Sissy LaRoussa has studied both the food cost percentage and contribution margin matrix methods of menu analysis
Question:
Sissy LaRoussa has studied both the food cost percentage and contribution margin matrix methods of menu analysis and believes they rely too heavily on the cost of food for their conclusions. Sissy operates a “Quick Wok” outlet in her local mall’s food court. She serves hot and tasty Asian cuisine to the mall shoppers. In her operation, both labor costs and occupation costs (her lease) exceed food costs on her monthly income statement. From that income statement, she knows that her nonfood variable cost (primarily her labor cost as well as a percentage sales fee assessed by the mall’s owners) averages 35% of her menu selling price. She wants to use goal value analysis to determine which, if any, of her menu items are failing to perform well for her. Utilizing last week’s sales data presented in the following chart, calculate the goal value for each item.
Then sort (in descending rank order) by goal value. Be sure to include the Overall Menu Goals in the appropriate rank order. (Spreadsheet hint: Review ‘Before You Start: How to Use Spreadsheets” on your CD-ROM before you attempt this problem in Excel. In order for the table to sort correctly, you must put the ENTIRE goal value formula in each cell of the Goal Value column.)
Sissy’s Quick Wok Number Food Cost % Sold
. Using this type analysis, which item would be considered Sissy’s most profitable item?
. What is the primary cause of that item's high goal value?
. Using this type analysis, which item would be considered Sissy’s least profitable item?
. What Is the primary cause of that item’s lower goal value?
. Based on the results of the goal value analysis, identify specific actions you would recommend Sissy take to improve the profitability of her menu items that do not meet her goals.
Step by Step Answer:
Managerial Accounting For The Hospitality Industry
ISBN: 9780471723370
1st Edition
Authors: Lea R Dopson, David K Hayes