Break-Even Point Calculations

Source for use with Section B

Extract C

Beach in the summer, Bali in the winter

Soul Boul is a small business selling smoothie bowls from a beachside cafe in New Zealand. The smoothie bowls are made with yogurt, fresh fruit and topped with berries, seeds and more fresh fruit. The colourful bowls look amazing, are fun to eat and taste delicious.

Co-founders, Stacey Horton and Alexandra Bell, met at university and became friends through a shared interest in nutritious food and healthy lifestyles. The idea for Soul Boul came from a holiday Alexandra took to Bali, Indonesia.

“I was amazed at all the incredible, healthy foods available there, which included numerous smoothie bowls. I spent a considerable amount of time taste-testing different recipes in Bali. I began to think of business names and logo concepts and came back to New Zealand to ask Stacey if she would set up a lifestyle business with me,” Alexandra explained.

Stacey and Alexandra had previously worked in the hospitality industry for six years and saved a lot of their wages during that time. However, Stacey lost her job when her former employer’s business failed to break-even and closed down. Therefore, she was initially reluctant to risk her savings.

“I worked for a busy tourist hotel,” said Stacey. “It had a lot of guests but also a lot of competition, with three other hotels competing for business within 1 km. At first I was worried Soul Boul may end up as a failing business too but then I realised the reasons the hotel failed were things we could make sure did not happen to us.”

“The quality of our ingredients is always high,” said Stacey. “The hotel manager was not interested in maintaining quality. He said foreign guests were unlikely to return anyway but there would always be other tourists to replace them! This led to negative reviews on social media and the poor reputation spread.”

Stacey took the positives from her experience in hospitality and learned from the negatives. Stacey and Alexandra have a positive attitude, plenty of energy for their ideas and are prepared to work hard. It does help that they earn enough during the summers working to be able to spend winters relaxing on a low budget in Bali, whilst sampling new ideas for ingredients.

In 2018, Soul Boul’s revenue totalled NZ$104 625 from selling smoothie bowls at NZ$12.50 each. By keeping costs to a minimum, operating profit was NZ$32 175.

Source for use with Section B

Extract C

Beach in the summer, Bali in the winter

Soul Boul is a small business selling smoothie bowls from a beachside cafe in New Zealand. The smoothie bowls are made with yogurt, fresh fruit and topped with berries, seeds and more fresh fruit. The colourful bowls look amazing, are fun to eat and taste delicious.

Co-founders, Stacey Horton and Alexandra Bell, met at university and became friends through a shared interest in nutritious food and healthy lifestyles. The idea for Soul Boul came from a holiday Alexandra took to Bali, Indonesia.

“I was amazed at all the incredible, healthy foods available there, which included numerous smoothie bowls. I spent a considerable amount of time taste-testing different recipes in Bali. I began to think of business names and logo concepts and came back to New Zealand to ask Stacey if she would set up a lifestyle business with me,” Alexandra explained.

Stacey and Alexandra had previously worked in the hospitality industry for six years and saved a lot of their wages during that time. However, Stacey lost her job when her former employer’s business failed to break-even and closed down. Therefore, she was initially reluctant to risk her savings.

“I worked for a busy tourist hotel,” said Stacey. “It had a lot of guests but also a lot of competition, with three other hotels competing for business within 1 km. At first I was worried Soul Boul may end up as a failing business too but then I realised the reasons the hotel failed were things we could make sure did not happen to us.”

“The quality of our ingredients is always high,” said Stacey. “The hotel manager was not interested in maintaining quality. He said foreign guests were unlikely to return anyway but there would always be other tourists to replace them! This led to negative reviews on social media and the poor reputation spread.”

Stacey took the positives from her experience in hospitality and learned from the negatives. Stacey and Alexandra have a positive attitude, plenty of energy for their ideas and are prepared to work hard. It does help that they earn enough during the summers working to be able to spend winters relaxing on a low budget in Bali, whilst sampling new ideas for ingredients.

In 2018, Soul Boul’s revenue totalled NZ$104 625 from selling smoothie bowls at NZ$12.50 each. By keeping costs to a minimum, operating profit was NZ$32 175.

Define the term 'break-even'. (Extract C, line 16)