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Starbucks - Problem Statement

Starbucks is considering acquiring Contra Café, a gourmet coffee shop, to expand into the gourmet coffee market. A research agent observed that Contra Café served over 150 customers per day and operated at full capacity. It has annual costs of $350,000 and is located on a trendy street with high foot traffic. Starbucks should evaluate the acquisition from strategic, investment, profitability, and market impact perspectives.

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4K views2 pages

Starbucks - Problem Statement

Starbucks is considering acquiring Contra Café, a gourmet coffee shop, to expand into the gourmet coffee market. A research agent observed that Contra Café served over 150 customers per day and operated at full capacity. It has annual costs of $350,000 and is located on a trendy street with high foot traffic. Starbucks should evaluate the acquisition from strategic, investment, profitability, and market impact perspectives.

Uploaded by

saurabhpandey13
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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STARBUCKS CASE

Starbucks Corporation is an international coffee and coffeehouse chain, which specializes in Traditional & Specialty Coffee.

It is evaluating a potential buy-out of a single coffee outlet, Contra Caf, which specializes in Gourmet Coffee. (Assuming that Starbucks currently does not offer Gourmet Coffee) As per research request, we had one of our primary research agents do some mystery shopping at Contra Caf. Following were the observations:

At 8:30 am, there were 30 customers in Contra Caf. By 12:00 pm the place had at least 70 customers for the day From 12:00 pm-8:00 pm the coffee shop had approximately 50 additional customers The maximum capacity of Contra Caf is 100 people There is one manager, and three cashiers each shift. There are two shifts: morning and evening Contra Caf is located on one of Atlantas trendier streets with a lot of foot traffic Contra Caf is open Monday thru Saturday from 8:30 am until 8:00 pm

Details of the orders of that day are noted in the file attached.

We were also able to extract the costs at Contra Caf through interviews. Combined Variable and Fixed costs is approximately $350,000 per year.

Evaluate the proposal from a Strategic view point.

INVESTMENT PROFITABILITY BUSINESS OPS MARKET IMPACT

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