question 5

A proposed dinner-only restaurant, Snickers, is scheduled to open in two months. The owner, Anna, seeks your advice on pricing. The owner, Anna, seeks your advice on pricing.

• Annas investment: $500,000
• Annas desired ROI: 15%
• Annas tax rate: 35%
• Funds borrowed: $500,000
• Interest rate: 10%

Forecasted annual costs:

• Undistributed operating expenses: $135,000
• Fixed costs: $106,000
• Cost of food sales: 35%

Snickers will have 150 seats and the average expected seat turn over per day is 1. The restaurant will be opened 310 days a year. Determine the minimum average dinner check per cover required to attain the desired ROI