Location: Dallas, TX
RoRo’s Bakery is a small family owned company that makes and sells cinnamon rolls and dinner rolls. They are located in a suburb just east of Dallas, Texas. Their products are Cinn-A-Rolls and Dinn-A-Rolls. The main product is their cinnamon rolls, which represent roughly 86% of their revenues. As of right now, they rent a professional kitchen by the hour to do all of their baking. Since they do not have their own store, they sell their products to grocery stores. Most of the grocery stores they sell to are located in the Dallas/Fort Worth area, but some are as far away as New York City.
They are planning on leasing a building next year where they will move all of their baking. The lease is estimated at $7,800 a year. Since they will no longer be renting the kitchen, they will have a large equipment purchase of over $24,000 for the first year. This large purchase is to buy a walk-in freezer, industrial mixers, ovens, and a fridge.
The biggest expense is cost of goods sold. We have estimated that the cost to make their products is half of the sales price. The two other largest expenses are salaries and shipping. Since RoRo’s sells to 17 different grocery stores, it means high shipping costs each year.
We believe this is a profitable business, but they will need to continue to increase production every year in order to stay in business. We believe if they were able to expand and open new baking facilities, that would help share some of the costs of the business.