A 100-seat restaurant with average daily turnover of 2 and average check of $15 opens 365 days a year. Food cost is 38% of revenue and other variable costs is 22% of the revenue. Fixed costs are $220,000 a year. a. How much is the variable cost per customer? b. How many customers does the restaurant have to serve if the owner wants a $200,000 operating income? c. The owner is not satisfied with the operating income and wants to improve it to $250,000 by increasing the average check to $17. To avoid customers deflecting to other restaurants, the owner will spend an additional $30,000 on advertising (additional fixed cost). The owner also wants to add $20,000 her own salary (another additional fixed cost). Assuming the variable costs per customer do not change (the same as in question a.), how many customers the restaurant needs to serve now?
A 100-seat restaurant with average daily turnover of 2 and average check of $15 opens 365 days a year. Food cost is 38% of revenue and other variable costs is 22% of the revenue. Fixed costs are $220,000 a year. a. How much is the variable cost per customer? b. How many customers does the restaurant have to serve if the owner wants a $200,000 operating income? c. The owner is not satisfied with the operating income and wants to improve it to $250,000 by increasing the average check to $17. To avoid customers deflecting to other restaurants, the owner will spend an additional $30,000 on advertising (additional fixed cost). The owner also wants to add $20,000 her own salary (another additional fixed cost). Assuming the variable costs per customer do not change (the same as in question a.), how many customers the restaurant needs to serve now?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A 100-seat restaurant with average daily turnover of 2 and
average check of $15 opens 365 days a year. Food cost is 38%
of revenue and other variable costs is 22% of the revenue.
Fixed costs are $220,000 a year.
a. How much is the variable cost per customer?
b. How many customers does the restaurant have to serve if
the owner wants a $200,000 operating income?
c. The owner is not satisfied with the operating income and
wants to improve it to $250,000 by increasing the average
check to $17. To avoid customers deflecting to other
restaurants, the owner will spend an additional $30,000 on
advertising (additional fixed cost). The owner also wants to
add $20,000 her own salary (another additional fixed cost).
Assuming the variable costs per customer do not change (the
same as in question a.), how many customers the restaurant
needs to serve now?
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