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HOSP 2330 – In Class Assignment Worksheet

Topic - 6
Date: ____________ Student Name: ______________________

Student No: _______________________

1. Bill owns Bill’s Burger Barn, and he is dissatisfied with his consistently high food cost
percentage. In an effort to drop his food cost % below 35%, he has decided to incorporate
price blending into his pricing strategy. He has developed three combo items, and he wants
to find out if his food cost % has been lowered after the first week of sales. Help Bill
calculate the food cost % for his combo items below.
Price Blending
Bills Burger Barn Combo
Item Number Item Total Selling Total Food
Sold Cost Cost ($) Price Sales ($) Cost %
Hamburger 200 $1.50 300.00 $3.49 698.00 43.0
French Fries (large) 185 $0.40 74.00 $1.60 296.00 25.0
Soft Drink (16 oz.) 190 $0.20 38.00 $1.35 256.50 14.8
Total 575 412.00 1,250.50 32.9

Bill's Bacon Cheeseburger Combo

Item Number Item Total Selling Total Food
Sold Cost Cost ($) Price Sales ($) Cost %
Bacon Cheeseburger 160 $1.65 264.00 $4.29 686.40 38.5
Onion Rings 135 $0.30 40.50 $1.40 189.00 21.4
Soft Drink (16 oz.) 155 $0.20 31.00 $1.35 209.25 14.8
Total 450 335.50 1,084.65 30.9

Bill's Chicken Sandwich Combo

Item Number Item Total Selling Total Food
Sold Cost Cost ($) Price Sales ($) Cost %
Chicken Sandwich 75 $1.10 82.50 $3.15 236.25 34.9
French Fries (large) 75 $0.40 30.00 $1.60 120.00 25.0
Soft Drink (16 oz.) 75 $0.20 15.00 $1.35 101.25 14.8
Total 225 127.50 457.50 27.9

Should Bill continue with this pricing strategy?

Answer:

Yes because combo items helps his sales increase his revenue significantly.

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 HOSP 2330 – In Class Assignment Worksheet
Topic - 6
Formula/Workspace

Total cost = item cost x no.of items sold

Total Sales = Selling price x No.of Items sold

Food Cost % = Total Cost / Total Sales x 100

3. Bess and David own two small diners in a mid-sized city in Oklahoma. Bess has primary
responsibility for the diner in the suburbs, and David has primary responsibility for the
diner in the inner city. The menu items and product costs are the same in both diners, but
the market in the inner city demands lower menu prices than that in the suburbs. So,
Bess has set her desired product cost percentage to 40%, and David’s desired product
cost percentage is 42% since he can’t charge as much as Bess. Bess likes to use the
product cost percentage method to price menu items, and David likes to use the factor
method. Help both of them determine their selling prices.
Bess and David’s Diner – Suburbs (Bess)
Desired Product Cost Percentage: 40%

Product Cost Percentage Method

Cost of Desired Product
Item Product Cost Percentage Selling Price ($)
Chicken Breast Dinner $2.25 40% 5.63
Seafood Platter 3.45 40% 8.63
Steak Dinner 4.99 40% 12.48
Turkey Sandwich 1.25 40% 3.13
Pork Chop 2.45 40% 6.13
Hamburger 1.50 40% 3.75
Cheeseburger 1.75 40% 4.38
Fries 0.45 40% 1.13
Meat Loaf 1.25 40% 3.13
Small Drink 0.35 40% 0.88

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 HOSP 2330 – In Class Assignment Worksheet
Topic - 6
Formula/Workspace

Selling Price = Cost of the item / Desired Product Cost % of the item

Bess and David’s Diner – Inner City (David)

Desired Product Cost Percentage: 42%

Factor Method

Cost of
Item Product Factor Selling Price ($)
Chicken Breast Dinner $2.25 2.38 5.36
Seafood Platter $3.45 2.38 8.21
Steak Dinner $4.99 2.38 11.88
Turkey Sandwich $1.25 2.38 2.98
Pork Chop $2.45 2.38 5.83
Hamburger $1.50 2.38 3.57
Cheeseburger $1.75 2.38 4.17
Fries $0.45 2.38 1.07
Meat Loaf $1.25 2.38 2.98
Small Drink $0.35 2.38 0.83

Formula/Workspace:

- Pricing Factor = 1.00 / Desired Product Cost %

- Menu Price = Pricing Factor x Product Cost

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 HOSP 2330 – In Class Assignment Worksheet
Topic - 6

4. Frankie Marie owns Frankie’s Cafeteria in a small southern town. She has decided to
price her menu items using the contribution margin method. She has determined the
following contribution margins for her food categories:

Contribution margins:
Salads: $1.20
Entrees: $4.25
Desserts: $1.50
Drinks: $1.10

Help her price her menu items below.

Desired
Contribution
Item Product Cost Margin ($) Selling Price
($)
Salads
Dinner Salad $0.30 1.20 1.50
Macaroni Salad $0.55 1.20 1.75
Potato Salad $0.65 1.20 1.85
Carrot and Raisin Salad $0.40 1.20 1.60
Bavarian Salad $0.60 1.20 1.80
Entrees
Liver and Onions $2.50 4.25 6.75
Steak Patty $2.75 4.25 7.00
Meat Loaf $2.85 4.25 7.10
Chicken Fried Steak $2.10 4.25 6.35
Fried Catfish $2.35 4.25 6.60
Chicken Casserole $2.25 4.25 6.40
Turkey and Dressing $2.55 4.25 6.80
Desserts
Chocolate Cream Pie $0.75 1.50 2.25
Coconut Cream Pie $0.75 1.50 2.35
Pecan Pie $1.25 1.50 2.75
Chocolate Cake $0.60 1.50 2.10
Pudding $0.20 1.50 1.70
Jello $0.20 1.50 1.70
Carrot Cake $0.70 1.50 2.20
Drinks

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 HOSP 2330 – In Class Assignment Worksheet
Topic - 6
Coffee $0.15 1.10 1.25
Tea $0.15 1.10 1.25
Soft Drink $0.15 1.10 1.25

8. Jackson Daniels is the Director of Food and Beverage at the Foxfire Country Club. In
June, Jackson’s Club hosted three weddings. Each wedding featured a 4-hour hosted bar
paid for by the bride and groom. The consumption data from each event is listed below.
Complete the missing data in the report, and then help Jackson answer the questions that
follow.

Number of Beer Wine Spirit Total Cost per

Guests Served Cost Cost Cost Cost Guest
June 07 250 $500 $400 $600 1,500 6.00
June 14 500 650 1,225 1,000 2,875 5.75
June 21 400 525 1,000 675 2,200 5.50
Total 1,150 1,675 2,625 2,275 6,575 5.72

i. What do you think should be Jackson’s “best estimate” of the cost per
guest, to the Club, of providing a 4-hour hosted bar at weddings?

Answer:
$5.72

ii. If Jackson seeks to ensure a 20% beverage cost, what should be his selling
price, per guest, for a 4-hour hosted bar?

Answer: $28.60

iii. Would you recommend Jackson charge 1/2 of the amount in the answer in
b. above for a 2-hour hosted bar? Explain your answer.

Answer: No. Because guests will have a high consumption at the first 2-hour, restaurant
will lose money if charge ½ of the amount. Instead, we can charge the price of 2 hour
higher so the guest will choose 4-hour.

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 HOSP 2330 – In Class Assignment Worksheet
Topic - 6
Formula/Workspace

Total Cost = Beer Cost + Wine cost + Spirit Cost

Cost per guest = Total Cost / No.of Guests served.