Richard Ivey School of Business The University of Western On

Richard Ivey School of Business The University of Western Onlario IVeV 9B09B001 SOMBRERO: PROPOSED FRUIT JUICE OUTLET Professor John D. McLellan wrote this case solely to provide material for alass discussion. The author does not intend to lustrate either effective or inefflective handing of a managerial situation The author may have disguised certain names and other idenbfying information to protect conidentiality. rvey Management Services prohibits any form of reproducten?siorage 0\"ansrmmal without its written pennsson. Reproducton of his material is not covered under authoization by any reproduction nghts organization. To order copies or request permission to reproduce materials, contact hey Publishing, vey Management Services co Richard Iwey School of Business, The University of Westem Ontario London, Ontasio, Canada, NGA 3KT, phone (519) 661-3208 fox (313) 661-3882e-mail casesDivey.uwo.ca t 2008 Services Version: (A) 2008-12-17 Moawia had five days to decide. Should he open a fruit juice business in the A Ain Mall or continue as the operating manager at the Al Qatara bowling alley in the Al Ain Club? He had been very successful running big bowling tournaments attended by people from all over the Gulf region and had saved enough money to start his own business. Was this the right one? BACKGROUND Al Ain was a town of 300,000 people in the centre of the Abu Dhabi Emirate, the largest and richest of the seven emirates that are collectively known as the United Arab Emirates (UAE). The United Arab Emirates University was in Al Ain, with a student enrolment of 13,000 UAE nationals. The total population of Al Ain was comprised of 40 per cent UAE nationals and 60 per cent expatriates. Before 2002, there were no malls in the city and people would have to travel to Dubai to shop. It was March of 2002 and the Al Ain Mall management planned to open the mall soon and was accepting business proposals for the food court to be built on the second floor Moawia Abdulla El Hourani had been trained in Poland and Gemany in optometry. He had planned to eventually open his own optical store selling prescription glasses in Al Ain when he arrived in 199S at the age of 29. However, by 2002 there were a number of optical stores operating in Al Ain and three more were planned to open in the new Al Ain Mall. PROPOSED BUSINESS PLAN Moawia had first presented to mall management his plan to open a food service business. The mall management would only consider plans for food services from people or organizations that had restaurant experience. Moawia had none. He thought of opening a fresh fruit juice operation because he had enjoyed making a variety of fruit drinks at home for both family and friends and he felt that perhaps mall

Solution

1. Statement showing contribution per order per customer for fresh fruit juice

Statement showing total cost incurred per for the first year:

Calculation of Total contribution:

Therefore, Total required no. of customers for first year = 123,340/8 = 15,418 customers (approx)

Particulars	DH
Average value of order per customer	10
Less: Cost of fruits	(1.20)
Cost of Ice-cream powder	(.35)
Cost of serving	(.45)
Contribution per order per customer	8