Presented to Professor David Fernihough Course Code : AIT704FR – Management Accounting

Backgroundo Landmark Restaurants, a successful upper-class restaurants

chain in Alberta. o An upcoming market player in Ontarioo Shane House, the president of Landmark Restaurants in

partnership with Bill Peters owned the Landmark Restaurant concept through a public company named Bragg Creek Restaurants

o Plans to accelerate development in Ontario.o Opportunity to convert Chili Pepper’s Steakhouse locations in

Ontario into new Landmark Restaurants.o Promising Locations – Vaughan & Newmarket

Concerno The brunch business had not “taken off” in Ontario the way it

had in Alberta. o The week-day lunch business peaked very quickly and lasted

for an hour at best on most days.o Selling prices were much lower at lunch and the business was

highly inefficient.o Would Landmark be as financially viable if it did not serve

lunch ?

Ontario’s Restaurant Industry

Porter’s 5 Forces Analysis

Competitive Rivalry

Threat of New

Entrants

Bargaining Power of

Customers

Threats of Substitutes

Bargaining Power of Suppliers

Porter’s 5 Forces Analysis Bargaining Power of Supplier• Supplier concentration• Frequency of orders – reduction in price• Ability to substitute• Switching cost

Threat of new entrants• Easy entrance in restaurant business• Economies of scale• Geographical factors

Porter’s 5 Forces Analysis Bargaining Power of Buyer• Buyer concentration • Buyers choice / options available• Price sensitive

Threat of substitutes• Cooking meal, take-outs, other restaurants• Price of change.

Competitive Rivalry• Plenty of competition – Joey’s, Moxies, The Keg etc.

Financial Analysis Lunch & Dinner Dinner House (Projected) Per Guest Total Per Guest TotalSales $ 3,417,971.00 $ 2,529,300.00 Guest 179,925 115,296 Percentage of guests 100% 64%Average cheque per Guest $ 19.00 $ 21.94 Cost of Food $ 5.74 $ 1,032,769.50 $ 6.80 $ 784,012.80 Cost of Service Labour $ 1.47 $ 264,489.75 $ 1.47 $ 169,485.12 Variable Kitchen Labour $ 1.52 $ 273,486.00 $ 1.52 $ 175,249.92 Variable Direct Labour Benefits $ 0.73 $ 131,345.25 $ 0.73 $ 84,166.08 Variable Management with Benefits $ 1.31 $ 235,701.75 $ 1.31 $ 151,037.76

Variable Overheads $ 1.80 $ 323,865.00 $ 1.80 $ 207,532.80 Total Variable Costs $ 12.57 $ 2,261,657.25 $ 13.63 $ 1,571,484.48 Contribution Margin $ 6.43 $ 1,156,917.75 $ 8.31 $ 958,109.76 Total Fixed Cost $ 565,803.00 $ 565,803.00

Financial Analysis Lunch & Dinner Dinner House (Projected) Per Guest Total Per Guest TotalSales $ 3,417,971.00 $ 2,529,300.00 Total Variable Costs $ 12.57 $ 3,983,774.00 $ 13.63 $ 3,095,103.00 Contribution Margin $ 6.43 $ 1,156,917.75 $ 8.31 $ 958,109.76 Total Fixed Cost $ 565,803.00 $ 565,803.00 Operating Income (Contribution Margin - Fixed Cost)

$ 591,114.75 $ 392,306.76

Contribution Margin Ratio (Contribution Margin/Sales) x 100

33.85% 37.88%

Operating Income % (Operating Income / Sales)

17.29% 15.51%

Financial Analysis Lunch & Dinner Dinner House (Projected)

Per Guest Total Per Guest Total

Sales $ 3,417,971.00 $ 2,529,300.00

Contribution Margin $ 6.43 $ 1,156,917.75 $ 8.31 $ 958,109.76

Total Fixed Cost $ 565,803.00 $ 565,803.00

Contribution Margin Ratio 33.85% 37.88%

Breakeven Point (BEP) - Guests (Fixed Cost / CM per Guest)

87,994 68,087

Breakeven Point in $ (Fixed Cost / CM Ratio)

$ 1,671,595.28 $ 1,493,655.10

Safety Margin (Sales - BEP ($)) / Sales

51.09% 40.95%

Balanced Score Card

Recommendations Lunch & Dinner Model• Landmark should continue to operate the Lunch &

Dinner business model in Ontario.• Value Leadership – Meeting customer expectation

as a upper-casual restaurant chain.• Financially Viable business model.

Strategy at Lunch Service• Express Lunch – Faster and improved customer

service.• Menu Engineering – offer limited selection.• Effectively manage Cannibalization by product

differentiation & pricing.

Recommendations Strategy at Dinner Service• Menu Engineering. Eliminate slow moving items .• Improve efficiency and quality in the value chain.• Enhance customer dining experience.

Other Factors to enhance profitability & leadership• Open venues for business lunch Seminars /

workshop, friends & family lunches etc.• External factors – Contract negotiation.• Marketing and Branding

Thank You !