CASE 21 Inca, Inc.* 81 persons, and included a pickup window for drive-through service. Inca, Inc., operated and licensed others to operate quick-service restaurants under Locations were chosen in heavily populated areas, since success depend-ed upon serving a large number of customers. the name Pedro's. The menu featured chiliburgers, along with a limited selection of Mexican foods. The walls of each restaurant were decorated with the exploits of Mexican heroes. All of the restaurants offered the same menu. Three sizes of chiliburgers were featured: the Gaucho (quarter pound), the Soldado (half pound), and the Matador (three-quarter pound). The names were integrated into the company's advertising. On television each commercial gave special attention to one of the three themes. The first Pedro's was opened in Santa Fe, New Mexico, on June 9, 2003. Ten years later there were 298 restaurants in operation in 27 states, of which 111 were operated by the ompany and 187 by franchisees. In The prospective franchisee signed a document that included the option of operating a specified number of Pedro's restaurants in a prescribed geographical area. Each new location required an initial payment of $18,000. In addition, a royalty of 5 percent of gross sales was specified. It was also stipulated that franchisees must spend at least 2 percent of gross receipts on local advertising. Inca, Inc., believed that properly trained employees were the key to success. Therefore, managers and company trainees were addition, 4 restaurants were under construction by the company, and 64 by franchisees. A balance sheet as of June 30, 2013, is included in Figure1 Each Pedro's restaurant was built to the same specifications for exterior style and interior dcor. The buildings, constructed of yellow brick, were located on sites of approximately one acre. The parking lots, depending on the exact size and shape of the land, were designed for 30 to 35 cars. The standard restaurant contained about 1,900 square feet, seated From Henry R. Kuniansky and William H. Marsh, Case Problems in Financial Management (Englewood Cliffs, N.J. Prentice-Hall)