(Solved): 1. Based on the cost breakdown provided, calculate the gross margin for one cup of coffee. What does ...

1. Based on the cost breakdown provided, calculate the gross margin for one cup of coffee. What does this margin tell you about the potential profitability of the coffee shop? 2. Discuss the scalability of this business model. As the volume of sales increases, how might fixed and variable costs behave? 3. Given the total cost and proposed retail price, consider additional factors that could influence the pricing strategy of the coffee shop. How would location, competition, and target market affect your pricing? 4. Reflect on potential hidden costs not considered in this breakdown, such as rent, utilities, marketing, and insurance. How would these affect the business model? 5. Explore how introducing a loyalty program or bulk discounts could impact the coffee shop's profit margins and customer retention. 6. Discuss the importance of inventory management in the coffee shop scenario and its effects on cash flow and waste reduction. Background: This case study presents a simplified cost breakdown for a single coffee serving in a potential coffee shop business. It highlights various cost components such as ingredients, materials, and labor and contrasts them against the retail price. Objective: To explore the financial feasibility and considerations of opening a coffee shop by analyzing the given cost structure.