Reference no: EM13972905
Brain and Nui Soon live in Macon, Georgia. Two years ago, they visited Thailand. Nui, a professional chef, was impressed with the cooking methods and the spices used in the Thia food. Macon does not have a Thai restaurant, and the Soons are contemplating opening one. Nui would supervise the cooking, and Brain would leave his current job to be the maitre d. The restaurant would serve dinner Tuesday through Saturday. Brain has noticed a restaurant for lease. The restaurant has seven tables, each of which can seat four. Tables can be moved together for a large party.
Nui is planning two seating per evening, and the restaurant will be open 50 weeks per year. The Soons have drawn up the following estimates:
Average revenue, including beverages and desserts............ $ 40 per meal
Average cost of the food..................... $ 12 per meal
Chefs and dishwashers salaries................... $50,400 per year
Rent (premises, equipment)...................... 4,000 per month
Cleaning (Linen and premises) ................... 800 per month
Replacement of dishes, cutlery, glasses................ 300 per month
Utilities, advertising, telephone .................. 1,900 per month
Requirement:
Compute annual breakeven number of meals and sales revenue for the restaurant. Also, compute the number of meals and the amount of sales revenue needed to earn operating income of 75,600 for the year.
How many meals must the Soons serve each night to earn their target income of 75,600?
Should the couple open the restaurant? Support your answer.
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