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You have been asked to consult for Yummy Eats, a group of entrepreneurs starting a restaurant. They have $1,000,000 to invest. The landlord is proposing
You have been asked to consult for Yummy Eats, a group of entrepreneurs starting a restaurant. They have $1,000,000 to invest. The landlord is proposing $4,000 monthly rent on a ve-year lease plus 7% of gross sales over $25,000. The building is 3,000 square feet, and the client gures that approximately 60 percent of the square footage will be the dining area and 40 percent will be for everything else (kitchen, common area, bathrooms, etc.). On average, a restaurant needs 15 square feet per person in the dining area space. The owners want to open for breakfast and lunch, from 7 AM to 2 PM, with an average seat turnover rate of 1 hour. The restaurant will need at least two cooks, a dishwasher, ve waitstaff/bussers, and a oor manager during an average shift. Your client wants to know if it is possible to make money at this venture before signing the lease. Without regard to the initial investment (the $1,000,000), what kind of information do you need to gather to complete your analysis? Please answer the following: 1. What are some of the xed costs of such a venture? 2. What are examples of variable costs? 3. Are there any mixed costs or costs that are hard to categorize? What are they, and how would you account for them? 4. How would you go about preparing a costvolume-prot analysis for this restaurant? a. Provide an example of a schedule you may use that would present the information to the owners. Note: The schedule does not need to have numbers as you have not been given all the information on salaries or pricing
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