Fishy and Chippy Ltd operates a chain of restaurants in Perth, South Australia. The head office reviewed information about two of its restaurants i.e. Restaurant Alpha and Restaurant Gamma (see below). Each restaurant operates as a separate stand-alone business and is designated as an investment centre.

	Restaurant Alpha	Restaurant Gamma
Sales	$900 000	$805 000
Cost of goods sold	$495 000	422 500
Operating expenses	$350 000	300 000
Profit	$55 000	$82 500
Average invested capital	$350 000	$500 000
ROI	?	?
RI	?	?

Required:

Calculate the financial performance of each restaurant using both ROI and RI. Assume the firm's minimum required rate of return is 13%.

Which restaurant performed better? Explain

Suggest two ways the poor-performing restaurant can improve its performance in the future