Question

Victor’s is open from 11:30am until 9:00pm 5 days per week, which works out to 250 days per year considering holiday closures. Victor recently invested in Toast, a mobile POS system for taking orders and issuing checks. The new system, which cost $35,000, provides key information on sales and costs, while also facilitating the job of employees who take orders and issue the checks. Using this new system, Victor obtained the following information on his results for 2019:

• Sales from Food:                                $430,000 (excludes tips)
• Sales from Drinks:                              $240,000 (excludes tips)
• Number of customer bills/checks          18,000 (includes drinks and food)
• Direct Costs of Food:                         $200,000
• Direct Costs of Drinks:                        $ 80,000
• Wages for hourly Workers:               $140,000 (includes all employment costs)
• Salary of Manager:                              $ 60,000 (includes all employment costs)
• Other operating Expenses                 $ 80,000 (rent, insurance, supplies, real estate taxes, etc.)

1. The following for Victor’s Bar and Grill:
   1. Average bill for food: $23.89
   2. Average bill for drinks: $13.33
   3. Average CM for food: $12.78 (CM = contribution margin)
   4. Average CM for drinks: $8.89
   5. CM % on food: 53.49%
   6. CM % on drinks: 66.67%
   7. Total CM %: 58.21%
   8. Total Revenue: $670,000
   1. Total CM: $390,000
   10. Operating Expenses: $280,000
   11. Operating income: $110,000
   50. Average hourly labor cost per bill: $7.78

2. In 2020, Victor’s expects the following changes to his business:
   1. Wages for workers will increase by 15% because of a new minimum wage.___________
   2. He will increase the salary of the manager by 5%._____________
   3. All other costs, including material costs per meal, are not expected to change.____________
   4. He plans to increase his prices of food by 3% and to increase his drink prices by 5%.__________
   5. The number of customers (meals) is expected to increase by 2%_____________