W02 Case Study: Maria's Soup Shack
W02 Case Study: Maria's Soup Shack Maria's Idea Maria's family gathered at her home after the
funeral service. Her beloved husband Juan passed away unexpectedly. Now, her home was filled
with family, friends, and neighbors, but she had never felt more alone. "What will you do now?"
Maria's sister Natalia asked, helping herself to another bowl of Maria's rice and chicken soup
from the large pot. The soup was nearly gone, having fed those who had come to express their
condolences for the past few days. "I don't know. " Maria had some savings, but she would need
to get a job very soon. Paco said I could run his fruit stand. " "Our brother "But then you'll have
to move. " Natalia frowned and lifted a spoonful of the delicious soup to her lips. "This really is
the best soup in the world, Maria. Too bad you couldn't go into business selling it instead of
Paco's lemons and limes. " Maria observed the many now-empty bowls of her famous rice and
chicken soup. It had been her grandmother's recipe and Juan's favorite. She knew she wasn't
expected to cook at her own husband's funeral, but it seemed to make everyone happy. She
could use some happiness today. Maria stirred what was left in the giant pot of soup, a perfect
blend of broth, chicken, and rice. Making this soup was what she knew how to do best in the
world. "Do you think I could?" she asked Natalia absent-mindedly, watching the colors in the
beautiful soup swirl. "Start my own business? Making soup?" "Why not?" Natalia said, blowing
on her soup before she took another big spoonful. "How hard could it be?" A business of her
own would give her freedom to stay in her home and be near her friends. She wondered, how
hard could it really be? When the guests finally left, Maria sat down to relax and ponder on this
idea. The more she thought about it, the more excited she became about the opportunity.
Fortunately, her husband had saved a fair amount of money for a rainy day. Perhaps she should
just go buy the ingredients and cooking equipment, rent a building, hire help and start selling.
Yes! Tomorrow she was going to get up early and make it happen. After all, it would keep her
mind off of Juan. Then she remembered his kind and supportive attitude. She felt him telling
her, "You can do anything you want - if you just put your heart into it. " Exhausted from both
grief and excitement, Maria decided to head to bed early. She knew she was going to need extra
rest if she was going to pull this off. Source: Pexels The next morning, she arose early, said her
morning prayers, and began to make a list of all the things she would need. But as she was
writing the list, her father came by and was surprised to see her getting ready to head out.
"What are you doing?" he asked. "I'm going to start a business!" she replied. "I'm making a list
of everything I need to buy today. " Her father wrinkled his brow. "What are you going to
make?" "Abuela's chicken soup. Everybody loves it. " "Everybody?" he said. It wasn't one of his
favorites. "Oh. Don't they?" she asked, feeling unsure for the first time. "It's honestly not for me
to say, " he said. "But before you waste time and money, go find out whether people really
would be willing to pay for it. Once you've proven that there is enough demand for it - and for
, the right price - then you can go crazy buying all the stuff. But I wouldn't spend a dollar before I
did that. " Maria frowned. "I have no idea how to do that. " "I'll help you. I've learned a lot of
hard lessons over the years. Hopefully, I can help you avoid a few of those. " He sat down, and
they began to make a plan that would help her best research her target market. The Soup
Shack: The Profit Formula Maria spent weeks researching her market. Local restaurant menus
focused more on salads not soup, likely due to the hot weather her town experienced during
tourist season. However, they hadn't tasted her grandmother's recipe yet, which was tasty all
year round. She invited her neighbor Gaston Petrenko who worked as a chef in a restaurant,
several friends who worked as waitresses, the owner of the town's largest local catering
company, and a family of tourists staying nearby to her home for a free soup dinner. The
feedback was overwhelmingly positive, confirming Maria's belief that she had something special
to offer. She then decided to set up a booth at the local farmer's market and see what kind of
feedback she received there. Quite a few people tried it the first day, and from the looks on
their faces, they seemed very pleased. What was even better, she noticed that over 35% of
them came back later in the week, about 22% of them bringing friends or family to try it too.
Her sales were increasing by 8-10% every day. "But what if these people only pay this much for
soup at the market? Would they expect to pay less if I had it in a restaurant?" she wondered.
She decided she had better do some surveys. When a customer purchased her soup, she would
ask questions like, "How often do you eat out? What times of the day do you usually eat out?
How much would you expect to pay for a bowl of soup like this in a restaurant?" She learned
that only about 40% of these individuals ate out regularly, but most would pay between $5-6 for
a bowl of soup, with some being willing to pay more. Maria figured that even if only 20% came
regularly, she should be okay, but she needed to figure out whether charging $5-6 would be
enough to make a profit. She made a list of all the ingredients she needed and how much each
would cost. The next day, she experimented with making large batches and found two local
farmers who could supply meat and rice. Now, she needed to make sure it would work
financially. She crafted her finance framework, mapping out the initial costs of ingredients and
the staff she needs to hire. She felt like she had good idea of the costs, but was it low enough to
leave her enough money to live if she were to charge less than $6? Calculating Unit Economics
When you know there is interest in your product, you should determine whether it will make
money. This is called calculating the "Unit Economics. " Your goal is to determine if the costs to
make the product are less than what your customers are willing to pay for it. Let's see how this
works by looking at a breakdown of Maria's costs. The Soup Shack Case: How much should
Maria charge? Even though everyone seemed to like her grandmother's soup, Maria knew she
had to be able to sell it for more than it cost her to make it. Fortunately, she had taken an online
accounting class and remembered that the first step in proving it could make money was to
calculate the costs, beginning with the Direct Materials and the Direct Labor. Unit Costs First,
she had to determine what the cost would be for all the ingredients for each bowl of soup, since
W02 Case Study: Maria's Soup Shack Maria's Idea Maria's family gathered at her home after the
funeral service. Her beloved husband Juan passed away unexpectedly. Now, her home was filled
with family, friends, and neighbors, but she had never felt more alone. "What will you do now?"
Maria's sister Natalia asked, helping herself to another bowl of Maria's rice and chicken soup
from the large pot. The soup was nearly gone, having fed those who had come to express their
condolences for the past few days. "I don't know. " Maria had some savings, but she would need
to get a job very soon. Paco said I could run his fruit stand. " "Our brother "But then you'll have
to move. " Natalia frowned and lifted a spoonful of the delicious soup to her lips. "This really is
the best soup in the world, Maria. Too bad you couldn't go into business selling it instead of
Paco's lemons and limes. " Maria observed the many now-empty bowls of her famous rice and
chicken soup. It had been her grandmother's recipe and Juan's favorite. She knew she wasn't
expected to cook at her own husband's funeral, but it seemed to make everyone happy. She
could use some happiness today. Maria stirred what was left in the giant pot of soup, a perfect
blend of broth, chicken, and rice. Making this soup was what she knew how to do best in the
world. "Do you think I could?" she asked Natalia absent-mindedly, watching the colors in the
beautiful soup swirl. "Start my own business? Making soup?" "Why not?" Natalia said, blowing
on her soup before she took another big spoonful. "How hard could it be?" A business of her
own would give her freedom to stay in her home and be near her friends. She wondered, how
hard could it really be? When the guests finally left, Maria sat down to relax and ponder on this
idea. The more she thought about it, the more excited she became about the opportunity.
Fortunately, her husband had saved a fair amount of money for a rainy day. Perhaps she should
just go buy the ingredients and cooking equipment, rent a building, hire help and start selling.
Yes! Tomorrow she was going to get up early and make it happen. After all, it would keep her
mind off of Juan. Then she remembered his kind and supportive attitude. She felt him telling
her, "You can do anything you want - if you just put your heart into it. " Exhausted from both
grief and excitement, Maria decided to head to bed early. She knew she was going to need extra
rest if she was going to pull this off. Source: Pexels The next morning, she arose early, said her
morning prayers, and began to make a list of all the things she would need. But as she was
writing the list, her father came by and was surprised to see her getting ready to head out.
"What are you doing?" he asked. "I'm going to start a business!" she replied. "I'm making a list
of everything I need to buy today. " Her father wrinkled his brow. "What are you going to
make?" "Abuela's chicken soup. Everybody loves it. " "Everybody?" he said. It wasn't one of his
favorites. "Oh. Don't they?" she asked, feeling unsure for the first time. "It's honestly not for me
to say, " he said. "But before you waste time and money, go find out whether people really
would be willing to pay for it. Once you've proven that there is enough demand for it - and for
, the right price - then you can go crazy buying all the stuff. But I wouldn't spend a dollar before I
did that. " Maria frowned. "I have no idea how to do that. " "I'll help you. I've learned a lot of
hard lessons over the years. Hopefully, I can help you avoid a few of those. " He sat down, and
they began to make a plan that would help her best research her target market. The Soup
Shack: The Profit Formula Maria spent weeks researching her market. Local restaurant menus
focused more on salads not soup, likely due to the hot weather her town experienced during
tourist season. However, they hadn't tasted her grandmother's recipe yet, which was tasty all
year round. She invited her neighbor Gaston Petrenko who worked as a chef in a restaurant,
several friends who worked as waitresses, the owner of the town's largest local catering
company, and a family of tourists staying nearby to her home for a free soup dinner. The
feedback was overwhelmingly positive, confirming Maria's belief that she had something special
to offer. She then decided to set up a booth at the local farmer's market and see what kind of
feedback she received there. Quite a few people tried it the first day, and from the looks on
their faces, they seemed very pleased. What was even better, she noticed that over 35% of
them came back later in the week, about 22% of them bringing friends or family to try it too.
Her sales were increasing by 8-10% every day. "But what if these people only pay this much for
soup at the market? Would they expect to pay less if I had it in a restaurant?" she wondered.
She decided she had better do some surveys. When a customer purchased her soup, she would
ask questions like, "How often do you eat out? What times of the day do you usually eat out?
How much would you expect to pay for a bowl of soup like this in a restaurant?" She learned
that only about 40% of these individuals ate out regularly, but most would pay between $5-6 for
a bowl of soup, with some being willing to pay more. Maria figured that even if only 20% came
regularly, she should be okay, but she needed to figure out whether charging $5-6 would be
enough to make a profit. She made a list of all the ingredients she needed and how much each
would cost. The next day, she experimented with making large batches and found two local
farmers who could supply meat and rice. Now, she needed to make sure it would work
financially. She crafted her finance framework, mapping out the initial costs of ingredients and
the staff she needs to hire. She felt like she had good idea of the costs, but was it low enough to
leave her enough money to live if she were to charge less than $6? Calculating Unit Economics
When you know there is interest in your product, you should determine whether it will make
money. This is called calculating the "Unit Economics. " Your goal is to determine if the costs to
make the product are less than what your customers are willing to pay for it. Let's see how this
works by looking at a breakdown of Maria's costs. The Soup Shack Case: How much should
Maria charge? Even though everyone seemed to like her grandmother's soup, Maria knew she
had to be able to sell it for more than it cost her to make it. Fortunately, she had taken an online
accounting class and remembered that the first step in proving it could make money was to
calculate the costs, beginning with the Direct Materials and the Direct Labor. Unit Costs First,
she had to determine what the cost would be for all the ingredients for each bowl of soup, since
