Practise Edexcel Business questions on competitiveness, market position and performance measures, using financial and non-financial evidence to reach a judgement.
Extract A
Lush promises to invest in UK stores after return to profit
Ethical UK high street retailer Lush, best known for its highly scented bath soaps and handmade cosmetics, returned to profitability in the financial year 2021-22.
The latest statement of comprehensive income for Lush showed a pre-tax profit of £29m during 2021-22 compared to a loss of £45m in the previous year. However, turnover was lower at £408.7m, down from £437.8m in the previous year.
Lush operates retail outlets in 48 countries and has manufacturing facilities in six countries. It plans to attract more customers by investing in larger outlets with services such as health spas and hairdressers.
The business made no dividend payments to its shareholders in 2022. "We have to invest money now. We need to refit our shops." said Mark Constantine, one of the co-founders of Lush.
The group continues its policy of charitable donations, with Lush raising funds of £6.3m for several charities.
Extract B
Selected cost and sales data for Lush's bath soap department
Extract C
Lush boss Mark Constantine happy to lose £10m after leaving social media
Ethical beauty brand Lush is expected to lose £10m in sales after leaving four major social media platforms. Lush's co-founder, Mark Constantine, shut its Facebook, Instagram, Snapchat and TikTok accounts. Its Facebook and Instagram accounts had 10.6 million followers.
Constantine said he had no choice and that it is a price he is willing to pay. He was concerned over research showing the negative impact of social media platforms on many teenage girls, key consumers for Lush. "We've tightened up during the global health crisis, it won't destroy us. We will find new ways to connect with our customers as well as using the older tried and tested routes," he added.
Extract D
Lush has been 10% employee owned since 2017
The employees of Lush and its ethics are at the heart of the business. In 2017, Lush shareholders gifted 10% of the company shares into the Lush Employee Benefit Trust (EBT). There are five Trustees who look after the trust on behalf of the employees.
The purpose of having an employee ownership scheme is to:
- protect our ethics
- ensure the independent ownership of the business
- maintain the bonus culture
- promote two-way inclusive communication
- give every Lush employee a voice.
Extract E
We Believe - Lush's guiding statement for 25 years
We believe in:
- making effective products from fresh, organic fruit and vegetables, the finest essential oils and safe synthetics
- making products by hand using little or no preservative or packaging, using only vegetarian ingredients, and telling you when they were made
- buying ingredients only from companies that do not test on animals
- happy people making happy soap, putting our faces on our products and making our mums proud
- our products being good value, that we should make a profit and that the customer is always right.
Explain one reason why shareholders might be interested in the financial
statements of Lush.
Assess whether employee share ownership might reduce labour turnover for a
business such as Lush.
Extract A The Five Guys' family, freshness and customisation Jerry and Janie Mitchell lived in Arlington, Virginia. In 1986 they gave their five sons a choice: start a business or go to college. The business route won and the family opened the first Five Guys - named after the five brothers.
To this day, the formula remains simple: 'Burgers and fries cooked to perfection' in keeping with Jerry's philosophy of 'To perfect and to serve.' The family is still very much involved in the business, meeting every Tuesday.
Five Guys is organised differently from other fast-food burger outlets. You will not find a freezer in any Five Guys restaurant because everything is cooked from fresh ingredients. Food is prepared every day for maximum freshness including hand cutting the potatoes. Employees do the cooking without timers and are trained to judge the food's readiness by sight, aroma and texture. In other fast-food outlets machines are used to cook the food and timers are relied on to indicate when the food is ready to serve.
The burgers, hotdogs and sandwiches come with up to 15 free toppings, giving 250,000 combinations to choose from. If you had one a day, it would take you 684 years to try them all and the milkshake machines give over 1,000 possible combinations.
Extract B Selected financial data for Five Guys (UK and Europe) 31 December 2020 and 2021
Extract C Data for purchasing a new £10000 milkshake machine for a Five Guys restaurant
Extract D How to Incentivise Your Crew The fast-food industry is well known for its over 100% labour turnover levels. Many businesses are relying on employee incentive programmes to retain their workers.
One popular way is using mystery shoppers. A mystery shopper is a person employed to visit a shop or restaurant anonymously to assess the quality of the goods and services.
Five Guys uses mystery shoppers to assess the quality of its food and the customer services given by employees. The information gathered from mystery shoppers is used to create weekly, monthly and quarterly rewards programmes for its employees.
Five Guys rewards the top 200 restaurants every week. The weekly reward is anywhere from $900 to $1 300 per restaurant. The money is shared between the employees working in the restaurant when they were mystery shopped.
Molly Catalano, Director of Communications and Marketing at Five Guys, said, "We think that our success can be seen in the increasing mystery shopper scores over time, in the satisfaction of our employees and in our growth as a company. We have seen success in all three areas."
Five Guys is still expanding and has 1,600 locations in 19 countries across the world.
Extract E Five Guys launches merchandise collection Five Guys, known for its burgers, hot dogs and milkshakes, has launched the first of its clothing lines branded with the Five Guys logo in the UK.
The main item from the collection is the black and white embroidered unisex college jacket that pays tribute to Arlington, Virginia, where the brand was founded in 1986. This follows the current trend for American-styled clothing, which has seen college jackets feature in high street and designer collections during summer 2022.
Alongside the college jackets are the official Five Guys t-shirts, featured in red, black and white, branded sweatshirts and hoodies, baseball caps and red-and-white checked sports socks. There is even a lightweight rain jacket with the Five Guys logo.
Prices start from £10 for the socks to £75 for the college jacket. T-shirts cost £20 each, while sweatshirts are priced at £35 and hoodies at £45. All can be purchased at the Five Guys online store.
Extract B Selected financial data for Five Guys (UK and Europe) 31 December 2020 and 2021
Using Extract B, calculate to two decimal places the return on capital employed
(ROCE) for Five Guys in December 2021. You are advised to show your working.
Assess the likely effectiveness for Five Guys of using financial rewards to reduce labour turnover.
Extract A
Lush promises to invest in UK stores after return to profit
Ethical UK high street retailer Lush, best known for its highly scented bath soaps and handmade cosmetics, returned to profitability in the financial year 2021-22.
The latest statement of comprehensive income for Lush showed a pre-tax profit of £29m during 2021-22 compared to a loss of £45m in the previous year. However, turnover was lower at £408.7m, down from £437.8m in the previous year.
Lush operates retail outlets in 48 countries and has manufacturing facilities in six countries. It plans to attract more customers by investing in larger outlets with services such as health spas and hairdressers.
The business made no dividend payments to its shareholders in 2022. "We have to invest money now. We need to refit our shops." said Mark Constantine, one of the co-founders of Lush.
The group continues its policy of charitable donations, with Lush raising funds of £6.3m for several charities.
Extract B
Selected cost and sales data for Lush's bath soap department
Extract C
Lush boss Mark Constantine happy to lose £10m after leaving social media
Ethical beauty brand Lush is expected to lose £10m in sales after leaving four major social media platforms. Lush's co-founder, Mark Constantine, shut its Facebook, Instagram, Snapchat and TikTok accounts. Its Facebook and Instagram accounts had 10.6 million followers.
Constantine said he had no choice and that it is a price he is willing to pay. He was concerned over research showing the negative impact of social media platforms on many teenage girls, key consumers for Lush. "We've tightened up during the global health crisis, it won't destroy us. We will find new ways to connect with our customers as well as using the older tried and tested routes," he added.
Extract D
Lush has been 10% employee owned since 2017
The employees of Lush and its ethics are at the heart of the business. In 2017, Lush shareholders gifted 10% of the company shares into the Lush Employee Benefit Trust (EBT). There are five Trustees who look after the trust on behalf of the employees.
The purpose of having an employee ownership scheme is to:
- protect our ethics
- ensure the independent ownership of the business
- maintain the bonus culture
- promote two-way inclusive communication
- give every Lush employee a voice.
Extract E
We Believe - Lush's guiding statement for 25 years
We believe in:
- making effective products from fresh, organic fruit and vegetables, the finest essential oils and safe synthetics
- making products by hand using little or no preservative or packaging, using only vegetarian ingredients, and telling you when they were made
- buying ingredients only from companies that do not test on animals
- happy people making happy soap, putting our faces on our products and making our mums proud
- our products being good value, that we should make a profit and that the customer is always right.
Explain one reason why shareholders might be interested in the financial
statements of Lush.
Extract A The Five Guys' family, freshness and customisation Jerry and Janie Mitchell lived in Arlington, Virginia. In 1986 they gave their five sons a choice: start a business or go to college. The business route won and the family opened the first Five Guys - named after the five brothers.
To this day, the formula remains simple: 'Burgers and fries cooked to perfection' in keeping with Jerry's philosophy of 'To perfect and to serve.' The family is still very much involved in the business, meeting every Tuesday.
Five Guys is organised differently from other fast-food burger outlets. You will not find a freezer in any Five Guys restaurant because everything is cooked from fresh ingredients. Food is prepared every day for maximum freshness including hand cutting the potatoes. Employees do the cooking without timers and are trained to judge the food's readiness by sight, aroma and texture. In other fast-food outlets machines are used to cook the food and timers are relied on to indicate when the food is ready to serve.
The burgers, hotdogs and sandwiches come with up to 15 free toppings, giving 250,000 combinations to choose from. If you had one a day, it would take you 684 years to try them all and the milkshake machines give over 1,000 possible combinations.
Extract B Selected financial data for Five Guys (UK and Europe) 31 December 2020 and 2021
Extract C Data for purchasing a new £10000 milkshake machine for a Five Guys restaurant
Extract D How to Incentivise Your Crew The fast-food industry is well known for its over 100% labour turnover levels. Many businesses are relying on employee incentive programmes to retain their workers.
One popular way is using mystery shoppers. A mystery shopper is a person employed to visit a shop or restaurant anonymously to assess the quality of the goods and services.
Five Guys uses mystery shoppers to assess the quality of its food and the customer services given by employees. The information gathered from mystery shoppers is used to create weekly, monthly and quarterly rewards programmes for its employees.
Five Guys rewards the top 200 restaurants every week. The weekly reward is anywhere from $900 to $1 300 per restaurant. The money is shared between the employees working in the restaurant when they were mystery shopped.
Molly Catalano, Director of Communications and Marketing at Five Guys, said, "We think that our success can be seen in the increasing mystery shopper scores over time, in the satisfaction of our employees and in our growth as a company. We have seen success in all three areas."
Five Guys is still expanding and has 1,600 locations in 19 countries across the world.
Extract E Five Guys launches merchandise collection Five Guys, known for its burgers, hot dogs and milkshakes, has launched the first of its clothing lines branded with the Five Guys logo in the UK.
The main item from the collection is the black and white embroidered unisex college jacket that pays tribute to Arlington, Virginia, where the brand was founded in 1986. This follows the current trend for American-styled clothing, which has seen college jackets feature in high street and designer collections during summer 2022.
Alongside the college jackets are the official Five Guys t-shirts, featured in red, black and white, branded sweatshirts and hoodies, baseball caps and red-and-white checked sports socks. There is even a lightweight rain jacket with the Five Guys logo.
Prices start from £10 for the socks to £75 for the college jacket. T-shirts cost £20 each, while sweatshirts are priced at £35 and hoodies at £45. All can be purchased at the Five Guys online store.
Extract B Selected financial data for Five Guys (UK and Europe) 31 December 2020 and 2021
Using Extract B, calculate to two decimal places the return on capital employed
(ROCE) for Five Guys in December 2021. You are advised to show your working.
Extract A The Five Guys' family, freshness and customisation Jerry and Janie Mitchell lived in Arlington, Virginia. In 1986 they gave their five sons a choice: start a business or go to college. The business route won and the family opened the first Five Guys - named after the five brothers.
To this day, the formula remains simple: 'Burgers and fries cooked to perfection' in keeping with Jerry's philosophy of 'To perfect and to serve.' The family is still very much involved in the business, meeting every Tuesday.
Five Guys is organised differently from other fast-food burger outlets. You will not find a freezer in any Five Guys restaurant because everything is cooked from fresh ingredients. Food is prepared every day for maximum freshness including hand cutting the potatoes. Employees do the cooking without timers and are trained to judge the food's readiness by sight, aroma and texture. In other fast-food outlets machines are used to cook the food and timers are relied on to indicate when the food is ready to serve.
The burgers, hotdogs and sandwiches come with up to 15 free toppings, giving 250,000 combinations to choose from. If you had one a day, it would take you 684 years to try them all and the milkshake machines give over 1,000 possible combinations.
Extract B Selected financial data for Five Guys (UK and Europe) 31 December 2020 and 2021
Extract C Data for purchasing a new £10000 milkshake machine for a Five Guys restaurant
Extract D How to Incentivise Your Crew The fast-food industry is well known for its over 100% labour turnover levels. Many businesses are relying on employee incentive programmes to retain their workers.
One popular way is using mystery shoppers. A mystery shopper is a person employed to visit a shop or restaurant anonymously to assess the quality of the goods and services.
Five Guys uses mystery shoppers to assess the quality of its food and the customer services given by employees. The information gathered from mystery shoppers is used to create weekly, monthly and quarterly rewards programmes for its employees.
Five Guys rewards the top 200 restaurants every week. The weekly reward is anywhere from $900 to $1 300 per restaurant. The money is shared between the employees working in the restaurant when they were mystery shopped.
Molly Catalano, Director of Communications and Marketing at Five Guys, said, "We think that our success can be seen in the increasing mystery shopper scores over time, in the satisfaction of our employees and in our growth as a company. We have seen success in all three areas."
Five Guys is still expanding and has 1,600 locations in 19 countries across the world.
Extract E Five Guys launches merchandise collection Five Guys, known for its burgers, hot dogs and milkshakes, has launched the first of its clothing lines branded with the Five Guys logo in the UK.
The main item from the collection is the black and white embroidered unisex college jacket that pays tribute to Arlington, Virginia, where the brand was founded in 1986. This follows the current trend for American-styled clothing, which has seen college jackets feature in high street and designer collections during summer 2022.
Alongside the college jackets are the official Five Guys t-shirts, featured in red, black and white, branded sweatshirts and hoodies, baseball caps and red-and-white checked sports socks. There is even a lightweight rain jacket with the Five Guys logo.
Prices start from £10 for the socks to £75 for the college jacket. T-shirts cost £20 each, while sweatshirts are priced at £35 and hoodies at £45. All can be purchased at the Five Guys online store.
Assess the likely effectiveness for Five Guys of using financial rewards to reduce labour turnover.