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!!! Costing 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 Nuts!!!