The Blah Cafe operates a restaurant location in Fresno, CA where they serve food in an eclectic casual blah whatever setting. Blah Cafe analyzes their operations in two seasonal periods – Spring & Summer being the first seasonal period and Fall & Winter being the second. The average monthly demand, with revenue and variable cost figures for both the seasonal periods is given in the data table
The Blah Cafe operates a restaurant location in Fresno, CA where they serve food in an eclectic
casual blah whatever setting. Blah Cafe analyzes their operations in two seasonal periods – Spring
& Summer being the first seasonal period and Fall & Winter being the second. The average
monthly demand, with revenue and variable cost figures for both the seasonal periods is given in the data table
As can be seen in the Table, demand is pretty high and robust in the Spring and Summer season,
with demand falling in the Fall and Winter season.
1. Help Blah Cafe develop an EXCEL spreadsheet model to determine the break-even point*
demand quantity for each of the seasonal periods. Explain how you found the break-even
point. Should the restaurant be kept open during the Fall & Winter months? Explain.
*At the Breakeven Point (demand), Total Revenue = Total Costs (or at Breakeven Point,
Profit = zero).
2. Now given current demand for each season, what fixed cost will justify keeping the
restaurant open in each of the two seasonal periods? In other words, what are the break-
even points for each season as a function of fixed cost. Again, clearly explain how you
went about answering this question (i.e., what tool/technique did you use)? What is
your interpretation of the result?
data table to use to answer questions:
|
Spring & Summer
|
Fall & Winter
|
|
| Cost per meal ($) | 8 | 7 |
| Price per meal ($) | 15 | 11 |
| Fixed cost ($) | 3510 | 3366 |
| Avg demand per month (# of meals) | 1919 | 1105 |
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