Pans Across America Baking Company sells breads, bread products, and

Question

Pans Across America Baking Company sells breads, bread products, and cakes through multiple channels including cafes, supermarkets, its PAB online division, and its PAB catering division. For the past three years, PAB catering and online revenues have grown modestly. This result is surprising given a sharp, industry-wide slowdown in bread consumption due to low-carb diet crazes that have negatively affected total Pans Across America revenues markedly.

Which of the following resolves the apparent discrepancy presented above?

A. The recent introduction of Wi-Fi Internet access to Pans Across America cafes has increased both the number of visitors and the duration of their visits. 
B. Compared to three years ago, Pans Across America online and catering revenues have increased. 
C. Pans Across America is heralded for its partially baked bread products that many large sandwich chains purchase for use in their offerings. 
D. Profit margins at both PAB catering and PAB online are much higher than those generated by the company through cafes and supermarkets. 
E. Last year's attempt at marketing Pans Across America cafes as a coffee and bread destination on the basis of strong online coffee sales proved unprofitable

PgRaul · Answer

Pans Across America Baking Company sells breads, bread products, and cakes through multiple channels including cafes, supermarkets, its PAB online division, and its PAB catering division. For the past three years, PAB catering and online revenues have grown modestly. This result is surprising given a sharp, industry-wide slowdown in bread consumption due to low-carb diet crazes that have negatively affected total Pans Across America revenues markedly.
Which of the following resolves the apparent discrepancy presented above?

A. The recent introduction of Wi-Fi Internet access to Pans Across America cafes has increased both the number of visitors and the duration of their visits.  correct, tells why revenue increased in PAB catering divisions
B. Compared to three years ago, Pans Across America online and catering revenues have increased.  just stating fact 
C. Pans Across America is heralded for its partially baked bread products that many large sandwich chains purchase for use in their offerings.  same as B 
D. Profit margins at both PAB catering and PAB online are much higher than those generated by the company through cafes and supermarkets.  profit and revenue not same 
E. Last year's attempt at marketing Pans Across America cafes as a coffee and bread destination on the basis of strong online coffee sales proved unprofitable  doesn't resolve the discrepancy 
 EXPERTS REPLY

globaldesi · Answer

Official explanation:

(C) The basis of this Paradox question is that revenues for the PAB catering and online divisions have grown nicely in spite of an industry-wide slowdown that has negatively affected the total revenues for Pans Across America. You need to explain this discrepancy.

Choice (A) does not explain the discrepancy. The fact that Wi-Fi access has increased the number of visitors and the durations of their visits to the cafe does not address the paradox.

Choice (B) gives a reason why PAB catering revenues could have increased, which you already know from the argument. It does nothing to explain why this has happened despite weaker total company revenues and an industry-wide slowdown.

Choice (D) indicates that profit margins at PAB catering and PAB online are much higher than those generated by the company at cafes and supermarkets, but the scope of the argument is revenues — not profit margins.

Similarly, choice (E) mentions an unprofitable marketing campaign at the cafes, not a revenue decrease.

Choice (C) explains the paradox. If Pans Across America is known for its partially baked bread products that many large sandwich chains purchase for use in their offerings and there has been an industry-wide slowdown, it stands to reason that the sandwich chain customers would be buying fewer bread products from Pans Across America.

chetan2u · Answer

I do not think any option fits in correctly here.

The discrepancy is that revenue through 'PAB online division and PAB catering division' has increased in spite of overall slowdown in the industry due to change in eating habits of people. Even the revenue of other sales point of PAB have decreased drastically.

What should we be looking at?
 If there was a slowdown overall, then why did the revenue through 'PAB online division and PAB catering division' increase.

None of the choices is able to clear this discrepancy!!

A. The recent introduction of Wi-Fi Internet access to Pans Across America cafes has increased both the number of visitors and the duration of their visits. 
 Are these cafes part of 'PAB online division and PAB catering division'?  We cannot say as the CAFES have been mentioned separately in 'through multiple channels including  cafes , supermarkets, its PAB online division, and its PAB catering division.'

B. Compared to three years ago, Pans Across America online and catering revenues have increased. 
Mentions something that is already part of paragraph.--For the past three years,  PAB catering and online revenues have grown modestly

C. Pans Across America is heralded for its partially baked bread products that many large sandwich chains purchase for use in their offerings. 
Again mentions something that is already part of paragraph.--industry-wide slowdown in  bread consumption due to low-carb diet crazes  that have negatively affected total Pans Across America revenues markedly.
We already know that PAB deals in bread products that have taken a hit because of eating habits. Does not say WHY there was an increase in PAB catering and online revenues.

D. Profit margins at both PAB catering and PAB online are much higher than those generated by the company through cafes and supermarkets. 
Irrelevant

E. Last year's attempt at marketing Pans Across America cafes as a coffee and bread destination on the basis of strong online coffee sales proved unprofitable
Irrelevant again

globaldesi · Answer

I totally agree .
I did it wrong but it was in one of the high score ranging questions(750-800) and I was not sure if the official explanation is correct.

Fdambro294 · Answer

The discrepancy as indicated by the facts:

The result is “surprising.”
 
The result referred to is that for the past 3 years, the bread company’s CATERING and ONLINE revenues have increased, even though PAB’s “total revenues” have been “negatively effected markedly.”

So which answer resolves the apparent discrepancy?

Which answer explains why the company’s catering and online revenues have grown modestly, in spite of the fact that overall revenues and industry wide demand are down.

Which answer describes why the company’s two divisions saw revenue increases even though overall the revenue declined?

Large sandwich chain purchases are not “catering business.” (This is considered wholesale/retail business)

Furthermore, it’s not clear how large sandwich chain purchases would affect the online business. It is also unclear how purchases from large sandwich chains would provide just those two divisions with enough business to generate modest revenue growth, while the rest of the company was negatively affected.

Out of the 5 answers provided, at least C provides something “positive” with which we can use to say the company might have seen revenue increases. However, it is still unclear how large sandwich shop demand/purchases impacts the two divisions discussed in the passage.

Posted from my mobile device

mike1122 · Answer

Could any of the experts explain the reasoning, as its unclear why we should assume that the orders from sandwich chains contribute to online/catering revenue growth?

guddo · Answer

Pans Across America Baking Company sells breads, bread products, and cakes through multiple channels including cafes, supermarkets, its PAB online division, and its PAB catering division. For the past three years, PAB catering and online revenues have grown modestly. This result is surprising given a sharp, industry-wide slowdown in bread consumption due to low-carb diet crazes that have negatively affected total Pans Across America revenues markedly. 
 
Which of the following resolves the apparent discrepancy presented above?

The puzzle is that total PAB revenues dropped because bread consumption slowed, but PAB’s online and catering divisions still grew modestly.  The best explanation  should show that those divisions had some source of demand that was not strongly hurt by the general  low-carb trend .

(A) The recent introduction of Wi-Fi Internet access to Pans Across America cafes has increased both the number of visitors and the duration of their visits.

This does not explain the growth in online and catering revenues. It is about cafes.

(B) Compared to three years ago, Pans Across America online and catering revenues have increased.

This only restates the surprising fact. It does not explain why those revenues increased.

(C) Pans Across America is heralded for its partially baked bread products that many large sandwich chains purchase for use in their offerings.

This is correct. If many large sandwich chains buy PAB’s partially baked bread products, then PAB can have a strong revenue source even while ordinary consumer bread consumption is falling. This can explain why some divisions, especially business-oriented channels such as catering or online ordering, grew despite the overall decline.

(D) Profit margins at both PAB catering and PAB online are much higher than those generated by the company through cafes and supermarkets.

This does not explain revenue growth. Profit margin and revenue are different things.

(E) Last year's attempt at marketing Pans Across America cafes as a coffee and bread destination on the basis of strong online coffee sales proved unprofitable.

This does not explain why online and catering revenues grew. It discusses an unprofitable cafe-marketing attempt.

Answer: (C)

egmat · Answer

Hi mike1122,

Your instinct to look for a connection between the sandwich-chain orders and the catering division is a good one. But that connection isn't an  assumption  you have to supply. It's built into what a  catering division  is.

Start with what's causing the slowdown. The stimulus says demand fell because of  "low-carb diet crazes"  - that's  individual consumers  cutting bread. Those are the people buying a loaf at a cafe counter or off a supermarket shelf, so retail is exactly where the industry-wide drop bites.

Now look at who C introduces:  "many large sandwich chains purchase   for use in their offerings."  Sandwich chains are  businesses , not dieting individuals. They buy in bulk to build their own products, so their demand isn't governed by the low-carb craze the way retail demand is. It's a separate stream of buyers that keeps ordering.

And bulk supply to business buyers  is  the catering channel. Catering is the wholesale arm; the walk-in retail slowdown doesn't touch it the same way. So the sandwich-chain orders don't need to be "assumed" into catering - catering is the natural home for exactly that kind of bulk business demand. That gives you growth that survives, even grows, while the consumer side shrinks.  Paradox resolved.

Worth knowing too: a paradox answer only has to make the surprising result  plausible , not airtight. C supplies the one missing piece - a buyer segment insulated from the trend sinking everything else.

A simpler stand-in to lock it in:

A pizza place's total sales drop as customers go gluten-free, yet its  wholesale  revenue grows. Puzzling - until you learn nearby restaurants keep buying its dough in bulk. Those buyers aren't dieting, and bulk orders flow through wholesale, not the walk-in counter.

Same move: a distinct business-demand source, flowing through the channel that grew.

Answer: C

Pans Across America Baking Company sells breads, bread products, and

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Pans Across America Baking Company sells breads, bread products, and

Prep Toolkit

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