Consulting Advice for Ontario Sushi Inc.

Ontario Sushi Inc.

It is now October 19, 2018 and you, CPA, are a manager with York Consultants. You have recently been hired to provide consulting advice to Ontario Sushi Inc. (OSI). Jeff Fung is the sole owner of OSI’s shares and manages overall operations.

OSI has operated award-winning Japanese restaurants in Toronto for the past ten years. OSI’s mission has always been to provide the ultimate dining experience by serving the highest quality and freshest ingredients, with the widest variety of regular and exotic items on its menu, all provided with impeccable service in an authentic Japanese setting.

OSI’s key success factors include focusing on activities at which it excels. For example, Jeff’s best friend, Brandon Ling, manages the restaurants and has over 20 years of experience. As well, Jeff was an award-winning chef at an exclusive Japanese restaurant for many years before opening OSI. Another key to OSI’s success has been maintaining strong relations with only a few key suppliers of seafood, meats, and poultry for many years has generated strong loyalty in terms of efficient service and delivery. This has allowed OSI to obtain the best quality and selection of items to serve in its restaurants.

A few weeks ago, Brandon raised the possibility of expanding OSI’s core operations. Jeff has briefly looked at the proposals but wants you to evaluate these proposals to assess the consistency with the company’s strategic focus that has allowed OSI to be so successful to date. You met with Brandon to discuss the proposed expansion ideas and your notes from the meeting are provided in Appendix I.

Jeff mentioned that one of his restaurants has not been as profitable as budgeted. Jeff would like you to prepare an analysis of the variances and explain the reasons for the cause of the variances. You met with Jeff and your notes from the meeting are provided in Appendix II. During the year, Jeff inherited a food preparation business. The business is completely independent of OSI’s core restaurant operations. The food items are prepared in a factory and sold in local supermarkets. Additional information on this business is provided in Appendix III.

“On a few occasions recently, we refused seafood and meats that were not fresh. There is an existing fish plant for sale that is located relatively close to our restaurants. One of the key risks with any food processing plant is the risk of food contamination.”

“We want to consider selling the 20 most popular menu items through a retail store to reach a wider range of customers. We think that this is a good cross-selling opportunity because it is another way to bring more customers to our restaurant.

“We would not have any on-site sushi chefs. Instead, the food items would be prepared ahead of time and shipped to the store. In the event of potential shortages, food can be prepared at any of the restaurants and shipped to the store within one hour. For cost and logistical reasons, we would not be selling any of the exotic items that set our restaurants apart from others.

“The food items for the day would be prepared early in the morning and completed by 9:00 am.

Then the items would be shipped to the store by 10:30 am. The store would be open  items sold from static display cases. At the end of the day, any unsold items would be disposed of, or given to a homeless shelter, since fresh sushi only has a one-day shelf life.”