BSBINM601 Manage Knowledge and Information Assessment 2

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Appendix 1

CoffeeVille – your brief

Rufus and Emma Belcastran, CoffeeVille’s owners, have approached you for assistance. The business has been profitable and steadily expanding for the last 4 years but recently, expenses have started to climb and sales drop. In the last 3 months they have started to address the issue of rising expenses.

In the last 3 months they have started to address the issue of rising expenses by evaluating and updating procedures and work practices in an effort to reduce costs. So far, their efforts have not had a significant impact on expenditure and their sales revenue continues to be below budget forecasts.

It’s January 2016 and all four stores are closed for a summer break. Emma and Rufus are using the down time to assess their business’s operational and financial status in preparation for the year ahead.

They have asked you to help them analyse their business and the external environment to identify potential reasons for their declining sales. Now that the business issue or problem has been identified, they want you to analyse data and information to determine the potential causes of the issue.

You plan to use data and information identified in Assessment 1 and in the Appendices of Assessments 1 and 2, as well as conduct research into potential external environmental factors. You believe using statistical and sensitivity analysis techniques will enable you to identify relationships between data, clarifying potential causes of the business issue.

Appendix 2

Coffeeville business data and information

Business performance

General trends

● Sales for first 6 months of 2015 are down across all categories and stores. Overall, food sales are down 10%, beverages 12% and catering 17%. When combined with rising expenses, profits are down for the first half of the financial year by 19%

● After opening a year ago, the 4^th store is slowly building customers but is still not performing to forecasted levels. Most of the marketing budget and Emma’s efforts have been focussed there.

● Productivity has increased with staff able to serve more customers per hour per person. Barista coffee preparation speeds have increased after all barista staff completed an advanced barista course in Jan 2015.

● Savings made in payroll and cost of goods due to productivity gains has been offset by rising wages and food prices.

Payroll expenses

Year	Payroll expenses as % of total expenses
2009	34.9%
2010	35.3%
2011	34.2%
2013	39.8%
2014	42.1%
2015	45.3%

Financial information – Organisation

Financial year July 2014–June 2015

July–December 2014

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	285,668	279,805	273,942	262,580	250,078	199,251
Beverage sales	191,199	190,163	189,126	187,054	182,650	179,523
External catering	82,360	83,540	81,980	81,480	77,500	74,370
Total income	559,227	553,508	545,048	531,114	510,228	453,144
Total expenses	482,190	470,934	483,431	451,683	461,746	404,986
Net profit/loss	77,037	82,574	61,617	79,431	48,482	48,158

Jan–July 2015

Sales $	Jan	Feb	Mar	April	May	June	Year Total
Food sales	203,894	221,209	238,525	245,476	259,742	262,803	2,982,972
Beverage sales	181,220	185,263	187,263	188,263	189,560	191,208	2,242,492
External catering	57,284	60,926	67,853	68,853	51,853	49,137	837,136
Total income	442,398	467,398	493,641	502,592	501,155	503,148	6,062,600
Total expenses	413,064	421,865	442,733	447,512	464,198	478,630	5,422,972
Net profit/loss	29,334	45,533	50,908	55,080	36,957	24,518	639,628

Financial year July 2015–June 2016

July–December 2015 (actual results)

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	231,391	226,642	231,865	227,105	202,563	154,300
Beverage sales	148,065	147,262	153,192	158,323	135,088	129,705
External catering	60,207	60,358	56,476	55,457	52,111	47,597
Total income	439,663	434,262	441,533	440,885	389,762	331,602
Total expenses	373,713	364,780	366,472	374,752	339,093	288,494
Net profit/loss	65,950	69,482	75,061	66,133	50,669	43,108

Jan–July 2016 (adjusted forecast)

Sales $	Jan	Feb	Mar	April	May	June	Year Total
Food sales	177,388	201,300	224,214	208,655	233,768	233,632	2,552,823
Beverage sales	152,225	163,031	161,046	167,554	170,604	170,175	1,856,270
External catering	46,973	51,178	56,318	57,148	42,779	40,292	626,894
Total income	376,586	415,509	441,578	433,357	447,151	444,099	5,035,987
Total expenses	351,615	375,031	396,039	385,864	414,176	422,459	4,452,488
Net profit/loss	24,971	40,478	45,539	47,493	32,975	21,640	583,499

Budget variance report – All stores

Summary of variance results for comparisons of budget to actual income for the period 2011 - 2015

A positive variance indicates the percentage above budget, a negative figures indicates the percentage below budget.

Financial year	2011-12		2012-13		2013-14		2014-15		2015-16
	Jul-Dec 2011	Jan-Jun 2012	Jul-Dec 2012	Jan-Jun 2013	Jul-Dec 2013	Jan-Jun 2014	Jul-Dec 2014	Jan-Jun 2015	Jul-Dec 2015
Food sales	5%	8%	7%	12%	8%	1%	-3%	-8%	-10%
Beverage sales	8%	2%	4%	5%	5%	-2%	-4%	-5%	-12%
External catering	12%	4%	7%	2%	5%	2%	-8%	-11%	-17%
Total income	8%	5%	6%	6%	6%	1%	-5%	-9%	-12%
Net profit/loss	7%	4%	-1%	6%	6%	-4%	-5%	-11%	-13%

Financial history by income source

*Note: Store 3 opened July 2014, Store 4 July 2014

Food Sales	July	Aug	Sept	Oct	Nov	Dec	Jan	Feb	Mar	April	May	June	Total
2013-14	224,580	212,965	208,695	210,589	209,568	189,655	175,250	186,752	198,765	209,632	218,655	225,892	2,470,998
2014-15	357,580	362,937	365,600	355,290	347,868	337,438	301,056	301,475	323,324	307,358	282,052	289,080	3,931,058
2015-16	257,101	251,825	252,027	244,199	225,070	175,341	177,388	201,300	224,214	208,655	233,768	233,632	2,684,519

Beverage Sales	July	Aug	Sept	Oct	Nov	Dec	Jan	Feb	Mar	April	May	June	Total
2013-14	150,469	140,557	137,739	138,989	138,315	125,172	115,665	123,256	131,185	138,357	148,385	151,348	1,639,437
2014-15	210,306	214,056	215,920	203,934	189,078	182,794	160,878	161,130	182,540	185,239	185,074	189,085	2,280,034
2015-16	168,255	167,343	170,213	172,090	157,079	152,595	152,225	163,031	161,046	167,554	170,604	170,175	1,972,210

External catering	July	Aug	Sept	Oct	Nov	Dec	Jan	Feb	Mar	April	May	June	Total
2013-14	51,650	52,890	54,820	59,850	65,890	60,150	39,550	41,330	42,580	46,450	49,620	51,230	616,010
2014-15	97,274	98,881	99,680	95,853	89,385	85,196	60,585	60,753	66,414	77,605	81,944	80,067	993,637
2015-16	70,418	71,009	68,043	67,221	63,550	59,496	46,973	51,178	56,318	57,148	42,779	40,292	694,425

Total income	July	Aug	Sept	Oct	Nov	Dec	Jan	Feb	Mar	April	May	June	Total
2013-14	426,699	406,412	401,254	409,428	413,773	374,977	330,465	351,338	372,530	394,439	416,660	428,470	4,726,445
2014-15	665,160	675,874	681,200	655,077	626,331	605,428	522,519	523,358	572,278	570,202	549,070	558,232	7,204,729
2015-16	495,774	490,177	490,283	483,510	445,699	387,431	376,585	415,509	441,578	433,357	447,151	444,099	5,351,154

Net profit	July	Aug	Sept	Oct	Nov	Dec	Jan	Feb	Mar	April	May	June	Total
2013-14	93,874	85,347	92,288	98,263	99,306	78,745	62,788	77,294	85,682	94,665	91,665	89,979	1,049,896
2014-15	83,501	108,019	121,333	100,609	77,095	70,695	83,373	61,305	76,724	73,854	72,457	66,266	995,231
2015-16	68,296	73,126	55,426	72,312	42,350	41,174	24,970	40,478	45,539	47,492	32,975	21,641	565,779

Financial information - Store 2

Store 2 Financial results July – December 2014

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	64,364	65,329	65,808	63,952	62,616	60,739
Beverage sales	37,855	38,530	38,866	36,708	34,034	32,903
External catering	17,509	17,799	17,942	17,254	16,089	15,335
Total income	119,728	121,658	122,616	117,914	112,739	108,977
Total expenses	104,164	102,192	106,676	100,227	98,083	95,900
Net profit / loss	15,564	19,466	15,940	17,687	14,656	13,077

Store 2 Financial results Jan – July 2015

Sales $	Jan	Feb	Mar	April	May	June	Year Total
Food sales	54,190	54,266	58,198	55,324	50,769	52,034	707,590
Beverage sales	28,958	29,003	32,857	33,343	33,313	34,035	410,406
External catering	10,905	10,936	11,955	13,969	14,750	14,412	178,855
Total income	94,053	94,204	103,010	102,636	98,833	100,481	1,296,851
Total expenses	79,005	82,900	89,619	89,294	85,984	88,424	1,122,467
Net profit/loss	15,048	11,305	13,391	13,342	12,848	12,057	174,384

Store 2 Financial results July – December 2015

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	$51,289	$50,664	$49,413	$46,912	$46,286	$42,908
Beverage sales	$34,158	$33,827	$29,836	$28,515	$28,183	$26,178
External catering	$10,448	$8,064	$7,872	$7,776	$10,112	$9,363
Total income	$95,895	$92,555	$87,121	$83,203	$84,581	$78,449
Total expenses	$86,655	$82,660	$82,920	$80,392	$82,176	$72,560
Net profit/loss	$9,240	$9,895	$4,201	$2,811	$2,405	$5,889

Store 2 Budget variance report July – December 2015

A positive variance indicates percentage above budget, a negative figures indicates percentage below budget.

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	-2%	-3%	-5%	-9%	-10%	-14%
Beverage sales	3%	2%	-4%	-11%	-12%	-9%
External catering	-12%	-16%	-18%	-19%	-21%	-23%
Total income	-11%	-12%	-8%	-19%	-20%	-17%
Total expenses	1.50%	1.78%	2.10%	1.45%	1.32%	1.70%
Net profit/loss	-31%	-36%	-41%	-86%	-59%	-69%

Financial information - Store 3

Store 3 Financial results July – December 2014

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	71,516	76,217	76,776	78,164	76,531	77,611
Beverage sales	42,061	44,952	45,343	44,865	41,597	42,043
External catering	19,455	20,765	20,933	21,088	19,665	19,595
Total income	133,032	141,934	143,052	144,117	137,793	139,249
Total expenses	115,738	119,224	117,303	122,499	121,258	122,539
Net profit/loss	17,294	22,710	25,749	21,618	16,535	16,710

Store 3 Financial results Jan – July 2015

Sales $	Jan	Feb	Mar	April	May	June	Year Total
Food sales	69,243	72,354	77,598	70,692	64,872	63,598	901,685
Beverage sales	37,002	38,671	43,810	42,605	42,567	39,708	523,870
External catering	13,935	14,581	15,939	17,849	18,847	16,814	227,342
Total income	120,180	125,606	137,347	131,146	126,286	120,120	1,652,897
Total expenses	100,951	110,533	119,492	114,097	109,869	105,705	1,425,544
Net profit/loss	19,229	15,073	17,855	17,049	16,417	14,415	227,353

Store 3 Financial results July – December 2015

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	$71,922	$71,140	$71,922	$70,358	$68,795	$40,657
Beverage sales	$37,309	$36,894	$37,309	$36,065	$35,236	$28,407
External catering	$10,560	$9,440	$9,080	$10,320	$11,920	$12,768
Total income	$119,791	$117,474	$118,311	$116,743	$115,951	$81,832
Total expenses	$108,959	$103,853	$103,752	$103,752	$105,927	$87,464
Net profit/loss	$10,832	$13,621	$14,559	$12,991	$10,024	-$5,632

Store 3 Budget variance report July – December 2015

A positive variance indicates percentage above budget, a negative figures indicates percentage below budget.

Sales $	July	Aug	Sept	Oct	Nov	Dec
Food sales	-8%	-9%	-8%	-10%	-12%	-15%
Beverage sales	-10%	-11%	-10%	-13%	-15%	-17%
External catering	-12%	-13%	-16%	-14%	-13%	-16%
Total income	-16%	-18%	-18%	-19%	-21%	-23%
Total expenses	2.10%	2.30%	2.20%	2.20%	2%	2.30%
Net profit/loss	-43%	-45%	-46%	-51%	-56%	-59%

Appendix 3

Research data and information

Melbourne demographics – City of Melbourne

General and industry specific information is available on City of Melbourne website.

Two main areas of the website to investigate are:

● City of Melbourne, ‘Doing business in Melbourne’, viewed January 2016, < http://www.melbourne.vic.gov.au/business/doing-business/Pages/doing-business-in-melbourne.aspx >

● City of Melbourne, ‘Research and statistics’, viewed January 2016, < http://www.melbourne.vic.gov.au/about-melbourne/research-and-statistics/Pages/research-and-statistics.aspx >.

City of Melbourne has been producing a report called Daily Population Estimates and Forecasts for many years. It was updated in 2015. Among other information, it includes statistics on past and future trends for City of Melbourne’s workforce and residential population.

You can find it at:

● City of Melbourne, ‘Daily population estimates and forecasts’, viewed January 2016, < http://www.melbourne.vic.gov.au/about-melbourne/research-and-statistics/Pages/daily-population-estimates-and-forecasts.aspx >.

Economic activity

Summary Australian interest rates – Reserve Bank of Australia

All rates expressed as percentages.

	Feb	Mar	Apr	May	June	Jul	Aug	Sept	Oct	Nov	Dec
2014	2.5	2.5	2.5	2.5	2.5	2.5	2.5	2.5	2.5	2.5	2.5
2015	2.25	2.25	2.0	2.0	2.0	2.0	2.0	2.0	2.0	2.25	2.25

Melbourne CBD retail information

Commercial property rental rates per square meter Melbourne CBD

2013

2014

2015

2016 (forecast)

Gross average rent

$7,000

(h 5.7%)

$7,750

(h 10.1%)

$8,250

(h 6.4%)

$8,800

(h 6.6%)

Commercial property vacancy rates – Melbourne CBD

	2013	2014	2015	2016 (forecast)
Vacancy rates	8.2%	8.5%	9.1%	9.5%

Cafe / restaurant / bistros in Melbourne CBD as at June 31^st 2015

Note: figures based on registered businesses, closures and permit applications lodged by June1st each year.

Year	No. new cafe / restaurant / bistros opened	No. cafe / restaurant / bistros closed	No. cafe / restaurant / bistro seats	Total café / restaurant / bistros in CBD
2011	37	12	169,983	2585
2012	41	13	178,320	2613
2013	39	18	206,031	2634
2014	52	19	213,272	2670
2015	45	21	217,157	2694

Media articles

Business News Aug 2014

New era looms as CBD office boom ends

Property developers and investors are facing diminished returns and an uncertain future as the CBD commercial property market stalls.

Coinciding with a slowdown of economic activity and low business confidence, particularly in the retail and professional services sector, applications for new development projects fallen to their lowest levels in 5 years.

Mr Kenneth Staines, from Placement Properties, indicated this trend is also occurring in most other capital cities in Australia and many other Western countries. Consumer confidence is down, people are not spending and this is affecting businesses everywhere. Everyone is sitting tight on their money – consumers and investors, he stated at a business forum this week.

One of the reasons he believes applications are down is the recent rise in vacant office space within the central CBD. Rents have remained relatively high and many businesses are struggling as income has not risen in tandem, he said.

A recent survey conducted by the Property Institute shows the number of tenants in the CBD falling, particularly in small to medium business categories. New tenant enquiries has been flat with most enquiries coming from larger businesses interested in acquiring recently vacated adjoining office space.

Melbourne moves: businesses shift out from the city

December 2014

There’s a shift on in Melbourne, with many medium and small businesses moving out of the CBD to its fringes and suburbs.

A new report shows 16 small and 10 medium sized companies moved from the CBD to its fringe and nearby suburbs in the past 12 months, continuing a trend that started in 2013.

The annual Johnson report Melbourne Property 2014 says there are several factors behind the move, including cost savings and changes in the way people are working.

Johnson’s Research Manager Kim Rayner says their analysis shows 85% of these businesses who moved out of the CBD this year have relocated to properties in the periphery or within 5 km of the CBD, with very few locating further than 10 kms.

Johnson’s Director of Office Leasing (Victoria) Andrew Mahji says Melbourne’s CBD office vacancy rate has substantially increased this year.

“We have a vacancy rate of 10% in the Melbourne CBD,” Mahji says. “It coincides with a lot of new buildings going up in Docklands and Richmond.”

Softer demand drives up office vacancy rates in all CBD markets

Vacancy rates for offices is expected to peak in most Australian CBD markets in 2015–2016, with Brisbane expected to have the peak vacancy of nearly 14% according to forecasts from REAC.

REAC’s Research Director for Australia, Millie Kearney, said the latest Property Council of Australia vacancy statistics highlighted that demand had decreased across all CBD markets with negative net absorption driving up vacancy rates in every major capital city.

CBD Office Total Vacancy rate % - July 2015

Appendix 4

Decision Analysis Report

Part 1 – Decision / Issue Name Name decision, issue, problem, project, plan or strategy the decision is linked to.
Decision required Describe the decision that must be made. It should outline what are the expectations or parameters of the decision to any decision-makers or recipients of the document. Include any timeframes the decision must be made in.
History A brief history of events, reasons or causes that necessitates the decision. This should be an overview only and only contain information relevant to the required decision. It should briefly describe the who, what, when and where of the situation requiring a decision.
Part 2 – Analysis Summarise the analytical processes used, the results of the analysis and their implications – do they support or disprove the issue or problem, what further questions were raised as a result of the analysis.
Analysis	Results		Implications




Part 3 – Decision options List all viable, genuine courses of action that address the issue. Briefly list actions to be taken, any costs associated with the option and potential positive and negative outcomes.
Option 1:
Positive outcomes / benefits		Negative outcomes / Risks
Option 2:
Positive outcomes / benefits		Negative outcomes / Risks
Option 3:
Positive outcomes / benefits		Negative outcomes / Risks
Part 4 – Recommendation / Action taken Indicate which course of action is recommended (if making a recommendation to a higher decision-maker) or the action to be taken. Briefly outline the reasoning for choosing this option.
Confirmation / Approval Names, titles, signatures and date of decision or granting of approval Name Title Signature Date Name Title Signature Date Name Title Signature Date

Appendix 5

Assessment questions

1. What is your objective/s for the analysis processes you plan to undertake?

2. Briefly describe how management information or decision support systems can assist you when analysing information and identifying trends and patterns.

3. Briefly describe how management information or decision support systems can support the analysis of proposed courses of action and their impact on the business.

4. List two types of adjustments you might have to make management information or decision support systems to help you meet your stated objectives.

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