Citroen has the experience of working in a large organization. He understands the business of cooking and recipes well. But he is still a novice in handling business operations. He may not have accosted those costs of a business that come to fore better in a small environment.
The figures on which he is Citroen bases his decisions are not exhaustive and the actual running cost of the restaurant could be higher. Some of the fixed and non-fixed expenditures like overheads like electricity, water. establishment costs, telephone bills, software, internet and computer costs, insurance, dilapidation costs, maintenance costs and sales promotion are not included in his analysis. A business always needs to be in growth, expansion, improvement or development mode in order to stay in competition. A salary of $85000 and a profit margin of $ 90000 are not comparable figures. He needs to generate enough money that is over and above the amount he needs to look after himself.
According to Citroen, each meal leaves him with a margin of $22. The costs for sales promotion. He needs to make forecasts of the occupancy of 40-seater restaurant especially the peak occupancy and its time period. In case it exceeds the available seating capacity of 40, for such time period that may lead to substantial business loss, he will have to provide additional seats. This needs a workload and capacity management planning. His decision to close shop on the weekend is also flawed as restaurants generate highest turnovers on the weekends.
Cost should be defined as what the customer pays to obtain certain goods or services and to derive full utility from them. It is important for Citroen to realise that he will not be able to encash his rapport with clientele of La Gauloise in entirety, for as much he may have done to increase restaurant’s popularity, big businesses carry their brand loyalty that does not change with change of employees.