An owner invested $180,000 in a new family-style restaurant, of which $140.000 was immediately used to purchase
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An owner invested $180,000 in a new family-style restaurant, of which $140.000 was immediately used to purchase equipment and $40,000 was retained for working cash. Estimates for the first year of business are as follows:
- Menu selling prices to be established to give a markup of 175% over cost of food sold
- Variable wages, 23% of sales revenue
- Other variable costs, 7% of sales revenue
- Fixed wages, S51,600
- Rent, $36,000
- Insurance, $4,800
- Depreciation on equipment, 20% ← THIS IS A 5 YEAR FACTOR
- AFTER TAX Return on investment desired, 10%. the Income tax rate is 25%
The restaurant has 75 seats and is open 5 days a week for lunch and dinner only.
Lunch revenue will 40% of total volume with 1.75 seat turnovers.
Dinner revenue will be 60% of total volume, with 1.25 turnovers.
Calculate the average check per meal period that will cover all costs, including desired return on investment.
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