RMIT Classification: Trusted

MealKit4U – Risk Management

Matters that cause sleepless nights for Mealkit4U managers.
Mealkit4U has been operating for a few year now. At one stage, losses were accumulating, and the
owners wanted to wind up the business. However, the management were confident that the business is
commercially viable and is on the verge of recording a profit. In the year ending 30 June 2022, the
managers expect a small profit and a positive cash flow. The problem seems to revolve around the cost
of delivering the meals to customers. At the last monthly management review meeting, the
management team introduced a delivery fee that would be waived for order quantities in excess of 12
meals. This seems to have increased the average number of meals per delivery and boosted contribution
margins. The company's prospects now seem more promising. The managers are worried about the year
ahead.
Inflation is expected to rise, leading to an increase in the cost of MealKits4U's supplies. The courier that
is currently delivering the meals has indicated that they may need to increase their delivery fee. Many
farms have been damaged by floods, bush fires, and shortage of labour. Cost of meat and vegetables
may rise.
A small increase in interest rates may wipe out MealKit4U's profit, while imported inflation may put
pressure on the Central Bank to increase interest rates (VietnamNews, July 25th 2022).
Wages are also under pressure to rise as the government decided to increase the minimum wage in July
after keeping it constant for two years. (VNExpress, June 13th, 2022). Staff at Mealkit4U will have a
strong case to ask for a pay raise given.
The COVID-19 pandemic has heighted public health concerns all over the world. Governments may
respond by imposing more onerous food hygiene regulations. Consumers are demanding higher quality,
more natural, more environmentally sustainable, and more healthy food (VietnamNews, June 8th, 2022).
The risk of contamination in a commercial kitchen is always lurking. A minor contamination incident may
cause long-lasting and disproportionate harm to the business.
The pandemic has also increased the incidence of sick leave. Workers may continue to take sick leave for
relatively mild symptoms to avoid contagion.
The effects of climate change are taking their toll on various communities. Unusual and extreme
weather pattern are disrupting communities. We are seeing more floods, storms, bushfires in
unexpected places (ABCNet, June 23rd, 2022).
As online shopping becomes the norm, new providers of home delivered meals are entering the market.
Competition is intensifying.
Innovative technology is yielding efficiencies in online shopping platforms, delivery networks, and
commercial kitchens. If MealKit4U does not adopt these technologies quickly enough, its competitive
advantage will erode, and its precarious profits will disappear.
There is no shortage of issues causing sleepless nights for MealKit4U managers!
Last revised July 28th 2022 (DB)