The Bakery That Grew Too Fast
Mira owns 'Crust & Crumb', a single-site bakery in Geelong that has traded for nine years. Last year she opened a second site in a nearby shopping centre using a $180,000 bank loan. Sales at the new site are $14,000 per week against forecast of $22,000. Rent there is $3,200 per week versus $1,100 at the original site. Mira has moved two of her three most experienced bakers to the new site, and the original site's customer complaints about undercooked bread have tripled in six months. She now works 70 hours a week across both sites, does all rostering herself, and has stopped attending the local business network where she used to win catering contracts. Her accountant has advised that the business has four months of cash reserves left.
1. Identify the main business objective Mira appears to have pursued in opening the second site, and evaluate whether pursuing that objective has come at the expense of another objective. Justify your answer with evidence from the case.
Read the worked answer
Mira's decision to borrow $180,000 and expand to a second location points to growth as her dominant objective - specifically market expansion and increased scale. The loan size, the move to a shopping-centre location with higher foot traffic, and the forecast of $22,000 weekly sales all indicate she was chasing revenue growth rather than consolidation.
However, the evidence suggests this growth objective has been pursued at the expense of quality and stakeholder satisfaction. The original site's complaint rate about undercooked bread tripled after she redeployed her most experienced bakers - a direct trade-off between growth and product quality. Working 70 hours a week and withdrawing from the business network also signals that growth has cost her the relationship-building that previously generated catering contracts, an indirect revenue stream now lost.
A strong answer recognises that objectives are not independent. Growth was achieved in one dimension (an additional site) but undermined in another (falling quality and shrinking cash reserves). The four-month cash buffer means the growth objective is currently unsustainable, so the business may need to prioritise liquidity and survival over further expansion, even if that means closing or downsizing the second site.
2. Explain how the changing nature of work and the business environment may have influenced Mira's decision to expand, and assess whether these external factors justified the risk she took.
Read the worked answer
Two external influences are visible in the case.
First, consumer expectations and convenience-driven shopping behaviour have shifted toward shopping-centre precincts, which likely made the second location seem attractive. Mira was responding to where customers now spend time.
Second, competitive pressure in local food retail - the low margins of a bakery business - pushes owners toward volume growth to cover fixed costs. The original site's rent of $1,100 per week against the new site's $3,200 shows how much fixed cost expansion adds, which only makes sense at high volume.
The risk assessment is where judgement matters. The expansion was financed by debt, meaning Mira took on a fixed repayment obligation while her revenue was variable. At $14,000 per week versus $22,000 forecast, the new site is generating roughly 64% of projected sales while carrying nearly triple the rent of the original. External factors may have made expansion attractive, but they did not make the financing structure sound. A stronger answer distinguishes between reading the market correctly (plausible) and managing the financial risk appropriately (questionable). The missing step was likely a staged rollout or a lower fixed-cost format rather than a full second site on borrowed funds.
3. Recommend one action Mira should take in the next 30 days, and explain the likely impact on two different stakeholders.
Read the worked answer
A defensible recommendation is to consolidate operations at the new site by reducing its fixed cost exposure - for example, renegotiating the lease to a smaller footprint or subletting part of the space, while returning one experienced baker to the original site to stabilise quality.
Impact on employees: Returning an experienced baker to Geelong reduces the pressure on less-experienced staff who are likely producing the undercooked bread. This improves morale and skill development at the original site. However, staff at the new site may face reduced hours if the footprint shrinks, creating short-term job insecurity.
Impact on the owner/financier: Lower rent improves the cash position, extending the four-month buffer and reducing the risk of loan default. The bank's exposure improves. The trade-off is that Mira accepts slower growth and a smaller revenue ceiling, which conflicts with her original growth objective.
A weaker answer simply says 'cut costs' without identifying which cost, why, or who is affected. The best answers acknowledge the tension: any 30-day action trades one stakeholder's interest against another's, and justify why that trade-off is acceptable given the four-month cash constraint.