Breakeven Point (Number of meals) = Fixed Costs / (Average Order Price – Average Order Cost)
= (2000 + 500 + 3100) / (7-3) = 5600/4
Breakeven Point = 1400 meals
Analysis and recommendations
The marketing director of the Mexican Taco Restaurant is responsible of the actions that would be significant in navigating the company towards reaching the breakeven point. The director would undertake a number of responsibilities in consideration of the marketing elements of product, price, promotion, and placement to ensure the company achieves its breakeven point. The restaurant is currently operating at less than 1000 units, which is a figure below the breakeven point. Therefore, a plan needs to be executed to ensure the breakeven point is not achieved.
The first element that the director would focus on is the product. The customers are usually attracted by the product that suits their needs (Wijayanto, 2015). Therefore, the director should focus on ensuring the product is of the best quality. The director must also ensure the restaurant offers products that are in line with the tastes and preferences of the consumers. The products may be of different characteristics or forms so as to make them suitable for the needs and wants of different customers.
Price is an equally significant element for the marketing director to consider in driving the restaurant towards its breakeven point. Price is the amount of money the customer is required to pay to gain possession of a product (Goi, 2009). The price should match the quality of the product on sale. In this case, the price may be the hindrance to the achievement of the breakeven point for the restaurant. One of the strategies that would work best for the restaurant is to have the prices adjusted to a point where they would suit the customers.
Being in operation for one year without achieving the breakeven point; the price may be a major barrier. It means something ought to be done to ensure the prices are friendly. Therefore, the previous failure should push the director to suggest for lower prices on its products. Reduced prices are likely to attract more customers. The restaurant should seek to raise the level of cash inflows through increased customer base so as to balance the costs involved to influence growth for the business.
Promotion would also be a critical element towards the achievement of the breakeven point for the restaurant. Promotion refers to the manner by which the marketing director communicates to the customers of certain products (Goi, 2009). The director must ensure extensive and reliable communication with the customers so as to inform them of the products and their value. The director must ensure the customers get attracted to the product so that they may make a move to achieve the relevance that comes with the products. In the promotion, the benefits of the products must be a major point for discussion so as to attract more people and make the products relevant to them. The director must also differentiate its products so as to attract a wider pool of customers.
Placement is also highly significant in assisting the company to achieve its breakeven point. It is the process of making a product accessible for use by a consumer (Wijayanto, 2015). The director must ensure the restaurant outlet has the necessary stock for the products all the time. The restaurant must ensure the availability of all the products upon demand by the customer.
If the director undertakes the necessary measures for the price, promotion, product, and placement of the Mexican Taco Restaurant the breakeven point will be reached soonest. The company will experience growth and profits following the employment of new principles.
References
Goi, C. (2009). A Review of Marketing Mix: 4Ps or More?. IJMS, 1(1).
Wijayanto, G. (2015). The Effect of Service Marketing Mix in Choosing the Decision to Consumer Services Hotel: Studies in Hotel Grand Zuri Pekanbaru. MJSS 1(1).
