Break
Even Analysis
When examining the case of McDonald’s “senior” Restaurant there are several aspects to take into consideration, the first is the fact that the sheer amount of regular customers that come to this location can be considered advantageous for the company from a revenue standpoint. First off, it is important to note that while it is true that the amount seniors that occupy the restaurant is considerable, the fact remains that as a fast-food restaurant, most people are not there to stay for prolonged periods with the seniors being an exception to this “rule”. As such, the steady stream of customers that come into the fast-food chain can utilize the limited seating available, finish their meal quickly and leave.
Also, while it is true that most of the seniors do is merely buy a cup of coffee and stay there for a long period, the fact remains that this not apply to all instances wherein there is the very real possibility that some of the seniors would continue to buy food items as they get hungry since they are staying there for 2 to 4 hours. Thus, from a break-even analysis perspective of the number of seniors versus the limitation in seating for new customers, there is no problem whatsoever with the seniors being a very potent means of earning that branch more money.
As for the bingo idea, an underutilized party room for the seniors to play bingo would be a great idea since it is more or less not even used a majority of time yet the company still pays for it due to the rental payments it is subject to for the location it is using. By charging seniors $5 to join the bingo tournament and utilizing prizes in the form of McDonald’s coupons, this encourages people to continue to patronize the products of the restaurant. Not only that, the prizes awarded can be set at a lower level than the amount taken in for the bingo tournament which would result in more money generated than lost.
Financial Ratio Analysis
Sales
Overall, when looking at the sales of the branch, it can be stated that it is doing quite well for itself due to the sheer amount of regular seniors that patronize it. The coffee sales alone would be considerable which, when combined with other items that the seniors buy from time to time, make the current clients a very effective source of daily revenue.
Growth
When it comes to the growth of the location, it is important to note that there is nothing necessarily wrong with being known as the “senior” McDonald’s. The reason behind this is connected to the fact that this branch of the fast-food chain would be able to target a consumer demographic that in the past it had a hard time being able to successfully capture (Berfield 49). By encouraging more old people to visit the branch, this would result in higher sales revenue in the long run due to the steady stream of regular customers as compared to the irregular nature of the clientele that would visit an average McDonald’s branch wherein it is unknown how many people within a given day would come.
Forecasting
In terms of forecasting, the current setup is good for the restaurant since it enables an accurate estimation of the number of customers on any given day. Looking at the number of senior customers that come to the same branch which ranges from 100 to 150, it can be stated that a conservative estimate of the potential increase would be around 5% annually. The reason behind such an estimation is connected to the work of Boje, Driver, and Yue which explained that the inherent issue with senior clientele is that they do not have the same rapid exponential growth as compared to younger customers under their advanced ages (Boje, Driver, and Yue 197).
Works Cited
Berfield, Susan. “Mcfresh. (Cover Story).” Bloomberg Businessweek 4337 (2013): 46-48.
Boje, David, Michaela Driver, and Cai Yue. “Fiction And Humor In Transforming McdonaldāS Narrative Strategies.” Culture & Organization 11.3 (2005): 195-208.