Swu Stadium Revenue

SWU Stadium Revenue

1. Summary

In response to Dr. Starr’s request I have evaluated the feasibility of the pricing and sales for concessions. I have determined the breakeven point, revenue generated and cost of five categories of concessions through a quantitative analysis of selling price, variable cost and percent of the total revenue each item is expected to cover of the fixed cost.

2. Background

We are building a larger stadium to accommodate the increase of fans at the football game due to the arrival of Coach Bo Pitterno. Prior to the arrival of Coach Pitterno game attendance was around 25,000 attendees. That is expected to jump as high as 60,000. To be sure that the stadium generates adequate revenue to pay for itself, a thorough investigation was done.

3. Analysis of Revenue

The Topics covered are:

1. The total fixed cost that must be covered at each of the games.

2. The portion of the fixed cost allocated to each of the items.

3. What are the unit sales at breakeven for each item evaluated.

4. What are the dollar amounts of the sales of the items at breakeven.

5. Realistic sales estimates per attendee for 35,000 and 60,000.

1. It was determined that there are three factors that make up the fixed cost of each game. They are: food service salaries, cost per square foot of the stadium and wages of booth workers. In Table 1 you can see the total fixed cost of each game is $26,060.00.

Table 1

2. The items were broken into five groups. They are: Soft drink, Coffee, Hot dogs, Hamburgers and Misc. snacks. The expectations for sell price, cost per unit and the percent of revenue each item was expected to cover is shown in Table 2.

Table 2

3. At the prices and cost identified in Table 2, the number of units that need to be sold are defined in Table 3.

Table 3

4. Table 3 also shows the sales totals generated at breakeven.

5. The cost per attendee at the current 35,000 through to the projected 60,000...