W05 Case Study: Seeing Success in Soup

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Source: Pexels

By May 2025, The Soup Shack was finally starting to see signs of stability. Marco's marketing ideas and operational insights had already shown a positive impact, and Maria decided to move forward with the purchase of a commercial dishwasher. This decision marked a pivotal moment in Maria's business operations.

May: Growth with Purpose

May brought a steady rise in business as The Soup Shack gained a stronger foothold in the community. Marco's marketing ideas, coupled with the operational improvements, helped the restaurant gain momentum. The "Soup of the Week" spotlight drew attention to Maria's existing menu, encouraging customers to try items they might have overlooked. Marco emphasized the value of quality, showcasing behind-the-scenes posts of Maria preparing her beloved recipes and explaining what made her soups so specialfresh ingredients, traditional techniques, and love in every bowl.

Additionally, Marco tapped into the local community by partnering with a popular downtown walking tour. Tour guides began recommending The Soup Shack as the perfect post-tour lunch spot, bringing in a steady stream of hungry patrons.

Increased Efficiency in the Kitchen

The new commercial dishwasher was installed at the about the 20th of the month and proved invaluable. It not only cut down on the time and effort required to clean but also improved workflow in the kitchen. The cook and server adapted quickly to loading and unloading the dishwasher during slower moments, ensuring it didn't disrupt service.

Maria made good on her promise to her part-time dishwasher by paying him through the end of May to make up for the fact that he was terrific to help things run smoothly through the transition of getting the new commercial dishwasher going, even though he was about to hit the job market again. While her labor costs for dishwashing didn't decrease in May, she saw clear savings coming in June, which would allow her to redirect those funds toward other areas of the business.

The slight uptick in electricity costs from the new machine was offset by the labor savings and increased efficiency. The kitchen felt calmer during busy hours, giving the staff more energy to focus on serving customers.

Financial Improvements

Soup sales continued to climb. Chicken soup rose to 22.2 bowls daily, spicy sausage soup increased to 10.1 bowls, and Italian bread returned to a respectable 29 servings per day. While these numbers didn't yet match the January highs, they reflected steady growth that Maria hoped to maintain. Soft drink sales also improved, reaching 18.1 daily units, driven by the loyalty program.

Marco's managerial efforts allowed Maria to focus on strategic decision-making rather than daily concerns. With Marco's full salary now part of her regular costs, Maria carefully tracked her expenses, realizing that the improvements in customer volume and efficiency were helping to balance the books.

Update Maria's financials with the following:

May Revenue Information
Item	Daily Volume	Price
Chicken Soup	22.2	$	5.49
Spicy Sausage Soup	10.1	$	5.99
Beef & Bean Soup	6.4	$	6.99
Italian Bread	29.0	$	1.27
Soft Drinks	18.1	$	1.82

COGS/unit: no change from first four months

Final Fixed Asset Costs - Use this to calculate the new depreciation expense. (Add this to what you have had already as depreciation expense).

	Cost	Life (years)	Salvage	Purchase Month
Dishwasher	$	3,245	3	$	100	May 2025
Other Kitchen Appliances	$	895	2	$	175	May 2025

Also, update your Gross Fixed Assets and your Accumulated Depreciation with this new information. Make sure this information is being linked to the Maria's Financials tab.

Fixed Costs

May Operating Expenses
Indirect Labor	$	1,250	A full month of Marco's Salary
Payroll Tax (12.5%)	$	156	Payroll taxes on Marco's Salary
Benefits	$	100	Maria agreed to pay $100/month towards Marco's health insurance
Rent - Train Station	$	1,100	No change for this fixed cost
Electricity	$	228	Normal charges plus a few days with the new commercial dishwasher
Gas	$	74	Slightly less heating now that summer is getting closer
Insurance	$	425	No change for this fixed cost
Ads and Signage	$	300	Slightly higher than usual due to Marco's idea for "Soup of the Week" Promotion
Web Page	$	75	No change for this fixed cost
Accountant	$	250	No change for this fixed cost
Payroll Service	$	75	No change for this fixed cost
Internet	$	125	No change for this fixed cost
Depreciation	Have our new dishwasher. Calculate our new depreciation expense with our new dishwasher added (add a full month)

• Interest Expense = $52.58
• Tax rate is still 25.0%

It is also time to update Maria's Balance Sheet and to build her Cash Flow Statement and Key Ratios for her to manage her business.

Update your balance sheet with the following new pieces of information. (This is also in your supplemental information spreadsheet - you can also just copy/paste from that spreadsheet into yours).

Balance Sheet Information	Jan-25	Feb-25	Mar-25	Apr-25	May-25	Jun-25
Cash	$	7,245	$	8,555	$	8,407	$	8,007	$	3,339	$	3,567
Accounts Receivable	$	31	$	81	$	61	$	71	$	101	$	114
Inventory	$	168	$	133	$	103	$	114	$	148	$	106
Accounts Payable	$	191	$	155	$	119	$	124	$	149	$	147
Taxes Payable (just equal to Tax Expense)	$	(296)	$	258	$	16	$	(99)	$	(183)	$	(31)
Long Term Debt (Loan Balance)	$	7,805	$	7,608	$	7,410	$	7,211	$	7,010	$	6,808
Total Liabilities	$	7,699	$	8,022	$	7,546	$	7,236	$	6976	$	6,923
Stock	$	10,000	$	10,000	$	10,000	$	10,000	$	10,000	$	10,000

Make sure your Fixed Asset tab information is updating your Maria's Financials tab.

Complete the Cash Flow Statement for Maria. (Here is some more information in the supplemental spreadsheet to help you with some parts of the initial cash flows).

Selections from Cash Flow Statement	Jan-25
Accounts Receivable	$	(31)
Inventory	$	(168)
Accounts Payable	$	191
Taxes Payable	$	(296)
Plant Improvements	$	(9,595)
Stock	$	10,000
Change in Long Term Debt	$	7,805
Closing Cash	$	7,245

Complete the following ratios for Maria:

• Days Sales Outstanding (DSO)
• Days Inventory Outstanding (DIO)
• Days Payable Outstanding (DPO)
• Inventory Turnover
• Working Capital
• Working Capital Days
• Current Ratio
• Leverage
• Debt/Equity
• Contribution Margin
• ROS
• ROA
• ROE

__________________________________________________________________

June: Strengthening the Core

June marked a period of consolidation and focus on Maria's original vision: offering high-quality soups, bread, and a welcoming environment. Marco continued his marketing efforts, spotlighting customer testimonials on social media. Loyal patrons shared how Maria's soups reminded them of home, creating a warm, personal connection with the brand.

One standout initiative was Marco's focus on building relationships with nearby businesses. By inviting local professionals to lunch meetings at the Shack, Maria captured a steady lunch crowd. These groups appreciated the restaurant's convenient downtown location and cozy atmosphere, leading to an uptick in weekday lunch traffic.

Maria also made subtle but impactful improvements to the dining experience. She upgraded table settings with higher-quality napkins and utensils, creating a more polished feel that justified the value customers were paying. Her goal was clear: enhance the customer experience without lowering prices or introducing new items.

Community Engagement

Recognizing the value of word-of-mouth marketing, Marco organized a "Thank You Thursday" event every week in June. Maria prepared complimentary small samples of soup for walk-in customers during off-peak hours, encouraging people to stop in and experience the quality for themselves. These samples generated goodwill and converted curious passersby into paying customers.

Marco also began working with local charities to provide leftover bread to food pantries at the end of the day, positioning The Soup Shack as a caring member of the community. This initiative not only reduced waste but also fostered loyalty among socially conscious customers.

Financial and Operational Highlights

By the end of June, Maria saw tangible results:

• Chicken Soup Sales: 24.4 bowls daily, continuing a steady upward trend
• Italian Bread Sales: Increased to 31.9 servings per day, nearing January's peak
• Soft Drinks: Climbed to 19.9 daily units, bolstered by the loyalty program

With Marco's help, Maria also fine-tuned her inventory management. She reduced waste by carefully tracking ingredient use, leading a reduction of inventory days down to 16.1 days. The kitchen's improved efficiency allowed Maria to take small breaks during the day, recharging her energy and making her a more effective leader.

A Bright Future

By the end of June, Maria felt more confident in her restaurant's trajectory. Sales were increasing steadily, costs were under control, and the team operated like a well-oiled machine. While she still faced challengesbalancing higher labor costs and occasional equipment maintenanceMaria was finally seeing her hard work pay off.

She made a commitment to stick to her original vision: focusing on quality, consistency, and community. With Marco's leadership and her determination, The Soup Shack was becoming everything she had dreamed ofa beloved neighborhood gem.

Update Maria's Financials with the following:

June Revenue Information
Item	Daily Volume	Price
Chicken Soup	24.4	$	5.49
Spicy Sausage Soup	11.1	$	5.99
Beef & Bean Soup	7.0	$	6.99
Italian Bread	31.9	$	1.27
Soft Drinks	19.9	$	1.82

Calculate the new COGS/Unit for the soups and the bread with the cost of the dishwasher eliminated, now that the cook and server are doing that as part of their job. Also, calculate the GM$ and GM% at current prices with the new COGS. (Set up a section in your COGS with the new costs and make sure starting in June the financial statements reflect this new cost).

Item	Price	COGS Mat	COGS Lab	Total COGS	GM$	GM%
Chicken Soup	$	5.49
Spicy Sausage Soup	$	5.99
Beef & Bean Soup	$	6.99
Italian Bread	$	1.27
Soft Drinks	$	1.82

June Operating Expenses
Indirect Labor	$	1,250	No change to Marco's salary
Payroll Tax (12.5%)	$	156	Payroll taxes on Marco's salary
Benefits	$	100	Maria agreed to pay $100/month towards Marco's health insurance
Rent - Train Station	$	1,100	No change for this fixed cost
Electricity	$	239	Now have a full month of electrical usage with the new commercial dishwasher
Gas	$	60	Lower heating costs during the summer
Insurance	$	425	No change for this fixed cost
Ads and Signage	$	325	Slightly higher than usual due to Marco's change in marking strategies
Web Page	$	75	No change for this fixed cost
Accountant	$	250	No change for this fixed cost
Payroll Service	$	75	No change for this fixed cost
Internet	$	125	No change for this fixed cost
Depreciation	No new equipment, so keep depreciating our newly calculated rate

Interest Expense = $51.11

Tax Rate is still 25.0%

Now, update Maria's balance sheet, cash flow statement, and ratios and complete the quiz. Question 12 pts

What is the monthly depreciation for the new commercial dishwasher?

Group of answer choices

$3,157.64

$65.78

$87.36

$90.14

Flag question: Question 2Question 22 pts

What is the Net Fixed Asset value for the new commercial dishwasher at the end of May?

Group of answer choices

$3,158

$3,245

$3,058

$3,145

Flag question: Question 3Question 32 pts

What is the total Total COGS for May?

Group of answer choices

Between $2,390 and $2,430

Between $2,470 and $2,510

Between $2,510 and $2,550

Between $2,430 and $2,470

Flag question: Question 4Question 42 pts

What is the total Indirect Labor for May?

Group of answer choices

Between $1,245 and $1,255

Between $1,235 and $1,245

Between $1,225 and $1,235

Between $1,255 and $1,265

Flag question: Question 5Question 52 pts

What is the total Total Operating Expenses for May?

Group of answer choices

Between $4,495 and $4,515

Between $4,465 and $4,485

Between $4,525 and $4,545

Between $4,555 and $4,575

Flag question: Question 6Question 62 pts

What is the total Payroll Tax for May?

Group of answer choices

Between $150 and $155

Between $140 and $145

Between $155 and $160

Between $145 and $150

Flag question: Question 7Question 72 pts

What is the total Net Income for June? (to the nearest dollar)

Flag question: Question 8Question 82 pts

What is the total Gross Margin for June? (to the nearest dollar)

Flag question: Question 9Question 92 pts

What is the total COGS Mat for June? (to the nearest dollar)

Flag question: Question 10Question 102 pts

What is the total Revenue for June? (to the nearest dollar)

Flag question: Question 11Question 112 pts

Looking at the balance sheet, what is the total Plant & Equipment for June?

Group of answer choices

Between $13,750 and $13,760

Between $13,730 and $13,740

Between $13,690 and $13,700

Between $13,710 and $13,720

Flag question: Question 12Question 122 pts

Looking at the balance sheet, what is the total Long Term Debt (Loan Balance) for February?

Group of answer choices

Between $7,625 and $7,635

Between $7,665 and $7,675

Between $7,605 and $7,615

Between $7,645 and $7,655

Flag question: Question 13Question 132 pts

Looking at the balance sheet, what is the total Total Current Assets for January?

Group of answer choices

Between $7,420 and $7,470

Between $7,270 and $7,320

Between $7,120 and $7,170

Between $6,970 and $7,020

Flag question: Question 14Question 142 pts

Looking at the balance sheet, what is the total Total Liabilities for June?

Group of answer choices

Between $6,900 and $6,910

Between $6,880 and $6,890

Between $6,860 and $6,870

Between $6,920 and $6,930

Flag question: Question 15Question 152 pts

Looking at the balance sheet, what is the total Total Liabilities for March?

Group of answer choices

Between $7,500 and $7,510

Between $7,560 and $7,570

Between $7,520 and $7,530

Between $7,540 and $7,550

Flag question: Question 16Question 162 pts

Looking at the cash flow statement, what is the total Cash From Financing for June? (to the nearest dollar)

Flag question: Question 17Question 172 pts

Looking at the cash flow statement, what is the total Plant Improvements for March? (to the nearest dollar)

Flag question: Question 18Question 182 pts

Looking at the cash flow statement, what is the total Plant Improvements for January? (to the nearest dollar)

Flag question: Question 19Question 192 pts

Looking at the cash flow statement, what is the total Cash From Financing for March? (to the nearest dollar)

Flag question: Question 20Question 202 pts

Looking at the cash flow statement, what is the total Inventory for March? (to the nearest dollar)

Flag question: Question 21Question 212 pts

What is the total ROS for June?

Group of answer choices

Between -2.2% and -2.6%

Between -1.7% and -2.1%

Between -.7% and -1.1%

Between -1.2% and -1.6%

Flag question: Question 22Question 222 pts

What is the total Contribution Margin for April?

Group of answer choices

Between 60.4% and 60.8%

Between 61.4% and 61.8%

Between 60.9% and 61.3%

Between 61.9% and 62.3%

Flag question: Question 23Question 232 pts

What is the total Days Inventory Outstanding (DIO) for March? (remember March has 31 days)

Group of answer choices

Between 1.7 and 1.9

Between 2.3 and 2.5

Between 2.9 and 3.1

Between 3.5 and 3.7

Flag question: Question 24Question 242 pts

What is the total Inventory Turnover for June?

Group of answer choices

Between 22.6 and 22.8

Between 22.0 and 22.2

Between 22.2 and 22.4

Between 21.6 and 21.8

Flag question: Question 25Question 252 pts

What is the total Current Ratio for February?

Group of answer choices

Between 20.6 and 20.8

Between 21.2 and 21.4

Between 20.8 and 21.0

Between 20.2 and 20.4