Question

Required information

Taylor’s is a popular restaurant that offers customers a large dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant, has seen the number of patrons increase steadily over the last two years and is considering whether and when she will have to expand its available capacity. The restaurant occupies a large home, and all the space in the building is now used for dining, the bar, and kitchen, but space is available on the property to expand the restaurant. The restaurant is open from 6 p.m. to 10 p.m. each night (except Monday) and, on average, has 33 customers enter the bar and 53 enter the dining room during each of those hours. Taylor has noticed the trends over the last 2 years and expects that within about 4 years, the number of bar customers will increase by 50% and the dining customers will increase by 20%. Taylor is worried that the restaurant will be not be able to handle the increase and has asked you to study its capacity. In your study, you consider four areas of capacity: the parking lot (which has 90 spaces), the bar (72 seats), the dining room (103 seats), and the kitchen. The kitchen is well-staffed and can prepare any meal on the menu in an average of 12 minutes per meal. The kitchen, when fully staffed, is able to have up to 20 meals in preparation at a time, or 100 meals per hour (60 min/12 min × 20 meals). To assess the capacity of the restaurant, you obtain the additional information:

• Diners typically come to the restaurant by car, with an average of 3 persons per car, while bar patrons arrive with an average of 1.5 persons per car.
• Diners, on average, occupy a table for an hour, while bar customers usually stay for an average of 2 hours.
• Due to fire regulations, all bar customers must be seated.
• The bar customer typically orders one drink per hour at an average of $7 per drink; the dining room customer orders a meal with an average price of $22; the restaurant’s cost per drink is $3, and the direct costs for meal preparation are $3.

Required:
1-a. Given the current number of customers per hour, what is the amount of excess capacity in the bar, dining room, parking lot, and kitchen?

1-b. Calculate the expected total throughput margin for the restaurant per day, and month (assuming a 26-day month).

2-a. Given the expected increase in the number of customers, determine if there is a constraint for any of the four areas of capacity. What is the amount of needed capacity for each constraint?

2-b. If there is a constraint, reduce the demand on the constraint so that the restaurant is at full capacity (assume some customers would have to be turned away). Calculate the expected total throughput margin for the restaurant per day, and month (assuming a 26-day month).

Complete this question by entering your answers in the tabs below.

• Req 1A
• Req 1B
• Req 2A
• Req 2B

Calculate the expected total throughput margin for the restaurant per day, and month (assuming a 26-day month). (Round intermediate computation of capacity to the nearest whole number.)

	Per Day Per Month Total throughput margin

Given the expected increase in the number of customers, determine if there is a constraint for any of the four areas of capacity. What is the amount of needed capacity for each constraint? (Round intermediate computation of capacity to the nearest whole number.)

	If there is a constraint for any of the four areas of capacity? Bar (seats) Needed Capacity Parking (spaces) 0 Bar (seats) Dining (seats) 0 Kitchen (meals) 0

If there is a constraint, reduce the demand on the constraint so that the restaurant is at full capacity (assume some customers would have to be turned away). Calculate the expected total throughput margin for the restaurant per day, and month (assuming a 26-day month). (Round intermediate computation of capacity to the nearest whole number.)

	Per Day Per Month Total throughput margin

Answer 1

1-a.
Existing capacity
Bar(seats)	72
Dining(seats)	103
Parking(spaces)	90
Working to calculate the excess capacity
Number of bar patrons per hour		33
Average time spent(in hours)		2
Occupancy		66
Number of dining patrons per hour		53
Average time spent(in hours)		1
Occupancy		53
		Bar Patrons	Dining Patrons
Number of patrons per hour		33	53
Average patrons per car		1.50	3.00
Average time spent(in hours)		2	1
Parking space occupancy		44	18
Total parking space		62
Statement showing excess capacity
Particulars	Existing Capacity	Occupied Capacity	Excess Capacity
Bar(seats)	72	66	6
Dining Area(seats)	103	53	50
Parking Area(spaces)	90	62	28
1-b.
Total business hours per day = (10pm -6pm) = 4 hours
Throughput Margin = Revenue - Food Costs
Computation of daily Revenue
Particulars	Bar	Dining
Total hours (a)	4	4
No.of patrons (b)	33	52
Orders per occupancy ('c)	2	1
Price per order (d)	$7	$22
Revenue(a*b*c*d)	$1,848	$4,576
Computation of daily Cost
Particulars	Bar	Dining
Total hours (a)	4	4
No.of patrons (b)	33	53
Orders per occupancy ('c)	2	1
Price per order (d)	$3	$3
Revenue(a*b*c*d)	$792	$636
Computation of Throughput Margin
Particulars	Revenue (daily)	Costs (daily)	Throughput (daily)	Throughput (monthly)
Bar	$1,848	$792	$1,056	$27,456
Dining Area	$4,576	$636	$3,940	$102,440
Total	$6,424	$1,428	$4,996	$129,896
2-a.
Bar
Current number of bar patrons		33
Expected increase (33*50%)		17	(being 16.50 rounded off)
Expected number of bar patrons		50
Average time spent(in hours)		2
Required Capacity (seats)		100
Dining Area
Current number of dining patrons		53
Expected increase (53*20%)		11	(being 10.60 rounded off)
Expected number of bar patrons		64
Average time spent(in hours)		1
Required Capacity		64
Parking Area
		Bar	Dining Area
Expected number of patrons/hour		50	64
Average patrons per car		1.50	3
No. of cars		33	21
Average time spent(in hours)		2	1
Parking Capacity (spaces)		67	21
Total Parking Area			88
Particulars	Expected Capacity	Current Capacity	Needed Capacity
Parking	88	90	-
Bar	100	72	28
Dining	64	103	-
Meals	64	100	-
2-b.
Looking at the details in 2-a,the only capacity constraint would be at the Bar area
Current capacity of Bar area		72
Average time spent(in hours)		2
Number of bar patrons accommodated		36
Throughput Margin = Revenue - Food Costs
Computation of daily Revenue
Particulars	Bar	Dining
Total hours (a)	4	4
No.of patrons (b)	36	64
Orders per occupancy ('c)	2	1
Price per order (d)	$7	$22
Revenue(a*b*c*d)	$2,016	$5,632
Computation of daily Cost
Particulars	Bar	Dining
Total hours (a)	4	4
No.of patrons (b)	36	64
Orders per occupancy ('c)	2	1
Price per order (d)	$3	$3
Revenue(a*b*c*d)	$864	$768
Computation of Throughput Margin
Particulars	Revenue (daily)	Costs (daily)	Throughput (daily)	Throughput (monthly)
Bar	$2,016	$864	$1,152	$29,952
Dining Area	$5,632	$768	$4,864	$126,464
Total	$7,648	$1,632	$6,016	$156,416
Answers to the questions as required
Expected total throughput margin of the restaurant at current capacity
	Per Day	Per Month
Total throughput margin	$4,996	$129,896
Amount of needed capacity given the expected increase in the number of customers
If there is a constraint for any of the four areas of capacity				Bar (seats)
Parking (spaces)				0
Bar (seats)				28
Dining (seats)				0
Kitchen (meals)				0
If there is constraint, reduce the demand on the constraint
	Per Day	Per Month
Total throughput margin	$6,016	$156,416