Item E: Emilios
St Ives is a seaside resort. It is very popular in the spring and summer but has lower visitor numbers from October to February. Emilios needs to increase its sales during these months.
A local successful restaurant chain has asked Emilios to develop and produce a new range of ice cream desserts which it would sell in its eight large restaurants across Cornwall. The restaurant chain would promote Emilios by adding its logo to the menu. The restaurant chain has offered to sell the desserts for a two-week trial period. If sales are good, then the desserts will stay on the menu. Emilios will receive half of the price the restaurant chain charges its customers.
Another option is for Emilios to open an ice cream shop in a nearby town from October to February. Emilios would sell its current popular range of ice cream in the new shop. The town centre has many popular high street stores and is very busy at Christmas time. However, it can be very quiet in January and February. There are already two successful ice cream shops on the town's high street.

Emilios wants to increase sales revenue during the winter months. It is considering two options to achieve this. Both options will cost the same to set up. The options are:

• develop a new product range of ice cream desserts to sell to the restaurant chain
• expand by opening an ice cream shop in the town centre.

Analyse the effect of each of these two options on Emilios.
Evaluate which of these two options will have the biggest impact on sales revenue for Emilios.

**Analysis of Option 1: Supplying the restaurant chain** This option involves product development and selling to another business (B2B). A major advantage is the potential to reach a large, new customer base across the restaurant's "eight large restaurants". This could significantly increase sales volume and also acts as a form of marketing, as the Emilios logo on the menu would build brand awareness across Cornwall. However, a key risk is that it is only a "two-week trial period". If the desserts don't sell well, the partnership could end, leaving Emilios with wasted development costs and no long-term revenue increase. Furthermore, Emilios will only receive "half of the price", meaning the profit margin per unit will be lower than selling directly to consumers. **Analysis of Option 2: Opening a new shop** This option involves market development by opening a temporary (pop-up) shop in a new location. The main benefit is the potential to capture high footfall, as the town is "very busy at Christmas time". Emilios would also keep 100% of the sales revenue, leading to higher profit margins per sale compared to the restaurant option. However, this is a very competitive move, as there are "already two successful ice cream shops" in the town. Emilios would face immediate, established competition. Also, demand is likely to be highly seasonal, with the text noting it can be "very quiet in January and February", which could lead to the shop making a loss during these months after the Christmas rush. **Evaluation and Recommendation** Both options have the potential to increase winter sales revenue, but supplying the restaurant chain is likely to have the biggest and most sustainable impact. The new shop option is very high risk. While it could generate high revenue during the Christmas period, the presence of two established competitors and the guaranteed quiet period in January and February make it very likely that the overall profitability of the venture would be low. The costs of running a physical store (rent, staff, utilities) would continue even when sales are minimal. In contrast, the restaurant chain option leverages the existing success and customer base of another business. While the initial trial period is a risk, a successful trial would lead to a stable revenue stream from eight locations, likely far exceeding what a single, temporary shop in a competitive market could achieve, especially during the quiet post-Christmas months. The lower profit margin per unit is offset by the potentially huge sales volume and lower operational risk, as Emilios would not be running the outlets itself. Therefore, partnering with the restaurant chain offers a more scalable and less risky path to significantly increasing sales revenue over the entire winter period.