Profitability Assessment for a Restaurant-Coupon Partnership

Context

You own a restaurant and are evaluating whether to partner with a coupon marketplace that charges a commission on checks redeemed with a coupon. Assume:

• One coupon max per table; commission applies only when a coupon is used.
• Variable cost equals 40% of the gross check (food, disposables, etc.).
• Fixed cost is $100/day (rent, salaried labor, utilities).
• Unless stated otherwise, use the same average spend for coupon and non-coupon tables.

Questions

1. What qualitative and quantitative factors would you evaluate before deciding to partner with the coupon website?
2. Given current operations (20 tables/day, $30 average spend, variable cost = 40$ 100/day), calculate the daily profit.
3. If joining requires paying a 40% commission on every check that uses one coupon (max one per table), what average spend per table would make the partnership at least break-even relative to the current profit? State any assumptions and show the formula.
4. Based on your calculation, would you join the site? Justify your decision.
5. After joining, new data show 25 tables/day, 10 tables using coupons, $36 average spend, variable and fixed costs unchanged. Calculate the new daily profit and decide whether to continue the partnership. Explain why the profit changed.