Pricing Strategy Proposal

Pricing Strategy Proposal

You are a marketing  director  for a Mexican  Taco  Restaurant  located in Lynchburg,  VA. The average  order size of your customers  is $7.00 per order. That means that when all your food orders are divided  by your total  number of customers,  the average  order amount  is $7.00.

Your Role/Assignment

Your variable  cost per order is $3.00 in food costs and paper products.  Of course, there are also fixed costs (whether  you sell one or a hundred).  These  include your building lease ($2,000 per month, electricity  $500 per month, and labor $3,100  per month).


Check the interactive  to answer the question  below and submit the deliverable  for this assignment.

You  DecideBreak Even Analysis


Using this formula,  what is the break-even  point?  In other words,  how many meals, at

$7.00, would  need to be sold before you start making  a profit?


Breakeven  Point (number  of meals)  = Fixed Costsl  (Average  Order Price – Average

Order Cost).


The problem  is that, even after being in business for a year, your restaurant  is selling slightly  less than  1,000 meals. There are several actions that can be taken to reach your break-even  point, which  is necessary  if you are to remain in business. As the marketing director  is responsible  for the product,  price, promotion,  and placement,  you control

many of the tools to make necessary  adjustments. Deliverable





You Decide Assignment







The owner has a passion  for this business  and is willing  to follow  your instructions.  He does not want to lose the business  and you certainly  want to keep your job.   In a two page proposal,  please provide  the break-even  formula  and plug in the actual to arrive at the correct  answer.  State the problem  and articulate  the possible  solutions  to solve your stated problem.  Here are some clues. You can increase  revenue,  decrease  expenses,  or some combination  of both. There are many

ways to do this. Make sure to also describe pricing  constraints  and why they must be considered

within your proposed  solutions.




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