Question

Fast-food chains, such as Burger King’s, will occasionally discontinue restaurants in their system. What are some...

Fast-food chains, such as Burger King’s, will occasionally discontinue restaurants in their system. What are some financial considerations in deciding to eliminate a store? Please be detailed. Thank You

Homework Answers

Answer #1

The financial considerations in deciding to eliminate a store are :

  • Fixed costs involved in running the store such as rent, salaries, electricity etc.
  • Break even point of store in terms of number of burgers sold
  • Break even point of store in terms of sales amount per month
  • Share of store sales in overall sales of the region/state/city as compared to the incremental cost of operating the store
  • Sales lost due to closure versus the incremental cost savings in closing the store
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