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Romano’s Pizzas, Inc

Contents

Executive Summary 1

Introduction 2

Issues and Alternatives 2

Expanding to Outlet 3

Diversification 3

Benefit 4

Limitation 4

Analysis of the Issues 5

Incremental Income 5

Opportunity Cost 6

Recommendations 6

Appendices 7

Expanding to Outlet…………………………………………………………………………………………………………………………………7

Diversification……………………………………………………………………………………………………………………………………….…7

Executive Summary

Romano’s Pizzas, Inc operates pizza shops in few provinces. One of their most profitable income source is the one located near the large university campus. An opportunity was presented that a bakery shop went out of business and the property owner is currently looking to lease the space for $18,000 a year under a 15 years lease contract. Now, Romano’s management team is considering to rent the space which the manager now faced two options.

1. Should Romano’s Pizzas, Inc expand to outlet?

2. Should Romano’s Pizzas, Inc diversify the shop?

In my report, you will be able to find a detailed analysis for the two alternatives and I will also show the benefit and limitation as well. I believe that, a thorough qualitative and quantitative analysis will guide you to a better decision so that the Romano’s Pizzas, Inc can have a bright future.

All in all, my recommendation to Romano’s Pizzas, Inc should implement the second option which was to diversify the shop into many sections. This will create a steady income of $340,328 as oppose to the first option can only provide $149,000 annually. In addition, this option will maximize the revenue for the company and will build a strong relationship with the students in the future.

If they agree to the contract they will need to deal with certain logistical issues. They will have to deal with late check-out times and have rooms cleaned immediately upon check-ins. They will roughly have 2-4 hours to clean the rooms before the next crew arrives. This means that the hotel will need to keep...