Kristen's Cookie Company Case Analysis

Karson Arnold

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Kristen’s Cookie Company Case Analysis

        As a college student, starting a business out of your apartment can be a very risky, yet rewarding venture. It can bring a strong profit if the business is set up correctly and efficiently, and can also be a possible start to a life long career. Starting Kristen’s Cookie Company is a very smart business to start in a college community, where students are always doing a lot of late night studying and are craving a sweet sugary snack. Kristen’s Cookie Company is preparing to offer customers a special kind of cookie service with a unique business model. To separate them from the other competitors in the industry, Kristen’s Cookies are going to provide completely fresh, custom, “right out of the oven” cookies right on campus.  Cookies will be ready to pick up from the apartment within an hour of the customer ordering them. This business is going to be run by two roommates from an on-campus apartment. Before starting the business, some key decisions need to be made regarding what prices to charge, what equipment to order, how many orders to accept, and to determine whether the business can be profitable.

        To start the analysis of this potential business, we will look at the process that it takes to make a single batch of cookies. This process is portrayed in the image below. The first step is to take the order, which my roommate has devised a method using the campus e-mail system to accept orders and to inform customers when their orders will be ready for pickup. The first step of the process won’t take any of our time, since it’s automated. The second step is to wash out the electric mixer’s bowl and beaters from the previous batch, add the ingredients to the bowl, and turn on the mixer to mix the ingredients, which in total takes about 6 minutes. You then have to spoon the cookies onto the tray, which takes approximately 2 minutes per tray. The next step is to put the cookies in the oven and allow them to bake, which takes a total of 10 minutes. Once the cookies are done, they have to be pulled out to cool for 5 minutes, then carefully packed into a box which takes about 2 minutes per dozen. The last step is to accept the customers’ payment, which only takes 1 minute.

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Before we analyze the cookie making process and how many orders we are able to accept in a nights time, we will have to look at the costs and restrictions that will come along with this business. We currently own all of the necessary equipment for this business: a high-capacity professional – grade mixer, cookie trays, and spoons. The apartment already has a small oven, which will only hold one tray of cookies at a time. Fortunately, our landlord pays for all of our electricity. The costs associated with this business will be: costs of ingredients (approximately $0.60 / dozen), the cost of the boxes to pack the cookies ($0.10 / box), and the price of our own personal time. For our own personal time, I have decided to value at $10/hour, which is a fairly average rate of pay for a college student who is taking classes full time. After computing how much time it would take each of us to make a batch of cookies, I landed on about 8 minutes of my time, as well as approximately 8 minutes of my roommates’ time. Using these numbers, it would take approximately 7.5 boxes of cookies to equate to our 1 hour of work, per person. This brings the total cost of each box of cookies to approximately $2.

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