Sugar and Spice Bakery: The Catering Opportunity

The Purpose of this memorandum is to analyze the advantages and disadvantages of closing the bakery and focusing on catering events full time. Given the rising expenses of operating the bakery, I recommend closing the bakery and seeking a catering opportunity.

Advantages and Disadvantages of Closing the Bakery

Advantages of Closing the Bakery

• Be able to work fewer hours and spend more time with children

• Do not need to pay the rent and utility fees of the bakery building

• Do not need to pay for employee wages

• Be able to reduce food cost

Disadvantages of Closing the Bakery

• Need to give up an old dream since a young age

• Need to take the risk of bad debt that is unlikely to be paid

• Will not earn the bakery revenue anymore

• Need to lay off experienced employees and may lack of workforce

• Will face more competitors

Annual Income after Closing the Bakery

Assuming the catering business isn’t doing well after closing the bakery retail store, then we can make a rough estimate of taking 84 catering orders a year. In that case, the net income would be $41,625, exclusive of investments in a van and a refrigerator. We can get our payback in seven years. However, if the catering business is successful, then we are likely to take 120 catering orders. In that case, the net income would be expected to reach $60,675, exclusive of investments. We can get our payback in less than one year. In either of