Venkat Mangudi wrote [at 01:10 PM 10/11/2007] :

If you were to distribute those costs to your sales, how would you do
it? You cannot, hence the term break-even. At some point in time, every
business breaks even. After that, the setup cost cannot be included in
calculating profit.

Sure. However, amortization schedules for setup costs in a restaurant would tend to be in the 5+ year range (I'm sure Madhu can add to that, I'm just making a WAG).

Secondly, even with operational costs and import duties, most (if not
all) restaurants have high rates for drinks (not just the alcoholic
kind). Try to BYOB, and the restaurant charges corkage. So what is
really the operating model here? Wish I knew, or could find out...

Simple - the restaurant is charging for teh use of its premises and facilities, to the optimum extent that (they think) the market will bear.

Udhay
--
((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))


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