Question

Segment profitability Calculation

(Please show both the calculation process and the final answer)

Q1 What is the margin ($ dollar value) of each segment (experientials, indulgents and frugals) per customer per year for Red Lobster according to the table below?

(hint: food margin($)for each customer+ alcohol margin($)for each customer)

Q2 Which segment is the most profitable and should be target at according to results in Q1?

Q3 Calculate each segment’s total margin change ($) if Red Lobster gain 2000 new unique Experiential customers, but lose 1000 Indulgent and 1000 Frugals.

Q4 Calculate the restaurant level total margin($)change if Red Lobster gain 2000 new unique Experiential customers, but lose 1000 Indulgent and 1000 Frugals.

	Experientials	Indulgents	Frugals
% of unique customers	23%	24%	28%
Meals/year/customer	6.3	5.6	3.8
Total spend/meal/customer ($)	24.88	18.78	14.86
% spend on food	88%	96%	99%
% spend on alcohol	12%	4%	1%
% Margin on food	67%	67%	67%
% Margin on alcohol	81%	81%	81%
Margin for each segment per customer per year($)	???	???	???
Change in the number of customers	2000	-1000	-1000
Margin Change in each Segment($ )	???	???	???
Total Restaurant Level Margin Change($)	???

Answer 1

Segment profitability Calculation (Please show both the calculation process and the final answer) he margin ($ dollar value) of each segment (experientials, indulgents and frugals) per customer per year for Red Lobster according to the table below? (hint: food margin($)for each customer+ alcohol margin($)for each customer)   Which segment is the most profitable and should be target at according to results in Q1?   Calculate each segment’s total margin change ($) if Red Lobster gain 2000 new unique Experiential customers, but lose 1000 Indulgent and 1000 Frugals. Q4 Calculate the restaurant level total margin($)change if Red Lobster gain 2000 new unique Experiential customers, but lose 1000 Indulgent and 1000 Frugals. Experientials Indulgents Frugals % of unique customers 23% 24% 28% Meals/year/customer 6.3 5.6 3.8 Total spend/meal/customer ($) 24.88 18.78 14.86 % spend on food 88% 96% 99% % spend on alcohol 12% 4% 1% % Margin on food 67% 67% 67% % Margin on alcohol 81% 81% 81% Margin for each segment per customer per year($) ??? ??? ??? Change in the number of customers 2000 -1000 -1000

	Experientials	Indulgents	Frugals
Meals/year/customer	6.3	5.6	3.8
Total spend/meal/customer ($)	24.88	18.78	14.86
% spend on food	88%	96%	99%
Spend on Food	21.89	18.03	14.71
% spend on alcohol	12%	4%	1%
Spend on Alcohol	2.99	0.75	0.15
% Margin on food	67%	67%	67%
Profit From Food	14.67	12.08	9.86
% Margin on alcohol	81%	81%	81%
Profit on Alcohol	2.42	0.61	0.12
Margin/Customer for each segment ($)	17.09	12.69	9.98
Change in the number of customers	2000	-1000	-1000
Margin Change in each Segment($ )	34180	-12690	-9980
Total Restaurant Level Margin Change($)	29340	-12080	-9860
Spend on Food = 88%*Total Spend
Spend on Alcohol = 12%* Total Spend
Profit From Food = 67%*spend on food
Profit from Alcohol = 81% *spend on alcohol
Margin from each segment = profit from food+ profit from alcohol
Margin change in segment = change in customer number*Margin
Total restarurant level margin = change in customer * restaurant profit