Exam 13: Menu Analysis and Planning for Sales

As the contribution margin of an item increases, the food cost percentage decreases.

Target food cost refers to the ideal amount of cost your company hopes to spend for the menu item.

Menu engineering refers to items that are highly popular but less than average in contribution margin as:

What should the potential food cost (in dollars) at the Inn have been given the following sales mix? Potential Item Number Sold Selling Price Food Cost % Rib-Eye Steaks 2,000 $23.75 25 % Fish 1,000 $28.00 32 % Chicken 1,500 $21.50 20 %

What is inelastic?

The most popular measure of the impact of price on sales is:

What is price elasticity and why should it be considered when setting menu prices?

If two products are competing against each other-say, a mushroom burger versus a chili burger-the cross-price elasticity is negative.

What is the danger of focusing too heavily on food cost percentages?

Pricing strategy for a new product or a new menu that has no history of sales data is commonly referred to as:

Higher contribution margins will generate higher profitability:

What is sales mix?

What should the potential food cost (in percentage) at the Inn have been given the following sales mix? Potential Item Number Sold Selling Price Food Cost % Rib-Eye Steaks 2,000 $23.75 25 % Fish 1,000 $28.00 32 % Chicken 1,500 $21.50 20 %

Establishing prices based on _____ can result in failure to recover full costs, or in an unsatisfactory and unpredictable profit margin.

The logical weakness of cost plus markup pricing is that price is not considered a function of cost.

Revenue has nothing to do with pricing strategies.

What are the advantages of using menu engineering?

What is the distinction between markup rate and percentage margin?

What is the formula for deriving price elasticity of demand?

The impact of elasticity on demand is mostly felt in a homogeneously competitive environment.