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Alyssa GormalyDietetic Intern: Foodservice Management RotationLegacy Emanuel Medical Center/Randall Children’s Hospital, February 2019COST BENEFIT ANALYSIS: Kobos vs. Starbucks Coffee at Kite CaféBackground: Legacy Emanuel Medical Center/Randall Children’s Hospital (LEMC/RCH) is considering switching the brand of coffee beans that they “proudly serve” within one of their campus cafés, Kite Café. Currently, they purchase beans and own equipment from Kobos Coffee. They also primarily use straws, napkins, lids, milks, syrups, teas, and Legacy-branded cups purchased from Sysco.As part of a local contract with Starbucks, LEMC/RCH will be required to purchase beans, straws, napkins, lids, milks, syrups, sleeves, teas, and Starbucks-branded cups from Starbucks. Below are the costs and benefits to making the switch from serving Kobos to Starbucks coffee at Kite Café.KobosStarbucksAdvantagesCheaper overall costAppeals to customers at lower end of market rangeHigher qualityGreater brand loyaltyIncreases product variety (not all cafés will switch to SB)Implementation of SB increased coffee sales by $8000/mo. over 1-year period at another Legacy campusGreater revenue (selling drinks for more money)DisadvantagesPoorer qualitySmaller revenue (selling drinks for less money)Kite Café has the least traffic of all cafés on campusMore expensiveCostSee table belowSee table belowCost ComparisonKobosStarbucks (SB)ProductCostProductCostSleeve Sleeve0.0512 oz. cup (Legacy)0.0812 oz. cup (SB)0.0716 oz. cup (Legacy)0.0916 oz. cup (SB)0.0920 oz. cup (Legacy)0.120 oz. cup (SB)0.1116 oz. cold cup (Kobos)0.0516 oz. cold cup (SB)0.1120 oz. cold cup (Kobos)0.0526 oz. cold cup (SB)0.13Hot Lid0.03Hot Lid0.03Cold Lid0.05Cold Lid0.03Napkin (Sysco)0.03Napkin0.009Straw (Sysco)0.0053Straw (SB)0.001Almond milk x 12$1.82Almond milk x 12$2.58Soy milk x 12$1.50Soy milk x 8$4.30Coconut milk x 12$1.82Coconut milk x 8$4.205 lb espresso$36.55 ($7.31/lb)5 lb espresso$56.75 ($11.35/lb)5 oz. pillow pack5 lb pillow pack x 32$3.54DecafDecaf x 6$11.35Tea bag0.11Tea bag0.13Chai concentrate (64 oz.)$11.95Chai concentrate (4/case 63 oz.)$4.20SYRUPHazelnut$4.68Hazelnut$5.98Raspberry$4.68Raspberry$6.75Toffee nutToffee nut$6.75Vanilla SF$4.68Vanilla SF$5.98Cinn dolce SFCinn dolce SF$6.75Peppermint$4.68Peppermint$6.75Fon syrupFon syrup$5.98Vanilla$4.68Vanilla$5.98Coconut$4.68Coconut$9.98Cinn dolceCinn dolce$6.75SAUCEWhite chocolate mocha$15.87White chocolate mocha$17.79Choc. mocha (64 oz.)$15.87Choc. mocha (4/case 63 oz.)$14.93Caramel$15.87Caramel$14.93AlmondAlmond$6.75PeachPeach$6.75Kobos BreakdownGiven: ~32 double-shots in 1 lb. espresso.($7.31/lb) / (32 double-shots/lb) = $0.23/double-shot drink*Starbucks BreakdownGiven: ~32 double-shots in 1 lb. espresso.($11.35/lb) / (32 double-shots/lb) = $0.35/double-shot drink**Note: Some drinks may not require 2 shotsCOMMENTS:Bringing Starbucks coffee to Kite Café has great potential to increase overall revenue for the operation. Staff members have expressed concern that Starbucks might be too expensive for some customers; to cater to both ends of the socioeconomic spectrum, two cafés would continue to serve Kobos coffee, while one café (Kite Café) would serve Starbucks.Currently, Kite Café receives the least amount of traffic of all three cafés on campus because it is furthest away from the center of the campus. However, it is expected that offering a well-liked and popular incentive (Starbucks coffee) will motivate staff and customers to visit Kite Café more often and increase traffic, thereby increasing revenue. Upon casually mentioning the idea to staff, many expressed excitement. Many of them already purchase Starbucks coffee from outside locations on their way in to work. While the cost per drink of Kobos is lower than that of Starbucks, the expected revenue that Starbucks would bring through higher quality, increased selling prices, and greater brand loyalty outweighs the costs. ................
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