RB Restaurant has presented budget data for July 2019 in the table shown below. There are various
Question:
RB Restaurant has presented budget data for July 2019 in the table shown below. There are various types of food items under each type of food category (or group). The price per dish is an average for each food category. Also, variable cost per dish represents average cost for each food category. Detailed information of budgeted volume, price and cost for each menu category are given in the following table.
a. Calculate the projected safety margin in units for the second half of 2019 (July-December) and explain the importance of this information for the business.
b. During 2020, the restaurant lost income due to lockdown, working from home and restrictions on travel imposed in Victoria following the outbreak of COVID-19. The restaurant was closed for two months but later started operating at reduced scale due to social distancing measures and still the city was less populated. The restaurant experienced reduction of demand by 20% but the budgeted cost and price estimates remained same as in 2019. You are asked to re-compute safety margin for each food category and assess the relative riskiness of each food category for the year 2020 and interpret the results of your computations.