Wells Ice Cream

Wells Enterprises, a mid-sized ice cream chain in the US Southeast, has experienced a 20% decline in profitability over the past year. The VP of Sales & Marketing has engaged a consulting firm to diagnose the root causes and recommend corrective action. This is a moderately complex profitability case combining qualitative brainstorming with light quantitative analysis, designed to test a candidate's structured thinking, business intuition, and ability to identify meaningful trends from data.

Client: Wells Enterprises, Inc. Headquarters: Orlando, Florida Business: Mid-sized ice cream store chain operating across the US Southeast Brand Portfolio: Blue Bunny (flagship / primary brand) 2nd St. Creamery Bomb Pop Several private label brands Engagement Context: The VP of Sales & Marketing noticed a 20% year-over-year decline in profitability and has hired the consulting firm to investigate the cause and develop recommendations. The case is intentionally somewhat vague, simulating real-world ambiguity. The interviewer may ask follow-up qualitative questions such as "Why do you think that is?" or "Why is that number high?" throughout the discussion.

Why has Wells Enterprises experienced a 20% decline in profitability over the past year, and what specific actions should they take to reverse this trend?

Framework: Profit = Revenue – Costs Structure the analysis as a standard profitability tree, disaggregating profit into revenue and costs, then drilling into each bucket. Step 1 — Diagnose the Profit Decline Quantify how much of the 20% decline is from revenue compression vs. cost escalation Disaggregate revenue by brand, store, and region to isolate problem areas Break down costs into fixed vs. variable, and COGS vs. operating expenses Step 2 — Identify Root Causes Revenue side: pricing pressure, volume decline, product mix shift, or lost distribution Cost side: commodity inflation (dairy), labor market tightening, logistics cost rise, or operational inefficiency External factors: competitive activity, consumer trend shifts, regulatory changes Step 3 — Develop Recommendations (examples) If revenue-driven: Introduce tiered pricing or limited-time premium offerings to increase average ticket Launch loyalty program to improve visit frequency Double down on Blue Bunny marketing in highest-performing zones Rationalize underperforming private label SKUs dragging margins If cost-driven: Renegotiate supplier contracts or explore alternative dairy sourcing Implement labor scheduling optimization to reduce idle hours Evaluate store-level profitability — consider closing or restructuring loss-making locations Consolidate distribution routes to reduce logistics spend