Bethesda jazz and blues supper club menu

Financial Analysis

Anonymous 1

1. The cost of a ticket to my jazz party is $59.99. I came up with this price using two pricing strategies. First I used the competitive pricing strategy, which is defined as reducing “the emphasis on price competition by matching other firms’ prices” (Boone, p. 417). Second, I used the odd pricing strategy which is defined as a “pricing method using uneven amounts,” (Boone, p. 419) so that consumers would be more likely to purchase a ticket because the cost seems less than it actually is (Boone, p. 419). In benchmarking the ticket prices of competitors, there are several competitors to for this jazz party. One competitor would be the Bethesda Blues and Jazz Supper Club which charges $20 to $50 depending on the musician for admission (“Music Calendar”, n.d., p. 1). For the purposes of this paper, I will assume the average cost is $35 for admission by taking the average of those two prices ($20+$50= $70/2= $35). It is important to note that the admissions ticket does not include food or drink costs. Based on the menu available on their website, Bethesda Blues and Jazz Supper Club charges approximately $11 for appetizers, $28 for a main course and $10 for dessert (“Dining”, n.d., pp. 1-4). Drink prices were unavailable. Another competitor would be the Blues Alley D.C. Jazz Club which charges $25 to $45 depending on the musician for admission (“Events”, n.d., p. 1). For the purposes of this paper, I will assume the average cost is $35 for admission by taking the average of those two prices ($25+$45=$70/2=$35). Food and drink are not included in that price. Based on the menu available on their website, Blues Alley D.C. charges roughly $9.50 for appetizers, $22 for a main course and $7 for dessert (“Menu”, n.d., pp. 1-6). Drink pricing is not available. A third competitor would be the Bohemian Caverns Jazz Club in D.C. which charges a standard $20 admission fee (“Tickets”, n.d., p. 1). Food and drink are not included in the admissions cost. Based on the menu available on their site, they charge $8 for appetizers, $16 for main courses and $5 for sides (“Menu”, n.d., pp. 1-5). Pricing for desserts and drinks were not available. We have several distinct competitive advantages that separate us from the competition (Boone, p. 8). One competitive advantage is that we include food and a drink in our ticket price. You don’t have to worry about additional expenses just pay your admission fee at the front door, and you are all set for a great evening. Our second competitive advantage is that we are competitively priced when you factor in both the cost of food and admission. Our three competitors charge roughly $35, $35 and $20 for admission which averages out to $30 for admission ($35+$35+$20=$90/3= $30). In addition, they charge extra for food including a main course and a dessert which averages out to $33.50 ($22+$7=29 (Bethesda Blues and Jazz Supper Club). $28+10=$38 (Blues Alley D.C. Jazz Club). So, $38+$29=$67. 67/2= $33.50). I did not include Bohemian Caverns Jazz Club for comparative food pricing since dessert pricing was not available. I assumed that a non-alcoholic beverage would cost about $3 at these competitors. All in all, $30 admissions + $3 non-alcoholic beverage + $33.50 including main course and dessert = $66.50. So $59.99, our price, is $6 less than theirs so we are competitively priced since we cost less than our competitors when you factor in food and beverages costs in addition to the admissions price. Our third competitive advantage is where we are located. We are 1 block from the Bethesda Metro Station, and there are 2 large parking garages within 1 block as well making it extremely convenient for people to come. 2. My fixed costs are those costs that remain constant regardless of the number of people who attend (Boone, p. 415). An example would be the facility I am renting the Bethesda Round House Theatre which is $350 an hour (“Facility Use”, n.d., p. 1). I plan for the jazz party to be from 7-11 p.m. with the jazz band playing from 7:30-9 p.m. Then dinner from 9-10:30 p.m. and

Anonymous 2

the jazz band finale from 10:30-11 p.m. I believe I would need to rent the facility for at least 1 hour before and after the show to allow people to set up and cleanup. So my total cost would be $350x6 hours which equals $2,100. In addition, I would need to buy a couple of cash registers to process people’s payments at the door. I would have 3 cash registers to process people quickly. 3 registers at $59.99 each would cost me a total of $179.97 (Staples, n.d., p. 1). I would pay 3 people minimum wage, which is $8.40 an hour in Montgomery County according to the state of Maryland’s DLLR, to man the registers for 1.5 hours (“Minimum Wage”, 2015, p. 1). I don’t believe I would have much difficulty finding three people who would work for 1.5 hours at $8.40 an hour because of the location of my party. Bethesda Round House Theatre is located 1 block from the Bethesda-Chevy Chase High School, and I think three high school students would eagerly work 1.5 hours to earn some money. They could take that money to go to a movie in downtown Bethesda or go out to Chipotle for dinner afterwards. I would also hire 3 off duty Montgomery County Police Officers to watch the cash registers, but also to act as security if need be. Based on my personal knowledge, I know officers make time and a half for off-duty work so given that an officer makes $48,981 a year and then divide that by 52 weeks in a year and then divide that by 40 hours a week you get a hourly rate of $23.55 (Montgomery County Police, n.d., p. 1). At time and a half it would cost $35.33 an hour per officer. I would hire 3 officers for 5 hours each so my cost would be $529.95 ($35.33x5x3=$529.99). A band costs approximately $750-$1500 for a four hour time slot (Sam Hill Entertainment, n.d., p. 1) For the purposes of this paper, I will assume the average cost is $1,125 for the band by taking the average of those two prices ($750+$1500=$2,250/2=$1,125). I am also allocating $1,000 for various types of advertisements and decorations. Table 1:

Fixed Costs Hourly Rate/Cost

Quantity (how many people)

Duration (hours)

Total Cost

Rent Facility $350.00 1 6 $2,100.00

Off-duty Police Officers

$35.33 3 5 $529.95

Cashiers $8.40 3 1.5 $37.80

Cash Register $59.99 3 N/A $179.97

Band $1,125.00 1 4(contract min) $1,125.00

Advertising and Decorations

$1,000.00 1 N/A $1,000.00

Total Fixed Costs:

4,972.72

Anonymous 3

My variable costs are those cost that vary depending on the number of people that attend (Boone, p. 415). I would use Gist Family Catering which charges $18.50-$20 per person so I will assume the average cost per person would be $19.25 ($18.50+$20=$38.50/2=$19.25) (“Lunch and Dinner Menu,” n.d., pp.1-3). So assuming I sell 400 tickets, $19.25x400 would be $7,700. This per person price includes a drink (punch), several main courses to choose from along with several sides, dessert and paperware (“Lunch and Dinner Menu,” n.d., pp.1-3). Each server is $110.00 for up to 5 hours (“Lunch and Dinner Menu,” n.d., pp.1-3). Based on internet research, you generally need 1 server per 20 people (A Tasteful Affair, n.d., p. 1). So if I have 400 people attending, I need 20 servers which would cost $2,200 (400/20=20) ($110x20=$2,200). I would also need tables and chairs. A 72” round table sits approximately 11 people and costs $14.20 to rent each table, and each chair costs $1.45 (A to Z Party Rental, n.d., p. 1). So assuming 400 guests, 400 chairs would cost me $580.00 and since a table costs $1.29 per person it would cost me $516.00 ($1.45x400=$580. $14.20/11=$1.29 per person for a table. $1.29x400=$516) Table 2: Variable Costs Per person

Cost Quantity Total Cost

Food and Drink

$19.25 400 $7,700.00

Servers $110.00 20 $2,200.00 Chairs $1.45 400 $580.00 Round Tables $1.29 400 $516.00 Total Variable Costs

10,996.00

3. A breakeven analysis is used “to determine the minimum sales volume a product must generate at a certain price level to cover all costs” (Boone, p. 415). Break even= fixed costs/(avg sale price per unit- avg variable cost). My fixed costs are $4,972 please see table 1 and table 2 at above for a detailed break down. My avg sale price per unit is the price I am charging for a ticket $59.99. The avg variable cost is $27.49 based on dividing my total variable costs $10,996 by the number of people attending, 400. So $10,996/400= $27.49. Please see table 2 for a detailed break down. Therefore, I need to sell 154 tickets to breakeven. 4,972.72/ (59.99-27.49)= 153.006→ 154 tickets to break-even. Since I need to sell 154 tickets, I need $9,238.46 in revenue to breakeven (154x$59.99= $9,238.46). 4. I would use the Bethesda Round House Theatre as the venue for my jazz party because it has a state of the art theater that seats up to 400 people (“Facility Use”, n.d., p. 1). It is also located 1 block from the Bethesda Metro Station, and there are 2 large parking garages within 1 block as well making it convenient for people all over the D.C. metro area to come. According to a study, higher education and income levels are strongly linked to those who listen to jazz; in fact, “nearly half of those attending jazz performances, for example, are college graduates; over three-quarters have had some college education. Those earning more than $50,000 a year are more than twice as likely to attend performances as those earning less than $25,000” (DeVeaux, 1995, p. 3) According to the U.S. Census Bureau, Bethesda has a population of 60,858 where 98.2% of people age 25 and older have a high school degree or higher compared to 88.7% in the state of Maryland (2015, p. 1). In addition, 82.4% of people age 25 and older in Bethesda have a bachelor’s degree or higher compared to 36.8% in the state of Maryland (U.S. Census Bureau, p.

Anonymous 4

1). Also the per capita money income, also known as income per person, in Bethesda was $85,442 compared to $36,354 in the state of Maryland (U.S. Census Bureau, p. 1). Therefore because Bethesda is highly educated and has a greater income compared to the rest of Maryland, this makes the Bethesda Round House Theatre a great venue for my jazz party. 5. Regarding the potential sales (revenue) for this party, I am limited to selling 400 tickets because of the maximum capacity of the space I am renting. Therefore, my maximum revenue would be $23,996 (400x$59.99=$23,996) which would exceed my break-even point. Please see Table 3 below for more details. I believe selling 400 tickets is an attainable goal considering “About one-third of American adults reported that they ‘liked jazz.’ In addition, ‘25 percent of adult Americans expressed a desire to attend a jazz performance”’ (DeVeaux, 1995, p. 1). Using the Build Up Approach, which is estimating “the number of potential buyers in a geographic area,” (Weiser, 2015, slide #25) I would expect there to be 15,214 potential buyers in Bethesda for my jazz party given that Bethesda has a population of 60,858 and that “25% of adult Americans expressed a desire to attend a jazz performance” (DeVeaux, 1995, p. 1) (60,858x.25= 15,214) (U.S. Census Bureau, p. 1). Furthermore because the Bethesda Round House Theatre is located 1 block from the Metro, people all over the Washington region could come to my party. According to the Washington Post, the population of the Washington region is more than 5.8 million people (Mellnik & Morello, 2013, p. 1). Thus, I would estimate there to be 1.45 million potential buyers in the Washington region for my jazz party given that the population is more than 5.8 million and that “25% of adult Americans expressed a desire to attend a jazz performance” (DeVeaux, 1995, p. 1) (5.8 million x.25= 1.45 million). Table 3:

Price Each Ticket

Number of Tickets of Sold

Projected Revenue

Potential Sales $59.99 400 23,996.00

6. Please see the income statement (Table 4) below. Table 4:

Income Statement

Revenue/Sales $23,996.00

Cost of Goods Sold (Total Variable Expenses)

$10,996.00

Operating Expenses (Total Fixed Costs)

$4,972.72

Profit $8,027.28

Anonymous 5

7. In sum, yes this jazz party should be thrown because the facility selected has an ideal location with convenient parking and is in very close proximity to a Metro station. In addition, the population of Bethesda is an ideal target market that has both a high income and is highly educated both of which are strongly correlated with people who listen to jazz. Ultimately, we should throw this jazz party because selling 400 tickets should be easy and with a profit of $8,027.28, it is a no brainer! References Bethesda Blues & Jazz Supper Club. (n.d.). Music Calendar. Retrieved June 17, 2015, from

http://www.bethesdabluesjazz.com/events.cfm Bethesda Blues & Jazz Supper Club. (n.d.). Dining. Retrieved June 17, 2015, from

http://www.bethesdabluesjazz.com/docs/2014_Dinner_Menu.pdf Blues Alley. (n.d.). Events. Retrieved June 17, 2015, from http://www.bluesalley.com/events.cfm Blues Alley. (n.d.). Menu. Retrieved June 17, 2015, from http://www.bluesalley.com/menu.cfm Bohemian Caverns. (n.d.). Tickets. Retrieved June 17, 2015, from http://www.bohemiancaverns.com/tickets/ Bohemian Caverns. (n.d.). Meny. Retrieved June 17, 2015, from http://www.bohemiancaverns.com/menu/ DeVeaux, S. (1995). Jazz in America: Who’s Listening? [PDF]. Retrieved from

http://arts.gov/sites/default/files/NEA-Research-Report-31.pdf Gist Family Catering. (n.d.). Lunch & Dinner Menu. Retrieved June 17, 2015, from

http://www.gistfamilycatering.com/ordereze/Pages/Menu.aspx?DeptID=4 Maryland DLLR. (2015, March). Minimum Wage and Overtime Law in Montgomery County [PDF]. Retrieved from

http://www.dllr.state.md.us/labor/wages/minimumwagelawmont.pdf Mellnik, T., & Morello, C. (2013, March 14). D.C. Metro Area Population Growth Slows. The Washington Post.

Retrieved June 19, 2015, from http://www.washingtonpost.com/local/dc-metro-area-population-growth- slows/2013/03/13/145ffc66-8c09-11e2-9f54-f3fdd70acad2_story.html

Montgomery County Police. (n.d.). Police Officer Requirements and Benefits. Retrieved June 17, 2015, from http://www.mymcpnews.com/jobs/police-officer-requirements-and-benefits-hidden/

Round House Theatre. (n.d.). Facility Use. Retrieved June 17, 2015, from http://www.roundhousetheatre.org/meet- us/facility-use/

Sam Hill Entertainment. (n.d.). FAQ- How to Book or Hire a Band, How Much Bands Cost and Prices, etc. Retrieved June 17, 2015, from http://samhillbands.com/faq.shtm

Staples. (n.d.). Casio SE-S700 Cash Register. Retrieved June 17, 2015, from http://www.staples.com/Casio-SE- S700-Cash-Register/product_311197

A Tasteful Affair. (n.d.). Catering FAQ's. Retrieved June 17, 2015, from http://www.atasteful- affair.com/resources/faqs.html

A to Z Party Rental. (n.d.). Chair Rental. Retrieved June 17, 2015, from http://www.atozpartyrental.net/banquet_chair_rental.htm

A to Z Party Rental. (n.d.). Table Rental. Retrieved June 17, 2015, from http://www.atozpartyrental.net/banquet_table_rental.htm

U.S. Census Bureau. (2015, May 29). Quickfacts: Bethesda, CDP, Maryland. Retrieved June 19, 2015, from http://quickfacts.census.gov/qfd/states/24/2407125.html

Weiser, H. (2015, June 16). Financial Statements and Analysis [Prezi]. Retrieved from https://prezi.com/qwfj0_v1i2i7/financial-statements-and- analysis/?utm_campaign=share&utm_medium=copy