Topic > Capital Utilization: Menu Expansion vs. Canadian…

Over the past five years, BuckStar has built up excess capital and now needs to put it to good use. There are two plans that can achieve this: adding products to the menu, expanding store hours and renovating current stores, or a one-year expansion process of 1,500 stores in Canada. Our main objectives of these plans are to increase profits and maintain a viable supply chain. The most beneficial plan for our company is the first, since it will be advantageous to start selling donuts in our stores and expand our hours. This plan is a much safer choice, as we will not be expanding into a new foreign country. Our first objective that we must meet is increasing profits. The only change brought by the second plan is the expansion into Canada, which will cost over 140,000,000 dollars. If we expanded into Canada, we have no certainty that we will be successful in a new country, as there is already competition in which coffee Canadians like best. Additionally, by expanding into Canada, it would take at least a year to generate enough publicity and presence to make a larger profit. However, if we can successfully expand and citizens react similarly to how they have in the United States, we should be able to develop a plan. This would be an ideal choice as we could receive additional revenue due to the three new additions to our restaurants. Research has shown that customers who drink coffee prefer to accompany it with donuts over any other food. Additionally, the most popular times to drink coffee are 6am to 9am and 11pm to 1am. The first floor offers customers the opportunity to have both of these needs. Despite the need to renovate all the stores, which could sometimes reduce profits, the first floor will still increase profits in the long term