Answer to Question #150463 in Economics of Enterprise for Kien Nguyen

Question

You are planning to open a restaurant. You estimate the following monthly costs:

Rent: 1500
Insurance: 400
Fixed salaries: 5600
Other fixed costs: 2000

An avarage customer will spend 25 EUR per visit at your restaurant (including 14 % VAT).
Variable costs per customer (including raw materials for food, expenses for serving the customer, etc) would be 13 EUR on average.
The restaurant would be open every day. How many customers on average would be needed per day to break even? (Assume 30 days per month)

Answer 1

Monthly Expenses

Rent-1500

Insurance cost-400

Fixed salaries-5600

Other fixed costs-2000

Total monthly expenses is calculated as follows;

1500+400+5600+2000=9500

9500 is the total cost incurred at the end of 30 days period.

Each(one) customer is to spend 25EUR per visit at the restaurant

Variable Cost per customer is 13EUR

Therefore,average profit made on each customer per visit will be calculated as;

Average customer spending－Variable cost per customer

25－13=11EUR

To meet the monthly expense cost,the average profit needed per day is calculated as;

Total monthly expenses÷Total number of days in a month

9500÷30=316.7

=317

Average number of customers needed per day is given by;

Total Average expenses per day÷Profit made on each customer per day

317÷11=28.81

=29customers per day