Q1. You have the following projections about the costs in a family restaurant for next year:

Net income required: 15% after income tax on the owners present investment of $80,000, income tax rate is 25%.

Depreciation: Present book value (consolidated) of furniture and equipment is $75,500, depreciation rate is 20%.

Interest: Interest on a loan outstanding of $35,000 is 8%.

Known Costs Variable Costs

Insurance $ 3,000 Food cost, 36% of sales revenue

License 2,500 Wage cost, 34% of sales revenue

Utilities 8,400 Other costs, 12% of sales revenue

Maintenance 3,600

Administration 9,800

Salaries 32,400

a. What sales revenue would the restaurant have to achieve next year in order to acquire the desired net income after tax?

b. What is the required average check needed to achieve the annual revenue objective if the restaurant is open 365 days, had 60 seats, and had an average seat turnover of 2.5 times per day?

Q2. A restaurant has 90 seats. Total annual sales revenue for next year is projected to be $975,000. The restaurant is open 52 weeks a year and serves breakfast and lunch 6 days a week. Dinner is served 7 days a week. Seat turnover per day is anticipated to be 2.0 times for breakfast, 1.5 times for lunch, and 1.25 times for dinner. Sales revenue is derived at 20 percent from breakfast, 30 percent from lunch, and 50 percent from dinner. Calculate the restaurants average check by meal period.

Q3. A 140-seat dining room had a weekly customer count by meal period and day:

Lunch Dinner

Sunday Closed 180

Monday 160 110

Tuesday 170 112

Wednesday 175 108

Thursday 160 120

Friday 180 210

Saturday 50 250

a. For each meal period and for each day of the week calculate the seat turnover.

b. Calculate the average number of customers per day and the average seat turnover for the week for each meal period.

c. List some of the ways in which the information in parts a and b would be useful to the restaurant manager or owner.