Menu Development, Planning and Design: Costing and Pricing Analysis

This report provides a comprehensive analysis of menu costing and pricing strategies for The Peter's Cafe. It includes a detailed breakdown of menu items, their costs, and pricing to meet target customer markets. The report covers various aspects, including portion costs, food cost percentages, contribution margins, and sales mix analysis. It also examines cost analysis, including variable and fixed costs, staffing costs, and energy costs. The profitability analysis focuses on cost to profit margin and break-even analysis, providing insights into the financial performance of the cafe. Key considerations for menu development, such as competitor pricing, ingredient costs, and equipment affordability, are also discussed. The report aims to help the cafe optimize its menu for profitability and customer satisfaction.

Menu Development, Planning
and Design

TABLE OF CONTENT
 INTRODUCTION
 Costing and pricing correspond to set budgets
and to med various customers target market
 Key consideration to focus on for preparation
of menu will be focused on to evolve on best
competitive costing and pricing strategies.

INTRODUCTION
 Presentation will be analysing menu costing and pricing
strategies to meet target customer market, where The
Peters cafe aims to bring on best services for customer’s
market.

TASK 2
Costing and pricing correspond to set budgets and to med various customers target
market
MENU ITEMS Menu Price Portion Cost Food Cost %
Portion
Contribution
Margin Total Food Sold Net Income Total Food Cost Popularity
Hamburger 25 6.45 25.80% 18.55 15 375 96.75 3.97%
Cheese Burger 26 7.85 30.19% 18.15 27 702 211.95 7.14%
BLT Sandwich 20 8.09 40.45% 11.91 21 420 169.89 5.56%
Ham Sandwich 25 8.05 32.20% 16.95 41 1025 330.05 10.85%
Fried Chicken 23 6.57 28.57% 16.43 15 345 98.55 3.97%
Clubhouse 13 4.46 34.31% 8.54 14 182 62.44 3.70%
Steak Sandwich 17 6.85 40.29% 10.15 11 187 75.35 2.91%
Cheese Quesadilla 20 7.45 37.25% 12.55 20 400 149 5.29%
Quesadilla with
Chicken 19 6.85 36.05% 12.15 21 399 143.85 5.56%
Reuben Sandwich 17 5.95 35.00% 11.05 27 459 160.65 7.14%
Turkado 25 7.8 31.20% 17.2 52 1300 405.6 13.76%
Lasagna 22 7.7 35.00% 14.3 27 594 207.9 7.14%
Fish n Chips 27 7.32 27.11% 19.68 48 1296 351.36 12.70%
Meatloaf 23 7.85 34.13% 15.15 39 897 306.15 10.32%
Subtotal main
dishes 302 99.24 467.55% 14.48 378 8581 2769.49

Food Cost
percentage Total Food Cost / Total Sales 32.27%
Total Contribution
Margin Total Sales - Total Food Cost 5811.51
Average
Contribution
Margin/Customer Contribution margin / Quantity Sold 15.37
Contribution
margin/ menu item
Total Sales-Total Food Cost/Quantity
Sold 15.37
Profitability Analysis

Maximum sold
Items
Items Revenues
Cheese Burger 702
Ham Sandwich 1025
Turkado 1300
Fish n Chips 1296
Meatloaf 897
Total 5220
Sales Mix
It refers to calculation which determines proportion of every production sold by company against total sales. Sales mix is important as few
products could be more profitable than the others (Sabadosh, 2019). If sales mix is changed than the profit figure is also changed. The
below sales mix of revenues accounts for 60% of total revenues.
Main Sources of Revenue

Cost Statement Amount
Revenues 8581
Materials 1661.694
Labor cost 775.4572
Energy Cost 332.3388
Total 2769.49
Gross profit 5811.51
Fixed Cost 1200
Marketing 300
Profit 4311.51
Cost Analysis
The cost statement shows the overall costs of menu. The variable cost of company are materials,
labour and energy cost. The fixed cost includes cafe rent and power charges.

Labour Cost
Chefs 504.05
Waiters 155.09
Workers 116.32
Total 775.46
Energy Cost
Heating 116.32
Lighting 83.08
Water 33.23
Insulation 66.47
Others 154.14
Total 332.34
Staffing Cost
The staffing cost should be 30% of the revenues.
Staff includes waiters, chefs and other workers.
Labour cost of cafe is 28% of total cost.
Energy Cost
•Energy cost refers to fuel, gas and power charges incurred for preparing food.
•Cafe must have optimum utilisation of the resources.
•The energy cost amounts to 12% of total cost.

Cost to Profit Margin
Ratio Sales – COGS / Sales
Cost to Profit Margin Ratio = 8581
– 2769.49/ 8581
67.73%
Break Even Point
BEP = Fixed Cost / Contribution Margin
1771.86
Cost to profit margin
It reflects percentage the amount which will be retained by company
from total revenues.
Retained portion is used for meeting further business operations.
Break Even analysis
Reflects point where costs and revenues are equal.
Helps management in identifying level of sales to reach break even.

CONT..
 Key consideration to focus on for
preparation of menu will be focused on to
evolve on best competitive costing and
pricing strategies.

Key considerations to be taken when costing and pricing of
menus
The food and beverage industry is competitively growing among
customer’s market share, where there is wide range of efficacy to be
focused on for costing and pricing structure of menus.
Peter cafe while deciding pricing of menus of have to focus on various
key considerations which are as follows:

CONT..
• Price of competitors: While deciding price of
menus the pricecompetitors play profound role of
importance in setting best competitive price
structure to attract larger target customers.

CONT…
 Pricing will enable business to diversely
grow in new expertise factors for wider of
effective marketing, advanced business reach
pertaining larger customers market.

CONT..
 Price and seasonality of ingredients: The price and
seasonality of all raw ingredients impact fundamentally
on costing factor for pricing of menus, which develop
strong base for setting the price structure.

CONT..
 Equipment’s and affordability factor: Peters cafe has to also focus
on equipment’s and affordability factor while setting a competitive
menu which will enable to keep costs put as inputs attain stronger
revenue.
 This factor explains future business attainable goals in costs
revenue profits and better competitive cafe goodwill.