Reference no: EM133176221
You have just been appointed general manager of an under-performing restaurant. The good news is that there is a substantial bonus if you can turn it around. You look at the income statement for the previous year and see several things that need immediate attention.
Income Statement (Last Year)
Sales (income)
Food????$500,000
Beverage ???$100,000
Total Sales:???$600,000
Cost of Sales
Food????$175,000
Beverage???$45,000
Labor????$220,000
Maintenance???$60,000
Supplies???$60,000
Total Costs:???$580,000
Rent????$10,000
Insurance???$4,000
Net income, before taxes, is $6,000.
This data should alarm you into action. Your first step is to make a detailed plan for making this restaurant more profitable. Things to consider are menu options, pricing, advertising, labor, supplies, maintenance, rent, and insurance.
Question: Based on the financial information provided, answer these questions:
(a) Where would you cut costs and why?
(b) What could you do to boost sales and earn more income?
(c) Is this restaurant savable? Explain your reasoning based on the things you did in (a) and (b).