Blog Post #3- Amy Lau

Koni Underground- Ramen Shop

Part One and Part Two

History

            Koni Underground, a new ramen shop, was founded on March 30^th, 2015. The restaurant consists of 12 individuals (a owner (Chef Lau), one host/hostess, three waiter/waitresses, one busgirl/busboy, and four chefs, and two staff in the kitchen in the back) all working together to establish 5 different dishes of ramen as well as to ensure a positive restaurant environment. The different ramen dishes are inspired by Chef Lau’s experience in a Japanese Ramen shop in Sapparo, Japan.

            At Koni, they serve Sapporo-style ramen, which is distinguished by its chintan stock, a clear soup base that requires over 16 hours of preparation to achieve its delicate and complex depth. The stock contains chicken, pork, and beef. Aside from the soup, the noodles are imported from Sapparo, Japan. The following graph depicts the menu.

Ramen Menu

All ramen except vegetable is topped with chushu (roast pork), bean sprouts, onions, garlic, ground pork, and scallions. Please alert your serve of any allergies.

Shio Ramen  $13.00      This shows off the unique nuance of the Chintan stock. It is the most delicate ramen.

Shouyu Ramen  $13.00    In keeping with Sapparo ramen tradition, we use very dark soy sauce based soup. The soup has toasted garlic and slight caramel tones, topped with egg, nitamago.

Mugi Miso Ramen $13.00     Our miso ramen has bright, savory aromatics and is lighter than a traditional miso. Miso ramen is native to Sapparo, but using mugi miso is unique to Koni Underground.

Spicy Miso Ramen $13.00   Our spicy miso ramen broth has balance, depth, and complexity. It is not just simply spicy, instead, we use shiro-miso, which is white miso, for this ramen.

Vegetable Ramen $13.00 Not strictly tradition, this is a 100% vegan ramen. The vegetable shio broth is finished in the wok which adds roasted depth to the soup. Topped with brussel sprouts, bean sprouts, snow peas, carrots, onions, and wood ear mushrooms.

The restaurant’s targets vary from age, as they believe that everyone will enjoy an authentic hot bowl of ramen.

Fixed Costs:

Item:                                                                                                     Monthly Cost

Rent (utilities included)                                                                                   $6000                                   

Technology + Equipment (Waitlist app, Ordering System etc)                      $2064

Payroll                                                                                                           $18,700

Business/Government Fees                                                                              $1500

Import of Food from Japan                                                                               $3120

Other                                                                                                                $5000

                                                                                                        Total: $36,384.00

Price: $13 per dish

Variable Costs: $7 per dish

Q = Quantity

Cost Function

C(q) = 7q+36,384

Revenue Function

R(q) = 13q

Profit Function

P(q)=  R(q) – C(q)

P(q) = (13q) – (7q+36384)

Break Even Point

13q = 7q + 36384

6q = 36384

q= 6064

Interpretation

            The break-even point is the point at which the revenue and cost are equal. In this case, after selling 6064 bowls of ramen, Koni Underground’s revenue begins to exceed cost and therefore, Koni will begin to make a profit.

Profit Function

When P(q) passes the x-axis, it is where the company begins to make a profit. Hence, when Koni Underground sells 6064 bowl of ramen, it is where the company begins to even out, and anything sold above 6064 bowls is where the company is making a profit.

Part Three

Quantity Produced Each Day

N= Q = 9051 bowl each day

Marginal Cost

C(q) = 7q+36,384

C’(q)= 7

The marginal cost of producing q= 9051 bowls of ramen would be $7 per bowl. .

Average Cost when q = 9051

A(q) = C(q)/(q)

A(9051)= ((7*9051)+36,384)/9051 = (63357/9051) $11.01 per bowl.

1. The marginal revenue is greater than the marginal cost because the marginal revenue is $13 per bowl while the marginal cost is $7 per bowl
2. The number of bowl of ramen sold daily is after the break- even point because that is when a profit occurs.
3.  If the production is increased by one extra quantity per day, the company will continue to make money

              R (9052)-R (9051) = $13 per bowl

              C (9052)-C (9051)= $7 per bowl

4. At q=n, an increase in production decreases average cost

5.  Decreasing average costs would benefit the company because it would become cheaper to produce ramen, and therefore, increase the profit.

Part 4

 Over the next five years, the ramen shop will continue to grow as long as the marginal revenue is greater than marginal cost. Moreover, although the fixed cost is high, which is expected when you open a restaurant, but since the marginal cost is low when you make an additional ramen, you will eventually make profit. Ramen is also available and craved by people throughout the season, so the company should look at a high profit.