be entering his final year of studies at the Richard Ivey School of Business and had to decide
whether he would operate Cool Moose as a full-time occupation upon graduating. He had found another
town without a scooped ice cream parlour and was making arrangements to open a third Cool Moose in
Cookstown. Although the business kept him extremely busy, he was unsure whether it could provide him
with a full-time income. After two successful years, Perantinos began to research how to further grow Cool
Moose.
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9B10B013
Soft-serve ice cream machines created numerous health and safety issues. The cleaning of these machines
was critical to their ability to function properly and the longevity of their useful life; more importantly, if not
cleaned properly, the machines were susceptible to bacteria and food-borne illnesses. If Cool Moose added
a soft-serve machine, all employees would need to be trained in how to use and clean the machine. Perantinos
would provide one-time training for two hours on a single-head machine or three hours on a triple-head
machine to each of the store’s employees. Historically, employee turnover was low. A thorough cleaning
of the machine would be needed every night and would require an employee to work later. A single-head
machine would take an additional hour to clean and a triple-head machine would take 1.5 hours to clean. All
Cool Moose employees were paid $10.90 an hour including employment insurance (EI) and Canada Pension
Plan (CPP) contributions.
The soft-serve ice cream mix came as a bagged liquid product that required refrigeration. In anticipation of
his decision, Perantinos purchased a small refrigerator last month at a cost of $150. Operating the soft-serve
machine would also increase Cool Moose’s utilities costs by $150 for a single-head machine and $350 for a
triple-head machine over the four-month-operating period.
Perantinos knew that the investment in a new soft-serve machine was a large one. After meeting with his
bank’s account manager, Perantinos was told that the bank would extend Cool Moose a loan of up to $12,000
to purchase the desired machine at an annual interest rate of seven per cent.8 The loan would require
repayment in equal monthly installments over the next five years. All principal and interest payments would
be due on the first day of each month.
CONCLUSION
Perantinos was quite pleased with Cool Moose’s performance to date and with the awards and recognition.
His ice cream store was a “hotspot” in downtown Alliston and was more than capable of holding its ground
with the local Dairy Queen competition. Was the demand for Dairy Queen’s soft-serve ice cream proof that
Perantinos could improve his profitability by offering this product? Were the benefits of adding soft-serve
ice cream great enough to overcome the investment, time and effort needed to add these machines?
Perantinos sat down with his notes to contemplate the opportunity and evaluate its fit with the company’s
strategy. After completing this analysis, he would make his decision.
8
Interest would be calculated on the outstanding balance at the end of each month.
Page 26 of 29
For use only in the course UW BUS-2010 F2023 at University of Winnipeg from 9/5/2023 to 12/4/2023.
Use outside these parameters is a copyright violation.
soft-serve ice cream using the triple-head machine. Scooped ice cream had an average selling price of $2.50
per serving, and the ice cream cost averaged 31 per cent of sales.
Source: Company files.
For use only in the course UW BUS-2010 F2023 at University of Winnipeg from 9/5/2023 to 12/4/2023.
Use outside these parameters is a copyright violation.
Page 5
9B10B013
Exhibit 1
MAP OF COOL MOOSE CREAMERY LOCATIONS
Page 27 of 29
Page 6
9B10B013
Exhibit 2
LONDON FREE PRESS ARTICLE
Ivey student scoops award for entrepreneurship
Greig Perantinos’ love of ice cream is gaining him some cool
accolades across the province.
Perantinos, owner of Cool Moose Creamery and a student at
UWO’s Richard Ivey School of Business, has been named 2010
Student Entrepreneur Ontario champion by a not-for-profit
group called Advancing Canadian Entrepreneurship.
“It’s great to be recognized for doing something that I love,” the
20-year-old business student says. Perantinos, nominated by a
fellow Ivey student, is one of four champions chosen among 30
Ontario contestants.
Greig Perantinos, a student at Western’s Richard
Ivey School of Business, has been named
Student Entrepreneur Ontario for starting two icecream stores called Cool Moose Creamery. His
brother, Matthew Perantinos, and Breanna
Sweers work for him at his Tottenham store.
Perantinos had been looking for a summer job in 2008 without
any luck, so he decided to start his own business.
“I like hard ice cream and there were only soft-serve shops in
my town,” he says. So he found a space for rent, bought a few
freezers and opened the first Cool Moose Creamery in
Tottenham, an hour’s drive north of Toronto.
Now with six employees, the shop serves ice cream and frozen yogurt from May through September. A second store
opened last summer in nearby Alliston.
Perantinos says he receives a lot of support from the community and his family, especially his younger brother,
Matthew. In return, his stores have played host to several fundraising events that collectively have raised more than
$7,000 for Big Brothers Big Sisters of South Simcoe, Alliston and District Humane Society, Tottenham Food Bank
and Tottenham Lions Club.
Perantinos plans to grow his business, opening two more stores this summer.
“I love what I do, it’s such great fun and it really complements my academic studies,” he says. “I hope to continue
running Cool Moose when I graduate.”
Perantinos will represent Ontario in a regional competition March 8 in Toronto that has $1,000 up for grabs for two
finalists. A national champion will be selected in Calgary on May 12, with a $10,000 cash prize on the line and a
shot at becoming Global Student Entrepreneur.
ACE is a not-for-profit organization that provides post-secondary students with an opportunity to gain entrepreneurial
and leadership skills outside of the classroom.
Source: www.lfpress.com/news/london/2010/02/22/12978206.html, May 2010.
Page 28 of 29
For use only in the course UW BUS-2010 F2023 at University of Winnipeg from 9/5/2023 to 12/4/2023.
Use outside these parameters is a copyright violation.
By DANIELA DISTEFANO, SPECIAL TO QMI AGENCY
Last Updated: February 22, 2010 6:39am
Page 7
9B10B013
Exhibit 3
Single Head
Triple Head
Source: www.taylor-company.com/product/equipment.htm, June 9, 2010.
Page 29 of 29
For use only in the course UW BUS-2010 F2023 at University of Winnipeg from 9/5/2023 to 12/4/2023.
Use outside these parameters is a copyright violation.
SOFT-SERVE ICE CREAM MACHINES