Magic Muffin Company

Magic Muffin Company

Less than six months had passed since Meg Carter had opened the tiny shop fronting
the Newport harbor. The small store, which Meg had named the Magic Muffin Company, sold a
variety of freshly-baked muffins, soups, and natural beverages.
Meg was ecstatic that sales for the initial five months had been about $145,000,
considerably above Meg’s initial expectations. As she thought about the company’s tremendous
progress to date, she had one primary concern: was it now to think about expanding to
additional locations?

Background
Meg Carter, chef extraordinaire, had a prolific background in the food service industry.
While in school, Meg had worked as a waitress, chef, hostess, and assistant manager of a local
restaurant.
After graduation, she had accepted a position as an administrative assistant to a man
who was expanding a chain of retail bakeries. Her duties included store layout, staffing,
equipment planning, and supervision of new stores as they were being opened. This experience
led her to think about opening a retail store of her own someday.
Meg worked for the bakery chain for several years. Although she was well paid, she
began to feel that her job was losing some of its original challenge. Then, one day, while
snacking on a stale muffin bought from a convenience store, she had an idea. Why not open a
store to sell freshly baked muffins?
Meg thought about whether demand would exist for such a store. She noted the success
of similar stores which sold freshly baked cookies, Mrs. Field’s and David’s Cookies in
particular. If those stores could be successful, why not a muffin shop? Besides, muffins were
much healthier items and the nation was becoming increasingly obsessed with diet and
nutrition. Meg became convinced that a store where customers could get warm, fresh muffins
would really flourish.
Over the next several weeks, she thought about what it would take to open such a store
and where it should be located.
Early Decisions
A number of factors crossed Meg’s mind as she thought about how and where to open
her new muffin store. First, she thought it would be important to open the store in a location
which drew a large amount of foot traffic. Muffins, she felt, were somewhat of an impulse
purchase so it might be necessary to grab the consumer off the street and into the store.

Hult International Business School

This case was written by Professor John W. Newman and reproduced with express permission by Asst.
Prof. Daniel Rukare. Copyright © 2001-2008 by the author. All rights reserved. This case may not be
reproduced in any manner or form without the author’s prior, written permission.
Second, Meg was concerned about the amount of money that it would take to get the
store off the ground. Her salary of $60,000 annually had enabled her to save a fair amount of
money over the past few years. However, she didn’t want to risk it all in one investment. She
believed that it would be wise to limit the amount of store space that she rented and keep the
interior furnishings simple. Once the concept was proven to be successful, she could always
upgrade the store’s atmosphere and image.
Third, Meg believed that a limited menu was all that was needed. Mrs. Fields and
David’s Cookies had apparently proven that a retail baked goods store didn’t need a large and
varied menu and Meg thought that operations would be much simpler if her new store kept
menu choices to a minimum. Meg decided that she would sell only muffins, soups, and
beverages in her new store. About six varieties of muffins would be available on any given day
along with two soups, coffee, tea, and a line of naturally-flavored soft drinks. Meg felt that the
soups were needed to offer lunch customers a more balanced meal although she didn’t expect
that soup and beverage sales combined would amount to more than 30% of the store’s total
revenues.
Finally, Meg thought about her managerial skills and the amount of time she was
prepared to devote to a new business. She was convinced that she had the expertise needed to
start and run the business but was more concerned about the time issue. Meg decided that she
wasn’t ready to spend 100 hour weeks, 52 weeks a year starting a new business but she did not
mind a concentrated effort getting the store off