Bob’s Burgers is in the fast food restaurant business. One component of its marketing strategy is to increase sales by expending in foreign markets. It uses both financial and nonfinancial quantitative and qualitative information when deciding whether to open restaurants abroad. Bob’s decided to open a restaurant in Prague (Czench Republic) five years ago. The following information helped the managers in making that decision:
Financial Quantitative Information
Operating information
Estimated food, labor, and other operating costs (e.g., taxes, insurance, utilities, and supplies)
Estimated selling price for each food item
Capital investment information
Cost of land, building, equipment, and furniture
Financing options and amounts
Nonfinancial Quantitative Information
Estimated daily number of customers, hamburgers to be sold, employees to work
High traffic time periods
Income of people living in the area
Ratio of population to number of restaurants in the market area
Traffic counts in front of similar restaurants in the area
Qualitative Information
Government regulations, taxes, duties, tariffs, political involvement in business operations
Property ownership restrictions
Site visibility
Accessibility of store location
Training process for local managers Hiring process for employees
Local customs and practices
Bob’s Burgers has hired you as a consultant and given you an income statement comparing the operating incomes of its five restaurants in Eastern Europe. You have noticed that the Prague location is operating at a loss (including unallocated fixed costs) and must decide whether to recommend closing that restaurant.
Review the information used in making the decision to open the restaurant. Identify the types of information that would also be relevant in deciding whether to close the restaurant. What period or periods of time should be reviewed in making your decision? What additional information would be relevant in making your decision?
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