This website uses cookies to ensure you have the best experience. Learn more

Boston Chicken Case Essay

1102 words - 5 pages

Boston Chicken Case Analysis
Team 4F

EF 663 – Accounting for Decision Making

In theory Boston Chicken is a solid company with a strong short-term strategy. They have positioned themselves in a unique market which offers a meal replacement to consumers aside from the generic fast food restaurant. They have invested in their supply chain network and their operational activities. Overall customer satisfaction and product consistency improved through the use of flagship stores, as well as technology that enabled immediate customer feedback. They implemented drive in windows for added customer convience, which increased their sales volume. However their strategy is not without flaw. ...view middle of the document...

Exhibit 1 - 2

Further dissecting the income statement, as illustrated in Exhibit 1 - 3 gives us a discrete breakout of revenue that is generated from royalties, franchise fees and company-operated stores. Franchise fees comprise a significant portion of the revenue. What is less clear is the revenue that is being generated from interest bearing loans to financed developers. Concurrently there is no mention of average revenue per store, it is our assumption that revenue from operations may be artificially overstated, reflecting income that is being generated as a result of interest from financing developers and possibly software licensing. This aggressive practice not only manifests itself in the income statement but also in valuation of assets that appear on its balance sheet.

Exhibit 1 - 3

Another accounting red flag is their depreciation schedule which is greatly accelerated compared to the standard policy for buildings. The normal principle for depreciation is 39 years using the straight line method, theirs is assuming 15-30 years in deprecation using the straight line methodology. Depicted in Exhibit 1 – 4 below are two assumptions (lower limit and upper limit) with an estimated cost per store of $1,153,703.70.

Exhibit 1 - 4

The franchise owners need to invest a significant amount of equity funding to open up a franchise as well as promise that they would open 50-100 stores in a certain area. Furthermore, this was the only requirement that potential franchisees had to meet. It does not appear that research was done to investigate potential profitability, previous market saturation and location factors. The financial statements of Boston Chicken do accurately account for individual franchise profitability. In fact, on average the Return on Investment (ROI) is 1.75% with average weekly revenue projected at $388 and annual yearly income of $20,176. Below in Exhibit 1 – 5 is a snapshot of the balance sheet ratios, and while they demonstrate short-term health and solvency, the long term is in question.

Exhibit 1 - 5
  | 1994 | 1993 |
Working Capital | $32,049.0 | $2,788.0 |
Current Ratio | 2.175 | 1.271 |
Equity Ratio | 0.608 | 0.862 |
Debt Ratio | 0.328 | 0.138 |

We also believe that corporate financed developer loans could become a potential problem for Boston Chicken. No liability account has been setup as an allowance for...

Other Papers Like Boston Chicken Case

Mcdonalds Case Study

3434 words - 14 pages Pizza Hut, KFC (Kentucky Fried Chicken), and Taco Bell. Sales in these restaurants have grown faster than hamburger chains in recent years. A growing trend is the move by customers to non-hamburger sandwiches. Subway dominates the market with more than 13,200 U.S. outlets. Prepared meals and sandwiches available in supermarkets, convenience stores, and gas stations are competitors as are the variety of microwave meals available to consumers

A Look at Modern Religious Views

1619 words - 7 pages ”(233). We would suspect Pelayo and Elisenda, being a good Christian couple, would take in the old man and care for him. Unfortunately this was not the case. The normal Christian reaction would be to help someone in trouble. Instead they ask the wise old neighbor woman what he is and what they should do with him. “ ’He’s an Angel,’ she told them. ‘He must have been coming for the child, but the poor fellow is so old that the rain knocked

Mcdonald's

5552 words - 23 pages the bankrupt Boston Market chain for $173.5 million in cash and debt. At the time, there were more than 850 Boston Market outlets, which specialized in home-style meals, with rotisserie chicken the lead menu item. Revenue at Boston Market during 1999 totaled $670 million. McDonald's rounded out its acquisition spree in early 2001 by buying a 33 percent stake in Pret A Manger, an upscale urban-based chain specializing in ready-to-eat sandwiches

What Really Goes Into Fast Food

1848 words - 8 pages damage the stomach with tumors and has shown damage in the DNA of lab animals. Does this sound like the kind of chemical you want in your body? According to a chemical analysis led by a researcher at Harvard Medical School, it was found that the McNuggets from Mcdonald's had a "fatty acid profile" more closely resembling beef than poultry. Beef tallow was once used in cooking chicken until they switched to vegetable oil. "Beef extract" is one

Arthur Andersen Llp

2907 words - 12 pages , the new policies also led to less experienced auditors and fewer partners overseeing audits. A new breed of partner rose to the top in this new environment. One prominent example was Steve Samek, who was in charge of the Boston Chicken audit. Top partners gave Samek high praise for “turning a $50,000 audit fee at Boston Chicken into a $3 million full-service engagement.” Samek, however, allowed the chain to keep details of losses at its

Dunkin Donuts Case

1122 words - 5 pages option than some other fast food franchises making it more appealing to the busy customer who needs something on the go. Provide an overview of the bagel market The bagel market has a variety of competitors compared to Dunkin’ Donuts. Those including but not limited to: Einstein Bros., Manhattan Bagel and Starbucks Coffee. Einstein Bros., was founded in 1995 as a branch of Boston Chicken (now Boston Market) in order to have breakfast

Another Interpertertation of the Flynn Effect

1817 words - 8 pages be performed (it would have to span many years for long term effects and accuracy), the cycle would start over and the next generation would have different environmental influences that the control group was not exposed to at the same phase of development. With this logic and reasoning, it seems to follow the thought process that environment may be the biggest player in this game of which comes first, the chicken or the egg, but in this case it

1994

5036 words - 21 pages business operations of Boston Beer Company. 2.1 2.2 2.3 2.4 2.5 Disposable Income (O1 – ER 1.1) Population Trends (O1-ER 1.3) Building Permits(O1-ER 1.3) Business Surveys(O1-ER 1.3) Specialist Trade/Industry Surveys(O1-ER 1.3) Before you commence each question, carefully read through the relevant Case associated with the question. This is to ensure you understand the facts and issues the small business venture’s is facing. After reading the

Eating State of Mind

1550 words - 7 pages way to comfort themselves, almost to get away. Children can face the obstacles in schools such as bullies, which can affect their self-esteem, developing a state of depression. This type of situation is referred to as the “chicken & egg case”, which means you do not know what comes first, and what is the cause or the effect. It is assumed that the two usually occur together, and a part of the brain called the HPA axis, links all of these

Fast Food Nation

2614 words - 11 pages case. According to Talwar, “The fast food industry in the 1950s and 1960s was dominated by men” (p. 90). In his autobiography, the founder of the McDonald’s franchise system, Ray Kroc, described employees of the very first McDonald's as being “all men, dressed in spiffy white shirts and trousers and white paper hats” (in Talwar, p. 90). According to John Love’s comprehensive study of the McDonald's Corporation in the 1980s, the key to the

Brannigan Foods

2688 words - 11 pages BRANNIGAN FOODS In this case, Bert Clark, vice-president and general manager of Brannigan’s Foods’ Soup division has been tasked with analysing the investment recommendations from his four key managers. Their proposals are based on the review of Julian DeGennaro’s annual ‘State of the Soup Industry’ report; as well as on Brannigan’s financial statements from previous years. In DeGennaro’s report, we notice that the sluggish economy is a

Related Essays

Boston Chicken Case Essay

3056 words - 13 pages [pic] TOPIC: Revenue Recognition CHAPTER LINK: Chapter 6 Boston Chicken, Inc.: No Chicken About Aggressive Franchising Boston Chicken, Inc. franchises and operates retail food service stores under the name “Boston Market” These stores specialize in fresh, convenient meals featuring home style entrees of chicken, turkey, ham, and meat loaf, as well as a variety of freshly prepared vegetables, salads, and other side dishes. It product

Boston Chicken Essay

651 words - 3 pages Boston Chicken Case Boston Chicken’s business strategy comes from a different franchising structure in which BC, instead of selling store franchises to multiple franchisees, sells franchises to 22 regional area developers across the 60 largest U.S. metropolitan markets. This 22 are developers are committed to open 50 - 100 other stores. Therefore, its strategy is focused in rapid growth and reaching economies of scale. The critical success

Management Essay

5348 words - 22 pages market Variety KFC offers provide variety of products in case of size and taste. We can categories the product as follows according to their size and taste. 1. Chicken 2. Burgers 3. Desserts and beverages 4. Snacks and side orders. Quality: KFC believe in providing the, "Superior Quality" to the valued consumers. . They use fresh ingredients and

Anaylsis Of Story Family Essay

1803 words - 8 pages back. These are my dad’s words and every day I try to put them to use to impress him, to impress my mom, to impress myself. WHO: The boy who wrote this is a nineteen year old boy; he shared this to chicken soup for the teenage soul to impact the lives of others. The authors of Chicken Soup for the Teenage Soul II are Jack Canfield, Mark Victor Hansen and Kimberly Kirberger. Jack Canfield (born August 19, 1944) is an American motivational