Pricing Strategy Proposal

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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).

Question

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

Assignment

You Decide Assignment

Deliverables

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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rCategory

JPoints I % Description

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I and FOlmatting ~ur strategy. The proposal should be two pages in length.

Organization and ! 7.5 15 I Quality work will be clearly organized to show your progress through t1

Cohesiveness I formula which will provide a cohesive transition to a well-organized

, appropriate solution.

~diting

I,0 ! Quality work will be free of any spelling, punctuation, or granuna!iCal~

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I Content

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concept and will show correct calculations. Conclusions from the breake

analysis should be summarized with your rationale for the solution(s) th.

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selected. The content presented must demonstrate an understanding

I I the material.

Pricing Strategy Proposal