Analyzing a Chili’s restaurant:
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
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
To break even we need our equation to be where everything equals zero:
X=.3X + .2X +40,000
80,000=24,000 + 16,000 + 40,000
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
Answer: X=2,000 people
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.
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