The success of the Mei Mei Group, which includes its Street Kitchen food truck and its new restaurant, can be credited to three siblings from the Boston area. Andy, Irene, and Margaret Li's award-winning food truck serves up creative Chinese American cuisine made with sustainably raised meats and locally sourced produce from small family farms. Using a repurposed shipping container kiosk, Mei Mei Group recently opened a third location, Mei Mei Design, at the Boston Design Center. "Mei Mei" is Mandarin for "little sister," and the secret to Mei Mei's staying power can be partly attributed to one of the "little sisters" in the group, Margaret, or Mei for short. She uses accounting information to make important strategic decisions about labor and food.

A key component of the company's success is its proactive approach and keen attention to recording, summarizing, and analyzing financial data. The food truck has been a great way to test and experiment with different dishes, while spending less money than running a full-service restaurant. After evaluating the results of its operation on a daily basis, the owners decided to expand operations by adding a restaurant to its business.

The Li siblings balance choices that make good financial sense with their business values and practices. The siblings believe cooking and serving food that reflects the humane treatment of animals can make a difference in the local food system, and balancing these values against costs is integral to their budgeting, financial planning, and overall operations. Keeping track of costs on a daily basis actually allows Mei tomake decisions to maintain and grow the businesses profitably. Mei uses accounting information to make decisions about food costs, which are maintained at a targeted percentage of sales. For all new product development, including new menu items, decisions are made with a focus on the numbers and metrics, or food costs as a percentage of the selling price.

While costs to source locally can be considerably higher, creativity and experience certainly help. For example, Mei purchases whole pigs from suppliers, which lowers the price per pound for pork. In addition, Mei keeps a watchful eye on fixed costs like rent and labor to be sure they remain at a targeted percentage of sales. With 40 employees, tracking labor costs and allocating staff have become increasingly important for the company.

Two business activities, financing and investing, involve accounting, and for the Mei Mei Group and most small businesses, both can be a challenge. For the funds required to get its Street Kitchen rolling, the Li siblings used a lot of their own personal savings, along with loans from other family members. For the Mei Mei restaurant, partial financing of $\$ 35,000$ came through Kickstarter, an online crowdfunding site. A wall in the restaurant will be dedicated to Kickstarter donors who believed that adding a restaurant to the Mei Mei business portfolio made good financial sense. The siblings agree that making the right investment decisions early on can make or break any small business. Their perseverance has paid off. The restaurant was named Eater Boston's Restaurant of the Year and made Boston magazine's list of 50 Best Restaurants.

Because employees and suppliers need to be paid on time, Mei makes it a point to check the books every day to be sure there is sufficient money coming in against the money being paid out. With regularly scheduled owner meetings the siblings communicate business results with one another on an ongoing basis. Information is also shared with managers and employees so accurate decisions can be made regarding food purchases, labor, and other business components. When Mei Mei managers understand the impact of a decision and its effects on company's finances, it proves to be an appetizing combination of continued growth and profitability.

Questions for Critical Thinking

1. In Mei Mei Street Kitchen's accounting equation, what are some of the firm's assets and liabilities? Based upon this data, what assumptions would you make about its owners' equity?

2. Identify the types of expenses that Mei Mei Street Kitchen might list on its income statement. How might these expenses vary?

3. Why is it important for a small company like the Mei Mei Group to prepare a regular budget? Discuss what you believe the budgeting process might look like at Mei Mei Street Kitchen as compared to the company's restaurant.

4. Discuss some of the financial challenges the Li siblings face in balancing local sourcing and doing business for a sustainable future. If the siblings did not have this value system, how might company financial statements differ, and what trade-offs might exist?