Since the day it opened, Jack's Burger Emporium has had all the business it could handle. Some days the restaurant, a casual, order-at-the-counter operation, been jam packed throughout the two-hour period between noon and two p.m.
The restaurant specializes in hand-formed, 1/3 pound burgers served on a fresh-baked roll. The ground beef used is top-quality, never frozen, while the condiments, garnishes, and french fries are all prepared on-site.
A burger goes for $5.25; a cheeseburger is $5.75. French fries are $2.45 an order.
Jack's accountant is complaining to Jack that he's not really making much money -- less than a couple of hundred dollars a month. Furthermore, all of Jack's other expenses seem to be in line; it's the cost of food that the accountant asserts is out of whack. "Your prices are too low," he suggests. "You're serving a great burger and practically giving it away!"
How would you respond to the accountant's advice and determine if, in fact, Jack's prices are too low? Discuss in detail, feeling free to describe additional information you might need to develop a set of pricing recommendations.