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Business Management – Case Study

The financial performance of the café has been displayed by the statement of comprehensive income for the café. The statement comprises the total revenues from food and drink products. The total expenses for the café have also been stated evidently in the statement of comprehensive income. The purpose of this financial statement is to find the total profits earned by the café within one month of operations. Therefore, this explains the financial performance and position of the business, which is useful to various users.

Stiff competition from other Cafes and restaurants operating within London implies that Café des souvenirs suffer the pressure of providing differentiated products to customers. Café businesses are located almost in every city or town, and many customers tend to be loyal to the café they mostly patronize. Therefore, this poses a challenge to Café des souvenirs as it is not easy to poach customers who are already loyal to other cafes. As a result, the café has to provide unique services and products to attract more customers and maintain brand loyalty.

High customer requirements and expectations need to feel French while they are still in London. Finding a way to fulfill the customers’ tastes and preferences may become a major challenge giving other cafes a competitive advantage over the café. Therefore, providing high-quality customer services and a high food quality consistent with the French culture is one of the hotel’s biggest challenges. Customers may tend to leave if, in any case, their needs are not met or when the quality of services is minimum.

There is insufficient storage for the café for both cold and dry storage, which may affect the quality of services, minimizing customer satisfaction. Inadequate storage facilities for the company may lead to losses of perishable foods leading to increased losses and minimized revenues (Nain, 2018). Storage facilities, e.g., refrigerators and freezers, are important to store the goods at the correct temperatures preventing spoilage. Lacking proper storage keeps the company from compensation in case of a risk as goods not stored in a warehouse are not insured.

Increased expenses that are payable regardless of the total revenues collected by the café minimizes the total profits earned in various financial periods. These expenses include rent, insurance, administrative expenses, and electricity expenses. The expenses also include salaries and wages to employees, which depend on the number of employees operating in the café. Since profits are usually computed by subtracting the total revenues by total expenses, high expenses lead to low profits or even losses when revenues are less than the expenses (Nain, 2018).

To ensure profit and revenue maximization, the business should assess and minimize operating expenses such as selling, general and administrative expenses, advertising expenses, rent expenses, and minimizing salaries and wages expenses (Dey, 2017). The firm needs to cut these expenses without affecting the firm negatively. For instance, to reduce advertising expenses, the firm can use a different promotional strategy that will be less costly but reach many customers simultaneously. Reducing these expenses will boost the business and attract new customers.

The business can apply the upsell, resell, and cross-sell methods to maximize profits and increase revenues. Since it is expensive to attract new customers, the business can utilize the method to introduce new products to customers, thus increasing the total sales. Using the upselling method, waiters can approach the customers and benefit from a newly introduced food product. The products introduced in the café should be a French dish that will attract more customers and help grow the café’s revenues hence maximizing profits.

The café can increase its revenues by motivating employees and encouraging them to work harder to achieve the business aims and goals. The management of the café can do this by giving waiters and salespersons bonuses to who make the most sales of food in one day. Hence, this will boost their efforts to ensure that each makes maximum sales. The overall impact of this method is that more customers will come, and existing customers will stay. It will be beneficial for the café as since it will make more sales; hence maximum profit is recognized (Pohl &Tolhurst,2012)

Increasing production efficiency and providing the best food quality and customer service is vital for the café. The café can improve the quality of food sold through high technology and modernized equipment (Young & Makhija, 2014). These will attract more customers and help create brand loyalty hence boosting sales for the business. When customers are satisfied, they will tend to buy more as they will be more familiar with the quality. It will also help the business have a competitive advantage over other competitors operating in London.

The business can drop off poorly performing food products to help the business minimize unnecessary losses. To analyze which products performed badly in a certain financial period, the financial manager can prepare an income statement for each product. Once done with computing the net income, the product with the lowest income means that it is the underperformed product; hence such goods should be dropped. The managers should add profitable products to skyrocket if the underperformed product affects the sales (Young & Makhija, 2014).

In conclusion, the café business stands in a good financial position and ensures that it performs well. Various methods need to be implemented. These must not implicate the business and sales, and whatever the café does to maximize profits should not affect the customers negatively. Moreover, to minimize the numerous changes facing the café, the aim should be to ensure the best customer services product differentiation through offering unique services to customers. These will also help the company increase its revenue hence maximizing profits.


Dey, A.K., 2017. Profit maximization. Business Perspective, 9, pp.41-49.

Longenecker, J.G., Petty, J.W., Palich, L.E. and Hoy, F., 2013. Small business management. Cengage Learning.

Nain, A., 2018. A study on major challenges faced by the hotel industry globally. International Journal of Creative Research Thoughts, 6(1), pp.561-571.

Pohl, M. and Tolhurst, N., 2012. Responsible business: How to manage a CSR strategy successfully. John Wiley & Sons.

Young, S.L. and Makhija, M.V., 2014. Firms’ corporate social responsibility behavior: Integrating institutional and profit maximization approaches. Journal of International Business Studies, 45(6), pp.670-698.


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