Gino owns a fast-food restaurant selling fried chicken and potato fries. He employs 5 full-time chefs and 12 part-time workers to serve the food. Communication is important and Gino has regular meetings with his part-time employees to keep them informed about any changes in the menu. It took 3 years before Gino's business was able to break-even. He aims to achieve a Return on Capital Employed (ROCE) of 10%. Gino is always looking for ways to increase the number of customers. Inflation may be a problem for Gino's business.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [2] When total costs is the same as total revenue
2. [2] Total revenue (TR) = Total cost (TC)
3. [2] The level of output at which Total revenue = Total Cost
4. [2] Fixed costs/contribution per unit
5. [1] Partial definition e.g. no profit or loss
6. [1] or revenue covers costs
7. [1] revenue equals total cost
8. [1] total revenue equals costs
9. [1] point where start making profit
10. [2] Profit as a percentage of capital employed
11. [2] Correct formula: (Profit/Capital employed) *100
12. [2] Profit made on each dollar/pound invested in the business
13. [1] Partial definition e.g. Money made on investment/capital
14. [1] (It is a profitability ratio which) shows how effectively a business uses it capital
15. [1] Fewer customers/lower demand/lower sales/less revenue [k]
16. [1] at the restaurant [app]
17. [1] Supplier prices may increase [k] for its chicken/fries [app]
18. [1] Employees might demand higher wages [k] from its 17 employees [app]
19. [1] May have to increase its prices [k]
20. [1] Businesses unlikely to want to/will not expand [k]
21. [1] Advertise or examples such as promote on social media [k]
22. [1] to inform/ raise awareness/attract [an] about his restaurant [app]
23. [1] Promotional pricing/discounts/lower prices [k]
24. [1] to compensate for the effect of inflation [app]
25. [1] as people might be willing to buy as more affordable [an]
26. [1] Loyalty schemes [k] as this can encourage customers to return again and again [an]
27. [1] Introduce new products [k] other than chicken/fries [app]
28. [1] to target different/new market segments [an]
29. [1] Offer better customer service/better quality [k]
30. [1] to improve brand image/ reputation [an]
31. [1] Open additional outlet/increase size of existing place/extend opening hours/offer home delivery [k]
32. [1] as would be able to cater for more people at same time [an]
33. [1] Free samples [k] so people can try the food, and if liked, might buy [an]
34. [1] Sponsorship [k]
35. [1] Competition [k]
36. [1] Allow two-way communication/immediate feedback/allows ideas to be discussed [k]
37. [1] so can explain if instructions/information is not understood (straightaway) [an]
38. [1] Information can be given out quickly/more detailed [k]
39. [1] Message can be reinforced by being able to see the speaker/body language of attendees [k]
40. [1] May take time/be difficult to arrange [k]
41. [1] as part-time employees do not work all the time [an]
42. [1] Will take people away from work [k] leading to lower output/ lower efficiency/missed sales [an]
43. [1] No guarantee read/may not have a phone [k]
44. [1] leading to mistakes/wasting resources [an]
45. [1] Have a hard copy/record [k] which can be referred to later [an]
46. [1] Can send at any time [k] allowing people to read it when it is convenient for them to do so [an]
47. Justification might include: Meetings allow two-way communication [k] which can help speed up decision-making [an]. A text message is good because it can be sent and received at any time [k] ensuring that all part-time staff receive the same message at the same time [an] but people may not be able to read/respond to it immediately. So while a meeting can be difficult to arrange it is the best option for part-time employees as slow decision making could result in missed opportunities which might result in fewer sales [eval] which can more than offset the cost of the time spent in arranging the meeting. [eval]