# Anaylizing a Chili's Restaurant

Topics: Costs, Employment, Inventory Pages: 2 (355 words) Published: March 13, 2012
ISOM 400
Final Project
12/12/11

Analyzing a Chili’s restaurant:

Step 1:
At what amount in total cost in food and labor will you need to spend to break even in a Chili’s restaurant if you average sales are at \$80,000?

* Variable 1: 30% of your total cost is food
* Example: Purchases \$500
* Beginning Inventory \$750
*  Ending Inventory \$625
*  = \$500 + \$125 = \$625 Cost of Food Sales
* FOOD COST PERCENTAGE Food Cost = Cost of Food Sales / Food Sales   Example Food Cost = \$625 /\$1,850 = 33.8%

* Variable 2: 20% of your total cost is labor
* .For example, labor costs \$8,000 per month. If the total cost of doing business is \$15,000 per month, you divide \$8,000 by \$15,000, which equals 0.53, or 53 percent. The employee labor percentage, therefore, is 53 percent of the total cost of doing business. * Labor is broken down to 10% Management and 10% Front and Back house crew * Fixed Cost-\$40,000

* I.e. insurance and rent
Equation:

To break even we need our equation to be where everything equals zero:

X=sales
X=.3X + .2X +40,000
80,000=24,000 + 16,000 + 40,000
80,000=80,000

Answer: To break even you need to spend \$24,000 in food and \$16,000 in labor

Step 2: If the average guest-check for one person at a Chili’s restaurant is \$12 (one entrée and one drink), how many people will have to come into the restaurant to cover your food cost?

Food cost is \$24,000
X=guest count
24,000=12X

Step 3:

At what point in the week will you be able to cover your food cost based upon guest count?

Average capacity for a Chili’s restaurant is: 200

In one hour you can turn a table twice, so in one hour you can have 400 guests come in.

Hours of Operation: 11:00am-10:00pm
Chili’s is open for 11 hours a day

Answer: If you have total capacity you will reach it at hour 5 on Monday.