The current situation at Premium Mexican Taco Restaurant is that we are not breaking even. To find Premium Mexican Taco Restaurant’s breakeven point we will use the following equation: Fixed costs/ (Average Order Price – Average Order Cost). Currently the equation looks like this ($2,000 Lease + $500 Electricity + $3,100 Labor)/ ($7 Average Order Price - $3 Average Order Cost) = 1,400 customers to breakeven with our costs. This means we are currently running at a deficit. The following plans are my suggestions to bring Premium Mexican Taco Restaurant out of a deficit and into a profit. Some monetary constraints are not change able to be changed. For example moving would be disruptive to our current customer base so moving is not advisable. …show more content…
This price setting is one that looks at the underlying expected customer tastes and preferences. Taking a page from the Odd-Even Pricing set the prices with odd dollar amounts and cents attached. For example, the pricing should be $1.99 or $3.75 for items. When the items are priced with cents attached at the ends so that the customer does not feel like they are over paying but the end prices add up. Doing this should increase the average price per person to $8.70. This changes the breakeven equation to look like this ($2,000 Lease + $500 Electricity + $3,100 Labor)/($8.70 Average Order Price - $3 Average Order Cost)= 982.5 customers to breakeven with our costs. Leaving room for a small customer loss with our increased per person …show more content…
The marketing campaign should include the use of a coupon with a dollar amount purchase and get a free taco or item. The marketing campaign will also include the promotion of getting the message to potential customers about ‘bundled meal deals’. The final pricing should take a page from the odd-even pricing and roll the prices up but not to a full dollar but adding change to the end of everything. The breakeven calculation has changed to the following: ($2,000 Lease + $500 Electricity + $3,100 Labor + $200 Marketing Cost for bundle + $200 Marketing Cost for coupon)/($10 Average Order Price - $3.5 Average Order Cost)= 857.2 customers to breakeven with our costs. This includes two marketing campaigns and the increase cost of the average order is represented by the $0.50 increase. The average food order price has risen to $10 because of the food meal bundles and increasing the price by including cents and making the prices
The operational column in the store-by-store analysis were the debits received by the franchisor that were not profit, but were reimbursement for items purchased for franchisees. It was somewhat difficult to determine how this should be recorded on the income statement to get accurate numbers. The final decision was to create a reimbursement line on the income statement that took the amount for 2013 ($134,221) out of both revenue and expenses. This left the net profit unchanged but gave a more accurate number for both revenue and expenses.
Table C projects the break even analysis in both units and dollars as a basis for further projections. As seen in Table C substantially larger sales are required to break even.
Because Chipotle has to pay higher prices for their company’s items such as the avocados and package than its competitors. According to the MarketLine articles about Chipotle Mexican Grill, Inc., "For instance, an average meal at Chipotle is the range of about $8, Whereas its competitors such as McDonalds, Taco Bell and KFC has options such as Value menus that start from even $1." Chipotle food is expensive because they have the best quality ingredients that are not common such as the avocados for their competitors. But Chipotle 's competitors are getting more sales revenues of their menu items because with one dollar to can buy a meal for a
The shops have a pricing strategy that ensures that people with different purchasing power can find the food product that they can afford. The price of different products will range from $4 to $40. This means that the cheapest food item in Platinum pizza shop is $4 and the most expensive food item is $40. This pricing is relative below what other restaurants are charging for the same food items. This is the perfect market strategy that the shop is
Chipotle Mexican grill has transformed the way people think about fast-food through delivering exceptional Mexican dining experiences to its guests and providing a simple menu of organic ingredients, quick service and at a low cost. More than just a great experience, they have created a lifestyle where people have the pleasure of eating good and healthy.
Assume required profit is equal to selling, general and administrative expenses so after expenses they will breakeven.
Lululemon’s has to produce and sell 150,000 jackets in order to cover their total expenses, fixed and variable. At this level of sales, Lululemon’s will breakeven (profit = loss).
Our decision is that Mr. Butkus should choose to implement both options. The additional capacity is definitely needed, and the demand to fill the capacity is also present. We calculated the possible revenue that could be earned under two sections: Low additional demand and High additional Demand. The additional revenue generated in these two scenarios are $42 900 and $31 200, respectively. Also, the in both of these scenarios, the time needed to pay for the cost of the required expansions are less than a year.
The cafeteria serves about one hundred and fifty residents of Cambridge Hall and approximately one hundred residents from Nottingham Hall. The cafeteria serves hot foods, salads, snacks, sandwiches, and beverages. The data has given me information on the percentage of customers that preferred a hot meal (interactive and precooked) to snacks, the ratio of customers that prefer precooked hot meals over an interactive hot meal, line formation, service times at the different stations, arrival times and the location of the different stations. I also learned that the peak hours of operations are from 5:00 p.m. to 6:30 p.m. and that the cafeteria has two cash registers available but only one is being utilized during the peak hours. If customers decide on a hot meal there is a 2 to 1 ratio that customers will purchase a precooked meal over an interactive meal. Through an informal customer survey, reasonable waiting times were established for the precooked line (5 minutes), the interactive line (10 minutes), and the cashier payment line (1minute).
Since our primary target customers are the university students and the local residents, hence, the price of the meal must be cheap and affordable. There are 2 different groups of target customers where different levels of people have different income. Thus, we take the student’s monthly allowance into the consideration and come out with a promotion plan for the students. When the students show their matrix card, they will get a 15% discount for the bill.
Fast food chains use value pricing. This type of pricing is how much the customer thinks an item on the menu is worth. Basically what this means is customers see price as a primary indicator of a product’s value. Value pricing happens when a company increases a product’s benefits while either maintaining or decreasing the price. A great example of value pricing in McDonald’s is the ability to “super-size” drinks and fries. The value of the drink or fries is increased because a customer can get substantially more of the item for a fraction more of the
A fast food restaurant will have to have a good pricing strategy in order to ensure that competition does not push the firm out of business. This will ensure the restaurant remains competitive. For effective management of cash inflows, the management will require to create an environment whereby each item has been priced conspicuously and reflecting the cost of bringing the same to the table as well as the profit margins targeted by the restaurant (Mark 1998).
CHANGING PREFRECE depended vastly on the fast food manus. For example we can mention about SALAD. Now salad was never considered as a part of fast food menu. But with the change of taste and preference, fast food chains like Windy, Taco Bell, and McDonald have introduced SALAD into their menus. This preference is not stopping only with salads. In 2002, McDonald’s introduced great tasting new products including premium salads, n salads plus menu; Chicken McNuggets made with white meat; Fish McDippers; Chicken Selects; and new breakfast offerings like the McGriddle sandwiches. Here as a fast food chain, McDonald did not have to introduce new dishes in their menus but with the impression and image in the market analysis, of increasing demand and chan...
An evaluation of the restaurant’s strengths, weaknesses, opportunities and threats served as the foundation for this marketing plan. The plan focuses on the restaurants marketing strategy, suggesting ways in which it can build on new customer relationships, and development of new food products and targeted to specific customer groups.
To breakeven, we would have to sell 267,857 units. We plan on selling the Galaxy Note 8 at a price of $499 which is cheaper than our previous phones in the Galaxy Note line. Consumers aren’t going to purchase a new smartphone if the price is going to be in the same range of the Galaxy Note 7. So we are going to be selling the smartphone at a discount. We are using odd-even pricing for the Samsung Galaxy Note 8. It gives a sense to the consumer that they will be purchasing the Samsung Galaxy Note 8 at a bargain, instead of using the even pricing method. The cost to make the smartphone itself is around $275. There will be a picture below that will explain the details of the build of the smart phone. For the breakeven I subtracted the Total Cost from the Total Revenue. The profit for year 1 will be $1 billion dollars, I subtracted the total revenue for year 1, which was $1.06 billion and subtracted that number by the fixed cost amount of $60