Professor: Last time, we went through a few samples of profit and loss statements of the manufacturing business. Here, the key to increase the bottom line was how to maximize the gross profit, which is the difference between the gross sales and costs of ingredients. This was because the cost of ingredients can often comprise more than half of the gross sales. Today, we`ll move on to discuss the restaurant business to A How to make money with this business significantly differs from the manufacturing business. Does anyone want to guess why? Susan?
① make money by running a restaurant of our own.
② start a restaurant and earn as much as possible.
③ find out ways to direct staff and have fun.
④ learn how restaurant owners can maximize their net profits.
Susan: Maybe the cost of ingredients is much smaller with the restaurant business?
Professor: Correct. Typically, the cost of ingredients for the restaurant busienss is about half of those of the manufacturing business. Then what else could be a few other big costs? Where do you need to spend money to successfully run a restaurant? I am sure some of you have been part of it. Any guess, David?
David: We being a part of it... Ah, B Another factor I can think of is the rent.
① one factor should be the cost of waiter`s uniforms.
② it should relate to wages for waiters and maybe chefs.
③ probably one factor should be the proportion of male and female.
④ I know that. What about the cost of food staff consume behind the counter?
Professor: Precisely. Two key factors are the costs relating to people and place. Maybe you have heard of 4P of marketing: product, price, promotion, and place. Among these, the last one, the place, plays a key role in determining if your restaurant would be a success. Firstly, it can typically comprise about 30 - 40% of the sales. This is huge and can make or break your business. C Can anyone explain it by using one of the key marketing factors? Yes, Lynsey?
① Why else do you think the place matters?
② Secondly, what can make a difference when deciding where to open your restaurant?
③ Then, what can you do to minimize rent?
④ Next, how should you decide on the place to open a restaurant?
Lynsey: Well, if your restaurant is on a ground floor with an easy access, then customers may randomly walk in. If it is not very visible from the street and you need to know the exact place to get there, you can not expect new customers without promotion.
Professor: Excellent. That is exactly my point. If you want to secure a great access to your restaurant, the rent would be higher. If you compromise on the place, then you need to spend money on promotion. That is the fine balance you need to strike.