You run a large restaurant equipment distribution company that sells smokers to

Question

You run a large restaurant equipment distribution company that sells smokers to BBQ places all over the United States. There are three different types of BBQ restaurants: 1. Shacks (Seat, on average, 5 people at a time) 2. Dine-Ins (Seat, on average, 30 people at a time) 3. Chain franchises (Seat, on average, 50 people at a time) Smokers are used to cook basically all of the meat in a BBQ restaurant, and each person consumes, on average, .5 pounds of meat when they visit any kind of BBQ restaurant. Your smokers can cook up to 50 pounds of meat at a time, and all BBQ restaurants cook their meat within 12 hours of when it is to be served. Most BBQ restaurants are open for lunch and dinner and often do take out, but, of course, have a lot of variability as to the number of orders based on the time of day in which we are discussing. Based on the information I have given you, I want you to tell me the size of each customer segment and the size of the total market. In doing this, I want you to assume characteristics about each of these customer segments based on anything of your choosing that you believe makes sense. After conducting these calculations, tell me which market segment you believe is more attractive for your business, why you think it is most attractive and your plan to grow your market share within this segment. One more time: Feel free to assume anything you think makes sense about anything – but please list your assumptions.

Explanation / Answer

Analysis of BBQ Restaurants TYPE OF RESTAURANT SEATING CAPACITY CONSUMPTION PER PERSON APPROXIMATE CONSUMPTION OF RESTAURANT AT 1 TIME Total consumption per restaurant per day Total Cost per portion in USD Total Earning per day in USD Total over heads per month Fixed and variable Total earning per month Total Taxes total net profit Shacks 5 0.5 2.5 20 5 100 100 3000 0 2900 Dine-ins 30 0.5 15 30 25 750 6500 22500 4050 11950 chain franchisee 50 0.5 25 50 25 1250 12000 37500 6750 18750 42.5 100 availability in pounds (pounds) 50 100 Assumptions: Shack has zero rental and no tax liability and he serves himself is is also the cook himself Dine ins and restaurants have tax liability to the tune of 18% Turn around is much higher in shacks as footfalls are faster and leave faster Best option is to invest in: Chain Franchisee Better returns Better profitability

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