I'll truly appreciate with explanations

PART 3 The Pieman's Fancy management team was once again impressed with your team's recommendations on the investment opportunities. For various reasons, the company decided to invest in the new labelling machine and not pursue the national fast food chain RFP. However, since receiving your recommendations, the company has been conducting strategic planning discussions on the future of Pieman's Fancy and is considering two major acquisitions. Option 1 Purchase Pete's Steakhouse. Up to now, Pieman's Fancy has focused on selling pies as a wholesaler to restaurants and supermarket chains. Linda and Taylor were approached by the chain's management group about whether they would be interested in buying their five underperforming restaurants and operate them under the "L&T's Steakhouse" name. Pete's Steakhouse is known for its excellent steak dinners and service but has struggled to expand its menu to compete with the many dining options available to consumers. The key idea with this acquisition is that adding Pieman's Fancy outstanding dessert offerings would make the new restaurant an appealing destination for both dinner and dessert. To help prepare for the upcoming initial negotiations, Linda and Taylor have asked you to review the 2019 performance report for the chain (see Table 2). It is estimated that average price per meal would increase 12% with the new desserts and require an investment of R10 million. Table 2: Pete's Steakhouse 2018-2019 Performance Report 2019 Actual 2018 Actual Customer volume R1 066 000 R1 105 000 Net sales R10 523 440 R10 508 520 Cost of sales R7 335 366 R7 363 252 Food R 6340 206 R6 362 722 Labour R995 160 R1 000 480 Gross profit R3 188 074 R3 145 268 Other operating expenses R2 270 665 R 2 222 835 Operating profit R917 409 R922 433 Other data Average operating assets R7 500 000 R7 500 000 Food costs: % variable 100% 100% Labour costs: % variable 70% 70% Other operating expenses: % variable 60% 60%Use the following as a guide when making your recommendations: 1. Assess performance for Pete's Steakhouse in terms of expected return on investment (ROI) and residual income. What were the major factors that contributed to the difference between profits from 2018 to 2019? What does this analysis suggest for Pieman's Fancy 2. Assess the viability and profitability for the Newtown factory including its expected ROI and residual income. What does this analysis suggest for Pieman's Fancy? 3. Comment on the strategic, technical, behavioural and risk factors that are relevant to this decision. What does this analysis suggest for Pieman's Fancy? 4. What action do you recommend for Pieman's Fancy at this time?Option 2 The second option is to purchase and operate a factory in Newtown, Johannesburg which would double Pieman's Fancy current production volume. There is an existing food production facility in Newtown in a location that is well positioned on distribution routes and provides proximity to a whole new market of restaurants and supermarket chains. The asking price for the factory is R7.5 million and includes existing equipment. About half the machinery could be used by Pieman's Fancy but would also require an investment of R2.5 million in additional equipment with a 10-year average life to provide the same capacity as the current factory. It would take about six months to get the new plant up and running. Estimated sales for the first three years after it opens are R4 million, R6 million and R10 million, respectively. Variable expenses are expected to have about the same behaviour and relationship to sales as the current facility. Fixed expenses would be about the same amount per month as the current factory