Menu Development, Planning & Design: A Costa Coffee Business Analysis

This report presents a detailed analysis of Costa Coffee's menu development, planning, and design. It begins with an introduction to Costa Coffee, a UK-based coffee house, and provides a budgeted menu with menu prices, plate costs, contribution margins, and net income for various items. High revenue-generating items are identified, and energy and staff costs are outlined. The report includes an analysis of profitability, a budgeted income statement, and calculations for the cost-to-gross profit margin ratio and break-even point. Key considerations such as competitor pricing, affordability, environmental and nutritional aspects, and labor costs are also discussed. The conclusion emphasizes the importance of considering customer preferences and business requirements, such as cost control and quality, to ensure sufficient profit. The report uses references to support its analysis.

MENU DEVELOPMENT,
PLANNING & DESIGN
COSTA COFFEE

TABLE OF CONTENTS
 Introduction
 Budgeted menu of Costa coffee
 High revenue generating items
 Energy cost of Costa coffee
 Staff cost of Costa coffee
 Analysis of profitability
 Budgeted income statement of Costa Coffee
 Cost to Gross profit margin ratio
 Breakeven point
 Key considerations
 Conclusion
 References

INTRODUCTION
 Costa Coffee is a UK based, coffee house dealing in many hot & cold
drinks and other items of foods and beverages.
 This presentation will indicate budgeted menu of Costa Coffee.

BUDGETED MENU OF COSTA COFFEE
MENU ITEM Menu
Price
Plate Cost % Contributio
n Margin
Quantity
Sold
Net
Income
Total Cost Popularity
Yorkshire
pudding
20 8.25 41.25% 11.75 15 300 123.75 3.30%
Shepherd's pie 12 4.85 40.42% 7.15 14 168 67.9 3.08%
Bangers &
mash
25 11.09 44.36% 13.91 40 1000 443.6 8.81%
Haggis 20 3.75 18.75% 16.25 35 700 131.25 7.71%
Ploughman's
lunch
30 7.6 25.33% 22.4 9 270 68.4 1.98%
Lancashire
hotpot
10 3.2 32.00% 6.8 10 100 32 2.20%

CONT.
Apple crumble 15 5.95 39.67% 9.05 7 105 41.65 1.54%
Cream tea 8 2.2 27.50% 5.8 16 128 35.2 3.52%
Café mocha 10 5.75 57.50% 4.25 19 190 109.25 4.19%
Caramel
Machhiato
15 9.65 64.33% 5.35 7 105 67.55 1.54%
Vanilla latte 18 10.25 56.94% 7.75 21 378 215.25 4.63%
Cheese burger 20 14.36 71.80% 5.64 23 460 330.28 5.07%
Chicken Burger 25 16.63 66.52% 8.37 24 600 399.12 5.29%
Burger- veggies 15 10.63 70.87% 4.37 11 165 116.93 2.42%

CONT.
Hamburger 30 18.36 61.20% 11.64 13 390 238.68 2.86%
Chocaccino 15 7.96 53.07% 7.04 53 795 421.88 11.67%
Cream Irish 15 10.21 68.07% 4.79 22 330 224.62 4.85%
Royal coffee 16 11.21 70.06% 4.79 52 832 582.92 11.45%
Chocolate- hot 20 14.21 71.05% 5.79 35 700 497.35 7.71%
Cappuccino 10 5.89 58.90% 4.11 21 210 123.69 4.63%
Red velvet coffee 20 16 80.00% 4 7 140 112 1.54%

HIGH REVENUE GENERATING ITEMS
Items name Resulting revenue
Bangers & mash 1000
Royal coffee 832
Chocaccino 795
Haggis 700
Chocolate- hot 700
Per cent of total revenue Approx. 50%

ENERGY COST OF COSTA COFFEE
Energy Cost
Heating 72
Lighting 48
Water 48
Insulation 24
Others 61.8
Total 240

STAFF COST OF COSTA COFFEE
Labor Cost
Chefs 325
Waiters 100
Other Workers 75
Total 500

ANALYSIS OF PROFITABILITY
Food Cost percentage Total Food Cost / Total Sales 54.34%
Total Contribution Margin Total Sales - Total Food Cost 3682.73
Average Contribution
Margin/Customer
Contribution margin / Quantity
Sold
8.11
Contribution margin/ menu item Total Sales-Total Food
Cost/Quantity Sold
8.11

Budgeted income statement of Costa
Coffee
Income Statement Amount
Revenues 8066
Materials 1200
Labor cost 500
Energy Cost 240
Total 2000
Gross profit 6066
Fixed Cost 1000
Marketing 250
Profit 4816

COST TO GROSS PROFIT MARGIN
RATIO
Cost to gross Profit Margin
Ratio
Sales – COGS / Sales
8066 – 2000 / 8066
75.20%

BREAK-EVEN POINT OF COSTA
COFFEE Break Even Point
BEP = Fixed Cost / Contribution Margin
1329.71

KEY CONSIDERATIONS WHILE
COSTING AND PRICING MENU ITEMS
 Competitors pricing policy
 Affordability
 Environmental considerations
 Nutritional value considerations
 Labor cost

CONCLUSION
 From this presentation it has been concluded that menu planning can’t be done in isolation
without considering customer’s requirements, their expectation and taste and preferences
prevailing in the target segment.
 Also, there is a need to be much concern about the business requirements such as lower cost and
quality products in addition to earning sufficient profit to cover costs.

References
 Jetter, K. M. and et.al., 2019. Yes we can: eating healthy on a limited
budget. Journal of nutrition education and behavior. 51(3). pp.268-276.
 Elshaer, A. M., 2020. Analysis of Restaurants’ Operations Using Time-Driven
Activity-based Costing (TDABC): Case Study. Journal of Quality Assurance in
Hospitality & Tourism. pp.1-24.