IV . Critical Thinking Case Analysis : La Cocina Instructions : Please read the following case and answer the case analysis beginning on the next page . Miguel is a 35 year -old chef in a local Mexican restaurant and has recently noticed how many people buy their food to-go , rather than coming into the restaurant to eat . He thinks that around 25 % of the restaurant's sales come from to - go orders which would equate to approximately $ 75 , 000 in revenue . While Miguel can make $ 35 , 000 per year as a chef , he knows he won't be making much more than that in 30 years if he stays in that position . As the sole provider for* his wife and 4 children , Miguel is starting to see that he will practically never be able to retire so he is considering* opening his own restaurant . Approximately 14, 000 people live in Miguel's town ( SEE demographics in table 1 ) and there is one traditional Mexican restaurant and a Taco Bell . However , the town does not have a quick-casual Mexican restaurant such as Chipotle , Qdoba , or Moe's Burritos , which have become very popular in the past decade . Miguel didn't personally know anyone who had started a quick - casual Mexican restaurant before , 50 he gathered some information from his friends at* sit- down Mexican restaurants and Taco Bells in nearby towns ( SEE table 2). Miguel had little training with regard to business creation , or even accounting . but he did know the 30 / 30 / 30 rule of thumb in the restaurant business ( 30%6 of every sale goes to food cost , 30%6 to employees , and 30% profit ) . He was also able to get a breakdown of the dishes sold at a Mexican restaurant in Trenton ( see table 3 ) . Miguel recently heard that the secret behind a successful quick- casual Mexican restaurant was having a limited* menu and quality food . Miguel was an excellent chef so he designed his entire menu around unique burritos and various* nacho platters . This would also allow him to offer items such as a burrito bowl or nacho-less nachos , which includes all of the ingredients of the main items except the tortilla or chips , at the same cost and preparation time . Miguel planned to rent a space in a local strip mall and he estimated all of the fixed costs and start- up costs ( SEE tables 4 and 5 ) . He was aware the restaurants have one of the highest failure rates of any business so he wanted to be prepared for any* questions the loan officer might ask , but he wasn't sure if or when he would break -even in the business . Miguel also wanted to use the data he collected from other restaurants to show that his business was viable , but he wasn't quite sure how to use the date to make a persuasive case for his business . In preparation for his meeting with the loan officer . Miguel found the following formulas online to help him calculate his break-even points :" Contribution Margin = Price - Variable Cost Weighted Average Contribution Margin = ( Product A Contribution Margin X Percent of total sales for* product A ) + ( Product E Contribution Margin* Percent of total sales for product E ) Weighted Average Price = ( Product A Price* Product A Percent of Sales ) + ( Product E Price* Product & Percent of Sales ) Break - Even Quantity = Fixed Costs / Weighted Average Contribution Margin Break - Even Sales = Break Even Quantity * Weighted Average Price* Miguel sat down and stared blankly at the formulas . HE thought . " People love the food I prepare , and I just know this business will work ! How can I convince the loan officer , and more importantly my wife , that starting this business is a good idea ?"