Question

Tall in square 17 8 BONUS Sissy LaRoussa has studied both the food cost percentage and contribution margin matrix methods of menu analysis and believes that 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 non-food 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. Sissy's Quick Wok Item Selling Price Variable Cost % Food Cost % Goal Value Number Sold Beef and broccoli 0.35 0.25 773 4.99 Sweet and sour pork 0.35 3.99 321 0.18 General Tao's chicken 0.35 4.99 640 0.20 Vegetable stir-fry 0.35 4.49 440 0.11 0.35 Three-item combo 6.99 310 0.41 Coconut shrimp 0.35 5.99 485 0.24 Asian ribs 0.35 6.99 145 0.30 0.35 Overall Menu Goals 5.50 445 0.25 Using this type of analysis, which item would be considered Sissy's most profitable item? b. What is the primary cause of that item's high goal value? . Using this type of analysis, which item would be considered Sissy's least profitable item? d. What is the primary cause of that item's lower goal value? t. 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. (Spreadsheet hint: In order for the table to sort correctly, you muust put the ENTIRE goal value formula in each cell of the Goal Value column.)

Answer 1

Ans

1 . Item Goal value calculation   Goal value Rank

number sold ×price - cost  

A. Beef and brocalli. 3857.27_9.64_ 13.50. 3834.13. 1

B.Sweet &s pork. 1280.79_ 2.30_4.48. 1274.01. 6

C. Genral t.chicken 3193.60_6.38_11.17 . 3176.05. 2

D.vegetable fry. 1975.60_2.17_6.91. 1966.52. 5

E.Three item comb . 2166.90_8.88_7.58. 2150.44. 4

F Coconut shrimp 2905.15_6.97_10.16. 2888.02. 3

G. Asian ribs 1013.55_3.04_3.54. 1006.97. 7

Overall menu goals 2447.50_6.11_8.56. 2432.83

2. A. The most profitable item is Beef and brocalli as food cost is as per the overlal goal menu that is .25% and sale is highest.

B. The primary cause of items high growth value is high sales figure i.e. high demand and reasonable food cost expenses.

C.Asian ribs is the least profitable item of the sisy,s analysis

D.The primary cause of Asian ribs growth value is low demand and above average food cost .

E. Sisy needs to discontinue selling Asian ribs as despite of high price and high food cost it's sales is not up to the mark ,in fact it is poorest. Sisy should also consider increasing price of Genral tao,s chicken as it is a high sales item together with low food cost by increasing its price a little bit she can recover revenue loss of Asian ribs.