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Implementing Enterprise Risk Management: Case Studies and Best Practices by Kristina Narvaez, Betty Simkins, John Fraser

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CHAPTER 31 Operational Risk Management Case Study Bon Boulangerie

DIANA DEL BEL BELLUZ

President, Risk Wise Inc.

Bon Boulangerie is a bakery business located in Oakville, Ontario. When the owner, Ray Pane, purchased the business three years ago, it consisted of a single site with baking facilities and a retail store and café. Based on market research with the bakery's retail and café clientele, Ray began to change and expand the product offerings to increase the volume of sales and margins. He also began a new line of business, wholesaling to local restaurants and high-end grocery stores within a 20-kilometer radius of the bakery.

Based on the success over the past three years (see Exhibit 31.1), Ray has made a strategic decision to expand his wholesale business, with the goal of tripling profits over the next three years (see Exhibit 31.2). He expects to accomplish this by: (1) covering a larger territory (i.e., expanding to a 120 km radius) for wholesaling to local restaurants and independent grocery stores across the entire Greater Toronto Area, and (2) introducing a new business line, white label products that he can supply to major supermarket chains.

(Actuals)

(all figures in $000's) Year 3 Year 2 Year 1
Income
 Café   300   273 246
 Retail Bakery   718   624 562
 Wholesale—Restaurants   410   234   0
 Wholesale—Other Retailers   359   312   0
 Total Revenue 1,786 1,443 807
Operating Expenses
 Cost of Inventories Sold 1,349 1,090 610

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