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Ken and Sai Krizorung live in Budget Haven, Financevania. A couple of years ago they visited Thailand. Sai, a professional chef, was impressed with the
Ken and Sai Krizorung live in Budget Haven, Financevania. A couple of years ago they visited Thailand. Sai, a professional chef, was impressed with the cooking methods and spices used in the Thai food. BR does not have a high-end Thai restaurant, and the Krizorung are contemplating opening one. Sai would supervise the production aspect of the restaurant, and Ken would be responsible for the business side. The establishment would serve dinner Thursday through Sunday, starting at 4.00pm until midnight. The restaurant will have 11 (eleven) tables, each of which can seat 4 (four). Tables can be moved together for a large party. Sai realistically expects to have 7 (seven) visitors (sittings) per evening and the restaurant will be open 48 (forty eight) weeks a year. They plan to hire 1 person as a waiter, who will be expected to be working during all opening hours of operation. Ken conducted some preliminary analysis and came up with the following estimates: Item $ Amount Average revenue per meal $98.00 Average cost of food per meal $27.75 Waiter Salary per hour $6.75 Sai Salary per year $50,000.00 Rent (Premises and Equipment) per month $4,000.00 Cleaning (linen and premises) per month $750.00 Miscellaneous Expenses per Month $400.00 Utilities, Ads, Communication Lines per Month $1,500.00 Questions: 1. How many meals must be sold for the Restaurant to break even? Show all of your calculations and answer the question in a complete sentence. 2. How many meals must be sold for the Restaurant to earn a profit of $90,000 per year? Show all of your calculations and answer the question in a complete sentence. 3. How many meals must be sold per night for the Restaurant to earn the target profit of $90,000 per year? Show all of your calculations and answer the question in a complete sentence. 4. Should the couple open the restaurant? Support your
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