How much does a bowl of chili cost on a full cost basis when all costs are included? And on an out of pocket basis?
Wendy's chili was prepared daily by the assistant manager, in aceordance with Wendy's secret recipe. It was slow simmered in a double boiler on a separate range top for a period of from four to six hours. While cooking, the chili had to be stirred at least once each hour, and at the cnd of the day it was refrigenited for sale the following day. Normally, it took between ten and fifteen minutes to prepare a pot (referred to at Wendys as a buteh) of chili. Finst, the forty-eight 1/4lb, cooked ground beef patties needed for a batch were obtained, if available, from the walk-in cooler. This took about one minute to do. These putties were ones that had been "well-done" sometime during the previous three days. Most of the time it was not necesisary to cook any meat specifically for use in making chiti, although the need to do so was more tikely to occur during the months of October through March when approximately sixty pertent of total annual chali sales occurred If, as only happened approximately ten pereent of the time, it became necesatry to cook meat specifically for use in making chili, the number of beef patties neoded were taken from the trays of uncooked hamburgers that had been prepared using a special patty machine at the rate of 120 putties every five minates, earlier that mornipg. On average, it took ten minutes to cook forty-eight hamburger patties. Before placing the meat in the chili pot, it had to be chopped into small picces. This generally took about five minutis to do. The remaining ingredients thea had to be obtained from the shelves and mixed with the meat. This process also took about five minutes to complete, after which the chali was resdy to be cooked. The quantities and costs of the ingredients noeded to make a batch of chili, and the labor costs associated with the different elassifications of restaurant personnel are shown in Tables 4 and 5 . Other direct costs associated with the chili included serving bowk, 5.035 eachy lids for chaliserved at the carryout window, 5.025 cach; and spooes, 5.01 each. CHII ISALFS The selling prices for all of Wendy's prodacts sold by company restaurants were set at corponate beadquarters. Nithough sone price differences existed among restairants in different locations, representative prices for 2001 were 50.99 for an 8 -ounce serving of chili, $1,59 for a 12 -ounce serving of Wendys store sales compared to about 55 percent for lamburgen. As shown in Exhibit L, Wendy" conoclidated eost of sales, as a percent of retail reverues, increased to 63.9 percent in 2001 from 67.1 percent in 2000 . Fond cosb in 2001 reflected a 134 porcent inserse in bef costs, which was partially offet by a presnt selting price increase. Retail sales increased by percent, and set income increased by atsout 14 percent daringt 2001. of the above amounts
