John is the manager of the Cornerrestaurant. The restaurant has 125 seats and has been open for 12 years. Historically the restaurant was fully booked every day, however lately this has changed. John has been reviewing the numbers for June, he is disappointed to see that the overall revenues are still down. Since the start of the year John was concerned to see that the overall revenues for the restaurant kept trending down and decided to introduce a new updated menu in June hoping it would attract more customers. Chef Jenny decided to only use local products only for the new menu. The new menu prices were determined by using a traditional pricing model; Product Cost Percentage. The cost prices of the local products are higher and by using this model the selling price for the menu items increased automatically. However, because of the quality of these local products, John and Jenny were convinced people would be happy to pay more for these new menu items. John and Jenny are desperate what to do next?

QUESTIONS

Question 1 Using the Product Cost Percentage Model, what is the new selling price for the below menu items?

	Desired Cost %	Item Cost $	Selling Price
Corner Burger & Fries	40%	$7.25	$
Chicken Club Sandwich	38%	$6.55	$
Daily soup & Salad	35%	$7.80	$

Question 2 John decided to deploy a questionnaire to understand the decline in customers. The most common answers he received were:

• The Red Bistro around the corner has better prices
• The time from ordering till leaving the restaurant often takes more than 2 hours
• The new portion sizes are smaller but the prices are higher

Looking at the feedback for the customers which 3 (three) value perceptions should John take in consideration when deciding on the selling price?

1. ________________ 2. ________________ 3.________________

Question 3 (max 150 words, use rubric) Reading the facts in the case study, do you believe the restaurant market for the Corner restaurant is Elastic or Inelastic? Explain why it important for John to understand why the market is elastic or inelastic?_________________________________________________________________________________

Question 4a John decides to review the average check and RevPASH for his restaurant. Calculate the Average Check and RevPASH for each time slot for Friday night.

Friday Night
Hour	Available Seats	Guest Served	Revenue	Average Check	RevPASH
4-5PM	125	10	$700.00	$	$
5-6PM	125	35	$2,520.00	$	$
6-7PM	125	105	$5,460.00	$	$
7-8PM	125	125	$6,000.00	$	$
8-9PM	125	125	$5,750.00	$	$
9-10PM	125	75	$3,525.00	$	$
10-11PM	0	0	0	$	$
Total	750	475	$23,955.00	$	$

SeatUtilized: _____________________

Question 4b

When analyzing the data of question 4a, name 1 (one) example of a demand pricing strategy that John could use to increase the revenues of the restaurant between 4-6PM:

• ____________________________________________________________________
• Why? (Max 150 words - use rubric) ____________________________________________________________________

Question 4c

When analyzing the data question 4a, name 1 (one) example of a demand pricing strategy that John could use to increase the revenues of the restaurant between 8-9PM:

• ____________________________________________________________________
• Why (max 150 words - use rubric) ____________________________________________________________________