Question: Entrepreneur John Doe has just founded Pizza Ready which will
Entrepreneur John Doe has just founded Pizza- Ready, which will accept pizza orders for pickup over the phone. Pizza- Ready’s strategy is to compete with established pizza restaurants by offering superior, fresh, made- to- order deep- dish pizza and excellent service. As part of his advertising campaign, Doe will publish an ad stating, “If your pizza is not ready in 20 minutes, that pizza plus your next order are on us.” Doe has done extensive research on the pizza making process and knows that all fresh deep- dish pizzas require 15 minutes of oven time and 2 minutes of preparation. Moreover, as part of its excellent service, Pizza- Ready will accept orders whenever customers place them, and a marketing study estimates that Pizza- Ready can count on an average demand of 20 pizzas per hour. Doe, therefore, has ordered five pizza ovens, each of which is able to bake one pizza at a time. Doe is now looking for a silent partner to help carry the financial burden of his start- up company. Given the structure of this business, a potential partner has asked you whether Pizza- Ready would be a profitable investment. What would you recommend, and why?
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