The Sahara nuts scenario

The Sahara nuts scenario
Setting the scene
Mike ‘drinks like a’ Fish
has recently taken over
The Pickled Newt public
house in Chelmsford.
In the two months he has
owned the pub, business
has been good ticking
over a steady trade.
The rep
One sunny Monday
afternoon, Glenn walk in.
He introduces himself to
Mike and explains he is a
rep for Sahara nuts, a
company providing
warmed coated peanuts
to the pub trade.
The offer
Glenn offered to supply
The Pickled Newt with
Sahara nuts guaranteeing
that sales would be high!!!
Glenn offered Mike a
three year contract at with
the following terms:
• Nut warmer £250 –
annual lease
• Bag of nuts £50 –
containing 70 portions
with RRP £1.50
Mike was confident he could shift a
bag of nuts each month and
thought this was a good deal. Do
you agree?
Three months later…
Three months after Mike
had signed the contract he
was very please with the
deal he had made. The
Pickled Newt was shifting
roughly 65 portions a
month, slightly below
projection but still enough
to be making some profit
even with a 5 bag wastage.
Or so Mike thought…
The accountant
At his quarterly review,
Mikes accountant Jim was
looking over the Pubs
finances when he came
across the Sahara Nuts
costing and revenue.
He explained to a bemused
Mike that for every pound
the Pickled Newt made 38p
of overheads had to be
attributed to the sale.
Write a memo to Mike explaining
why his deal with Sahara may be

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