Q1. You have the following information about Beech Tree Cafs lunch menu with 10 entres:

Number Menu Item Menu Item

Menu Item Sold (MM) Food Cost Selling Price

1. Corn beef on rye 328 $1.35 $5.95

2. Salmon salad sandwich 288 1.18 5.50

3. Club sandwich 420 1.36 5.95

4. Egg and tomato sandwich 192 0.76 4.95

5. Roast beef and lettuce sandwich 164 1.05 6.95

6. Chicken wings 236 2.21 8.95

7. Hot dog and fries 152 0.84 4.50

8. Hamburger and fries 536 0.97 6.50

9. Cheeseburger and fries 312 1.12 6.95

10. Veggie burger and salad 185 1.85 6.95

Complete a menu engineering worksheet using the information given above. Exhibits 6.4 and 6.5 can be used as a guide. Discuss how you would adjust the menu.

Q2. An owner invested $180,000 in a new family-style restaurant, of which $160,000 was immediately used to purchase equipment and $20,000 was retained for working cash. Estimates for the first year of business are as follows:

Menu selling prices to be established to give a markup of 150 percent over cost of food sold

Variable wages, 28 percent of revenue

Fixed wages, $51,600

Other variable costs, 7 percent of revenue

Rent, $36,000

Insurance, $4,800

Depreciation on equipment, 20 percent

Return on investment desired, 12 percent

Income tax rate, 30 percent

The restaurant has 60 seats and is open 5 days a week for lunch and dinner only. Lunch revenue is expected to be 40 percent of total volume with 2 seat turnovers. Dinner revenue will be 60 percent of total volume, with 1.25 turnovers.

Calculate the average check per meal period that will cover all costs, including desired return on investment.