How many cakes would Lady M need to sell in year one in order to break-even in accounting terms? Does this number seem feasible?

4 World Trade Center Although Lady M is Japanese and French, I want people to think: Lady M is New York. Romaniszyn said. The World Trade Center was certainly a prestigious and iconic location in New York City, but it was not cheap. While setting up a new boutique typically costs around $600,000, Romaniszyn predicted that the construction costs for the new World Trade Center location could easily reach a million dollars. Rent was also substantially higher at this location at $310,600 with an annual escalation of 3%. On top of this, they were looking at annual utility costs of approximately $38,644 (with an annual escalation of 3%) and annual labor costs of approximately $594,750 (with an annual escalation of 5%). The space was set to be 560 square feet within a food hall of 1,000 seats. Was the prestige worth the extra cost? Based on the commercial nature of the area, Romaniszyn predicted the new World Trade Center location would have similar sales patterns to the Bryant Park location (which made $1,152,001 in revenue in 2013). In Bryant Park, not only did they get the whole-cake purchases from businessmen on their way home after work, but also the customers who purchased individual slices, who may be on their lunch break or perhaps want to have a meeting in a different location. Romaniszyn expected the World Trade Center to also have both types of sales. When asked about possible self- cannibalization, Romaniszyn replied In New York, every 10 blocks is like a different city. People don't want to go 10 blocks. Really, it's a 10-minute walk but they don't want to go. It's got to be within a two-block radius. It will make it really convenient for a lot of people to pick up cakes. In addition, Romaniszyn hoped that this new location would open the business up to corporate catering because it would be in such a large office complex. In order to decide whether the new location would be worth the expense, Romaniszyn and Tom decided to do a break-even analysis. They were interested in seeing how many cakes they would have to sell each day (at an average price of $80 and with cost of goods sold assumed to be 50%) in order to make a profit in the first year. In addition, they were interested in how quickly cake sales would have to grow in order to pay back their start-up costs within five years of opening the new location. Although they were hoping sales would grow by 20% per year, if the new location didn't do very well they might only see sales growth of 5%. Based on this information, they would decide whether to open the new boutique