Burger20 Restaurant

Burger20 is a fast food restaurant chain specializing in burger and fries meals. Unlike your
average fast food restaurant, their burgers are made from never-frozen and guaranteed to be
fresh Angus beef. Burger20 prices are similar to other high end fast food restaurant chains. In
addition to serving great-tasting burgers, Burger20 also has five styles of hot dogs including
B2 spicy, B2 special, B2 Chili Cheese, Chicken Apple, and 100% Wagyu Kobe Beef.
Burger20 has been delighting customers at each of their locations for years and it’s now
making headway by expanding rapidly and preparing to open in a vast number of store stores
nationwide.

In the years passed by, restauranteur and Burger20-founding partner Mr. Shaw saw that one
of the best-selling menu items at several of his full-service restaurants was their famed all-
natural burgers. With that realization into what his customers craved most, Mr. Shaw wanted
to provide the public with a faster and more casual way to get their hands on these delicious,
all-natural burgers. So, along with Burger20 co-founder Jason Darwin, the duo set out to
build Burger20 into the national franchise that it is today. Starting with just two locations,
Burger20 has become the fastest growing all-natural burger franchise in the marketplace, and
is currently poised to open 150 stores across the nation

Burger20 was founded to be an environmentally sustainable restaurant chain that has Earth-
friendly elements, like chairs made out of recycled materials, tables made out of recycled
wood, and fans that use over 60% less electricity. Their goal is to maintain a low carbon
footprint and attract the environmentally-conscious crowd. As with everything, you get what
you pay for, and Burger20 prices justify spending a little more to gain a lot more.

They source only the highest quality ingredients for their food, and rely on the most proven
equipment. At the corporate level, they constantly negotiate and re-negotiate the best possible
prices on all of their ingredients to ensure the best possible price and consistency of price
across the nation. Regarding equipment, the Burger20 team thoroughly tests everything for
quality, availability, cost, durability, cost of repair, and ease of use

Burger20’s strategy for getting their message out to the world is less about mass-marketing
and promotional gimmicks, and more about truly giving customers and franchise owners
experiences worth talking about. For the customer, that means providing them with the best-
tasting burgers, hot dogs, and desserts they’ve ever eaten, not to mention a great selection of
craft beer and wine — all in an environment that they can feel good about, because it’s both
beautifully decorated and built with environmental sustainability in mind.

For the franchise owner, BurgerF20 focuses on providing all of the tools, resources, and
support that they need to be successful in growing their business, including a world-class
training program, and a mobile business management system that allows Burger20 franchise
owners to monitor and manage their business from anywhere in the world.

Expenses

Every organisation has various daily costs and expenses that result from its trading activities.
Some of these don't change over the short to medium term whilst others increase or decrease
directly as a result of production or sales changes. Owning a fast food franchise can be an
incredibly lucrative business, but it has a high start-up cost. The costs can be divided into
fixed and variable costs.

Many restaurant owners and managers do not understand the difference between their fixed
and variable costs.  The problem with defining the two types of costs relates to their
connection with sales.  In addition, reasonable assumptions have to be made in order to
delineate between fixed and variable costs in the food service industry. 

Variable Costs

The technical definition to variable costs is those costs that change with the change in sales. 
So, the obvious ones in the restaurant are the food and staff. For instance, in Burger20 the B2
chilli burger costs Rm 10 per burger the variable cost of 100 and 500 burgers sold will be
RM1000 and RM5000 respectively. The staffs include everyone from the waitress through
the dishwashers.  The chef, waiters and busboys; everyone that participates in getting that
patron served food and refreshments, is considered staff.  The entire staff’s payroll is variable
in nature.  If you didn’t have the customer, you wouldn’t need them to provide the service, so
their costs do change with the volume of sales.  

Fixed Costs

 An expense or cost that neither increases nor decreases from changes in sales made.  Such as
mortgage or rent payments, utility bills, and loan payments. The amounts may vary slightly,
which may be the case with utilities, but they are due on a regular basis.
While menu pricing is something of an arcane art than strict science, Burger20 still needs to
be aware of their costs, both direct and indirect. Direct costs involve the actual ingredients
used to make a given dish. They need to price out every single thing used in preparation,
down to that little sprig of parsley that they’re using as garnish. Indirect costs are basically
everything else: rent, labour, marketing, and those little wipes they might hand out after the
meal, crayons for kids, Andes mints, whatever.

While business, hospitality and academic studies have debunked the long-held myth of a
nearly 90 percent failure rate for restaurants, the actual figure of one in four new restaurants
failing in the first year of operation still points to the importance of careful budgeting and
financial planning for restaurant owners and operators. Fixed costs consist of those that do
not fluctuate with changes in production level or sales volume, while variable costs are those
that respond directly and proportionately to changes in activity level or volume. The fact that
labour and food costs, major components of restaurant operating expenses, often fall into the
variable category poses a major challenge to restaurant owners.

Occupancy Costs

Whether buying or leasing restaurant space the monthly payment is one of Burger20’s
restaurateur major fixed outlays. Related fixed costs include local and state real estate taxes,
as well as insurance. Rental space may increase in price over time, but Burger20 owners
typically can count on a certain period at a fixed price and will usually have some notice of a
rent increase. Certain utilities, such as water, phone and computer lines, are relatively
consistent over time. Others, such as electricity, may vary considerably depending on
seasonal demands for heating or air conditioning. Gas or oil, when needed may also fluctuate
in price depending on world markets.

Equipment

Normal operations and maintenance costs for Burger20’s equipment, such as stoves, grills,
dishwashers and freezers, have remained constant from month to month. Notable exceptions
to this fixed cost are the unexpected requirements to repair or replace broken equipment.
Items such as dishes, flatware, pans and glassware require a considerable expense at start-up,
but Burger20 owners generally can plan for purchases of replacements. This category also
includes decor-related items, such as candles, flowers or plants, light bulbs and window
fixtures, as well as consumables, including napkins. These items are typically bought
routinely and in bulk, allowing the Burger20 owners to plan for such expenses

Food and Beverages

Food and beverage costs are among the greatest variable expenses Burger20 owners and
managers face. These costs fall under the category "Cost of Goods Sold," commonly referred
to as usage costs. Successful restaurants skilfully manage the balance between buying in bulk
to have enough food to meet customer demand and not buying so much food that it goes to
waste. Menu prices for most items cannot change every time the Buger20's food costs
change, so their profit margin is affected if food costs fluctuate frequently or substantially.
Restaurants are at the mercy of local and national supplies and markets, which means that
when national milk or fruit prices go up because of shortages, they must absorb them.

Personnel

Labor and personnel expenses are variable costs, although Burger20’s managers can control
the overall personnel costs by managing the number of shifts assigned and how much
overtime is approved. Small, local restaurants with a relatively static customer base may
experience only limited variation in the month-to-month costs of staff, but Burger20 is likely
to have greater variability in staffing expenses. One key personnel expense such as the
manager's salary, falls under the fixed costs category.

Conclusion

Understanding the distinction between these different types of expenses and their recurring
costs will help build an effective budget and cash flow forecast for Burger20 restaurant.
Additionally, understanding theirr fixed cost commitments and variable cost trends will allow
them to analyze month over month fluctuations and identify variances from their forecast.
Using these principles will allow them to effectively manage their business and influence
decision making to insure the future health of your business.
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