Her restaurant made $14 million dollars last year. How can they not afford a few million in bills (we are talking 1 to 5million) and now as to file for bankruptcy?
I don't have a business degree nor know nothing about running a place but witha revenue of more than 14million I would think there should be plenty for employee salary,taxes,rent and, electric.......
by solesister "get thee to a nunnery!"
Hi, Ginger! Many stars take on resturants and other interests as they are known to lose money, and the loses are a tax right off. Most food places don't have the turnover (people buying the food) to last very long. They are trendy, and people come in droves at first in hopes of seeing Eva and other stars, and once they find that Eva is never there, or is not cooking herself, they won't pay the high prices just to eat among their neighbors.
A good chunk of the money goes for rent, employee salary and payroll taxes, and insurance; so if it takes $20 milllion to run, but you only make $14M,
you're in the red.
In her case, I think the approach was too broad, and she would have done better with a "theme" resturant, much like Planet Hollywood. I'm guessing, other than adding her name to the brand, she has no interest in making a go of it.
Ripley
I have a degree in law, but in my first year, accounting was a compulsory unit... Let me see if I remember it straight. The total revenue TR is basically the price multiplied by the quantity of all goods sold, in this case food items. The profit made is calculated by subtracting the total cost TC from the total revenue TR. The total cost TC is basically the accumulated cost of production, which includes fixed and variable costs, these would include employee wages, rent, utility bills, cost of raw materials blah blah blah. If she couldn't even break even, where TR is equal to TC, she'd make a loss. Which would inevitably end up in bankruptcy. If her total revenue is greater than the total cost, she'd score a profit. Which didn't happen seeing what turned out for her. Hope this helped... Now that I think of it, this was more economics than accounting. P/L accounts analysis of her restaurant would be more 'accounting'. =P God, I hated them both.
revenue is only the income made, so it doesn't include costs for employees, goods and so on. considering that she probably sells higher priced food, she has a lot of running costs. So her net profit maybe isn't that high. And she probably wasn't running it on her own, rather than being the investor and owner.
Restaurants can make a lot of profit, it just has to be done right, a lot of pro ballers own restaurants