Cambridge IGCSE™

ENTERPRISE 0454/13
Paper 1 May/June 2023

INSERT 1 hour 30 minutes

INFORMATION
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● This insert contains the case study.

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Food delivery enterprise

The background

Giacomo is studying at a catering college. To give the students work experience, the college has a
restaurant. Meals are prepared and served by catering students. The college restaurant is a popular
venue with many loyal customers from the local community. The profit from the restaurant is reinvested
back into the college. The only other source of finance the college receives is a government grant.
Local charities are able to use the college restaurant for fundraising events free of charge.

Recently, due to an issue with the building, the dining area was closed for repairs. The college has
been informed that the dining area will be closed for six months. Customers will not be permitted to eat
in the dining area for the entire period. However, the kitchen could remain open for students to prepare
meals.

The idea

Giacomo was concerned he would lose valuable catering experience. He wanted to find a way to keep
the restaurant operating even though the dining area was closed.

Giacomo had noticed that many local restaurants had started to offer delivery services. He thought that
the college could copy this idea. This could be a way to keep the college restaurant earning revenue.
He decided to discuss the idea with his lecturer, Mrs Tan.

The planning

Giacomo outlined his idea to Mrs Tan. She asked him some questions: How will they take the orders?
How will the food be delivered to customers? Giacomo thought that they could take orders over the
telephone or add a food ordering page to the college website. The students could deliver the food
using their bicycles.

Although Mrs Tan was impressed with his enthusiasm, she thought that the idea would not be
successful. There were three problems which Giacomo had ignored:

1. The service would involve some start-up costs which the college could not afford.
2. The standard of delivery would need to be high to avoid the risk of damaging the restaurant’s
reputation.
3. There would be laws and regulations which the food delivery enterprise would need to follow.

The research

After talking with Mrs Tan, Giacomo was determined to find solutions to the problems she had outlined.
He knew that if the food delivery enterprise was to be successful, he needed to set it up quickly before
their restaurant customers went to competitors. He decided to produce an action plan which he could
use in any future negotiation.

Giacomo knew that he had the skills to create an order page for the college website. He could also
arrange a team to produce leaflets to advertise the new food delivery enterprise. If he used the college
computers, the cost of the leaflets would be low. The college has a list of loyal restaurant customers
which he could use to ensure the leaflets are sent only to people who are likely to be interested.

Giacomo considered other possible costs. The restaurant receives its ingredients monthly. These
would be used to cook the meals for the food delivery enterprise. Raw materials would therefore not
be an extra cost for this potential enterprise. However, he would need to buy recyclable takeaway food
containers and insulated bags to keep the food hot during delivery. Giacomo researched the items and
prices on the internet. The results of this research are shown in Fig. 1.
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Item Cost US$

180 non-recyclable food containers 28

1 reusable insulated delivery bag 21

Printing and delivery of advertising leaflets 10

Fig. 1

Giacomo estimates that he will need three food containers for each delivery. He expects four insulated
delivery bags will be required to start the food delivery enterprise. Giacomo decides that a charge of
US$2 for each delivery would be suitable.

Another idea

While he was completing the research, Giacomo noticed that a ‘prepare at home’ meal delivery service
was becoming popular. With this delivery service, a package of ingredients is delivered to customers’
homes with instructions showing how to prepare the meals. Customers could then produce restaurant
quality meals cooked at home. The ‘prepare at home’ meal delivery service might be an alternative
way for the college restaurant to deliver meals to customers. This could combine two of the aims of the
college restaurant: training catering students and making money for the college.

Giacomo decided to present both ideas to Mrs Tan. He intended to negotiate with her to be allowed to
start one of the two delivery services.

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