1.

Sarah is the sole owner of a sandwich shop located in a busy town centre. The shop opened two years ago and employs two part-time staff members who help prepare food and serve customers. The shop sells freshly made sandwiches, soups and hot drinks, which are prepared on site each day.

The business attracts office workers, students and shoppers. Sarah prides herself on the freshness and quality of her products, which are made to order. Her prices are slightly higher than pre-packaged sandwiches sold in supermarkets.

Recently, a large supermarket chain opened nearby, selling cheaper sandwiches. Since then, Sarah has noticed her sales have started to fall. In March, Sarah’s revenue was £8,000, but in April this dropped by 15%. Her costs, however, have stayed the same at £6,200 per month.

Sarah is considering ways to respond. One option is to lower her prices to match the supermarket. Another option is to emphasise freshness, quality and customer service to encourage loyalty. She is also looking at launching online orders with local delivery to reach more customers and boost sales.