Question
A 100-seat restaurant with average daily turnover of 2 and average check of $15 opens 365 days a year. Food cost is 38% of revenue
A 100-seat restaurant with average daily turnover of 2 and average check of $15 opens 365 days a year. Food cost is 38% of revenue and other variable costs is 22% of the revenue. Fixed costs are $220,000 a year.
a. How much is the variable cost per customer?
b. How many customers does the restaurant have to serve if the owner wants a $200,000 operating income?
c. The owner is not satisfied with the operating income and wants to improve it to $250,000 by increasing the average check to $17. To avoid customers deflecting to other restaurants, the owner will spend an additional $30,000 on advertising (additional fixed cost). The owner also wants to add $20,000 her own salary (another additional fixed cost). Assuming the variable costs per customer do not change (the same as in question a.), how many customers the restaurant needs to serve now?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started