Author Question: Consider this case: XYZ University has been approached by a new coffee roaster for a sponsorship ... (Read 64 times)

karlynnae · **on:** Aug 10, 2018

Consider this case: XYZ University has been approached by a new coffee roaster for a sponsorship opportunity.

It has offered to partner with the athletic department to provide some scholarships for the student athletes and pay for the new electronic score board at the baseball stadium. However, the cost of its product is about 20 higher than the current brand used by Dining Services. Using the sample report from figure 8, how would you support your case that the increase in cost of coffee will have a significant financial impact on dining's budget?

Question 2

Why is it illegal to deny alcohol service to a pregnant woman?

a. Doing so is considered to be sex discrimination
b. It is not proven to be harmful to mother or child
c. Only hard liquor can be denied, not wine or beer
d. It is not illegal; it would be irresponsible to serve

bigcheese9 · **Reply #1 on:** Aug 10, 2018

Answer to Question 1

Looking at Figure 8, one sees that sales of coffee are responsible for over 43 of the sales volume. If the food cost goes up 20 percent on a product that represents almost half of a unit's sales, it will either represent a significant hit to the net profit, or will require a marked rise in the sales price, something many institutions are reluctant to do. Such changes have to be evaluated carefully.

Price increases of this sort are usually noticed almost immediately and can easily cause a drop off in sales if a similar product is available nearby at a better price. On the other hand, some coffee brands have perceived value in the customers' eyes (Think Starbucks) and may be able to bear a price increase that makes up for (or more than makes up for) the change in food cost, without discouraging sales. If such a change were made, marketing and promotional activities would be used to emphasize the increased value of the new brand of coffee to help allay natural customer price increase resistance.

Answer to Question 2

A