Question
Starting with the base case below, let's say a restaurant implements a lean op's initiative such that it is able to increase capacity (the maximum
Starting with the base case below, let's say a restaurant implements a lean op's initiative such that it is able to increase capacity (the maximum throughput rate) by 5% without an increase in fixed costs (that is, variable costs increase by 5% but no increase in fixed costs). Assuming the demand exists to take advantage of the 5% capacity boost, by how much does the restaurant increase its absolute profit? (By "absolute profit" we mean the raw profit number.)
Base Case:
Let's say a restaurant sells a meal for $20; spends 20% ($4) for the food ingredients; spends 40% ($8) for the labor directly involved in cooking and serving one meal; gets 60 customers per each of 30 days per month; and incurs monthly fixed costs of $12,000.
A- 20%
B- 5%
C- 30%
D- 40%
What's the right answer ?
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