Cost of Foods Sold r A funny thing happens when you decide to eat healthierthe food is sometimes not qu'rte as tasty. yet usually more expensive. When Boston Pizza decided to address the w emerging healthy eating band with its Smart Eats menu. the challenge was threefold. First. the food had to be up to the delicious standards held by the brand for 50 years. Second. the meals had to have evident health benets. Third, despite the cost of prodding healthy ingredients, the prices had to be congruent with family casual dining. The same three challenges existed to an even greater extent with BP's GlutenWise line ot products catering to the growing glutenintolerant market. Although in this situa- tion. a fourth challengedeveloping a pizza dough that would adequately adhere to the "handkneaded\" texture BP's customers are accustomed tointroduced a direct and signicant variable cost to the mix. Anyone on a gluten-free diet will tell you that any ' gluten-free baking with any quality of avour and texture is going to cost more. While Boston Pizza effects the costs of making glutenfree pizza by marginallyinoreas- ing its price, that product line, along with Smart Eatsand the entire menu. for that mat , terare exposed to the ups and downs of economic cycles as well. Since the nature of . healthy eating is often dened by fresh versus processed food. the cost of goods sold is _ very difcult to predict, given that It's more prone to uctuations in global supply and . demand and. In Canada's case. often volatile swings in the exchange rate. ' As president and CEO Mark Pacinda says, "A lot of our vegetables come from Gelltoc nia. so a) we're dealing with the exchange rate, which creates an uptick in costs, and b} yes. there has been an increase in the price of vegetables over the years." He adds, "We monitor our costs. so we tend to know what's going up and we work with our suppliers and try to lock that [price] in." ' . The other silver lining for BP is that 50 percent of its business is elther pine or posts. "so we've been able to hold pricing across our chain," claims Pacinda, The cash-cow nature of BP's biggest sellers also allows the brand to provide the healthier, costlier menu items at prices that are consistent with standard BP late. A. it QUESTIONS '1. If Boston Pizza's prot margin is less on its Smart Eats and GlutenWise menu otter- ings, why doesn't it just increase the price of these Items more signicantly to create greater prot margins? 2. Based on the theory outlined in this chapter. how would you olees'rly Boston Pizza's overall pricing strategy? Support your response. A