CASE STUDY: THE BOHO RESTAURANT

"The difference between well managed restaurants and not so well managed restaurants is the degree of attention they pay to the numbers

The manager of Boho Restaurant has just received an income statement report comparing the establishments financial performance this year to last years performance.

After reviewing the below financial report, answer the questions that follow to help the manager better understand the operation and its financial performance.

Restaurant Income Statement

SALES	This Year	Last Year
Food	$ 750,000	$ 690,000

Beverage 300,000 310,000

Total Sales	$1,050,000	$1,000,000
COST OF SALES
Food	$250,000	$225,000

Beverage 80,000 83,000

Total Cost of Sales	$330,000	$308,000
LABOR
Management	$ 55,000	$ 52,000
Staff	225,000	221,500
Employee benefits	85,000	83,500
Total Labor	$365,000	$357,000

Prime Cost $695,000 $665,000

Other Controllable Expenses:

Legal/accounting	$ 1,750	$ 1,690
Music and entertainment	12,000	11,500
Marketing	12,400	12,000
Utility services	18,000	17,500
General and administrative	12,500	12,000
Repairs and maintenance	15,000	13,500
Total Other Controllable Expenses	$71,650	$68,190

Non controllable Expenses:

Rent	$95,000	$95,000
Depreciation	6,000	6,000
Licenses/permits	500	450
Leases	2,500	2,500
Total Non-controllable Expenses	$104,000	$103,950

Utility services	18,000	17,500
General and administrative	12,500	12,000
Repairs and maintenance	15,000	13,500
Total Other Controllable Expenses	$71,650	$68,190

Operating Income	$179,350	$162,860
Interest expense	18,000	19,000

Other (income) expense 500 500

Income Before Taxes $160,850 $143,360

1. What was the difference between the operations food sales this year from the previous year?

2. Does this mark an improvement or a decline?

3. What was the difference between the operations beverage sales this year from the previous year?

4. Does this mark an improvement or a decline?
5. What was the difference between the operations total sales this year from the previous year?
6. Does this mark an improvement or a decline?
7. Did the operation spend more or less for food when comparing this years expense to last years expense?
8. By how much?
9. Did the operation spend more or less for beverages when comparing this years expense to last years expense?
10. By how much?