This case requires candidates to analyze four sourcing options (create in-restaurant, expand current plant, build new facility, use third-party supplier) against competing objectives: cost minimization, quality control, timeline feasibility, and alignment with the CEO's preference to keep operations in Minneapolis. The optimal solution balances the lowest long-term cost-per-unit ($2 from a new facility) with the CEO's stated values, requiring both quantitative analysis and qualitative business judgment.
Our client is the CEO of the fast-food chain Hot Indian. Hot Indian brings in $3B in annual revenues around the U.S., with locations in most major cities. Started in Minneapolis as a small food truck in 2003, Hot Indian quickly became a local staple known for their quality of food, level of service, and distinctive “dance for 10% off” style gimmicks for customers. Hot Indian also keeps a lean menu, devised to keep operations simplified and allow for a Hot Indian location to have success in food courts, food trucks, and standalone locations alike. All restaurants are owned by the company, and each restaurant brings in about $1.5M in annual revenue at 20% operating income.
We have been hired to figure out where Hot Indian should source their chutney. Currently, Hot Indian sources all sauce from a company owned manufacturing plant in Minneapolis and distributes the sauces to all locations around the country. Hot Indian has 500 additional restaurant openings planned in the next three years, and the plant will be out of capacity for the additional volume within two years.