Jim Foster is the owner of Selwyn Pub in North Carolina. Jim’s family was the owner of the pub for over four decades. The distinguishing feature of the Selwyn Pub is the massive oak tree in front of the pub, its branches and leaves cascading over the side walk. The tree became the arbor for outdoor dining and pub services, giving a natural gift of green shade and breeze through the hot summer months and cool sunshine in early Fall and late Spring. The outdoor area was approximately 50 feet by 50 feet. Each table occupies 12 feet by 8 feet, seating 22 tables, after accounting for walk throughs.
Over the years, Jim noticed that the tree was not as abundant and despite repeatedly service from expert arborists (tree doctors), the tree was in failing health. The town decided that the tree was danger to property and people and decided on its imminent removal.
Foster was convinced that nothing would replace the tree to his business and to its patron. However, will the removal of the tree offer opportunities for his business? Clearly, each replacement would involve different costs and benefits to his business. These are some of the thoughts Foster considered.
Foster estimated explicit costs as follows:
Foster also estimates that financing investment would require additional bank loan. The interest rate on the loan is estimated at 7% annually. Foster intends to apply for a business line, pay interest only for 12 months and the principal back at the end of 12 months.
Review attached spreadsheet for further inputs for analysis.
Modified based on Cox, S., Foster, J., Burson, T., & Repede, J. (2018). A Tree Dies and a Pub Suffers. Journal of Case Studies, 36(2), 19+.
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