Reference no: EM133266465

Problem:

You are currently running a concession stand and have a goal of 35-40% food cost overall with packaging (because it is all to-go). Here are your costs for some of your top-selling items:

• Soft Pretzel: $10.00 per case of 20, Cheese/Mustard for the pretzel: $9.50 tub for 50 portions; $.10 for the pretzel paper/cup
• All-beef 1/5 lb. hot dog: $25.99 for a case of 50; $3.29 for a pack of 16 buns; $.10 for a packet of mustard & ketchup; $.07 for the tray
• Bottled water: $5.19 for a case of 40
• Gatorade: $14.99 for a case of 24
• Candy Bar: $26.95 for a case of 36

Answer the following:

1. Using the formulas Served Cost (divided) by Target cost % = Target price. What should the selling price be for each item.

2. If the following prices were Pretzel $3.00, Hot Dog $3.00, Gatorade $2.00, Water $1.00, and Candy $1.50 what would each food cost percentage be? (List per item)

3. Using the prices in #2, if someone came up and ordered one of each of these items, what would the food cost be overall for their order? (Hint: do not average the different % but instead add up the costs and divide by the prices in #2).

4. You have a price increase, due to Covid, supply chain issues, and increased labor costs at the production facilities. The following costs increased: Pretzels are $12.50/case, hot dogs are $31.99/case, water is $7.89, and Gatorade is $19.99/case (no change on candy). What happened to your overall food cost when someone comes up and orders one of each, and what does that mean to your overall profits? Do you think you should raise your selling price? (Hint: you need to calculate the new costs first!)