Food Cost Management & Pricing Flashcards
7 cards from real CRM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Food Cost Management & Pricing flashcards as text
Which pricing strategy deliberately sets a low price on a loss-leader item to drive customer traffic and increase overall check averages?
Answer: Loss-leader pricing
Loss-leader pricing sacrifices margin on one item to attract guests who will then purchase higher-margin food and beverages during the same visit.
What is 'product mix' and why does it affect overall food cost percentage?
Answer: The combination of menu items sold; high-cost items increase the blended food cost %
Product mix (sales mix) describes which items guests actually order; if guests buy more high food-cost dishes, the blended food cost percentage rises even if individual recipes are unchanged.
A manager notices the restaurant consistently runs out of a key ingredient before the week ends. Which par level adjustment is needed?
Answer: Increase the par level to ensure adequate stock through the order cycle
Running out before the next order cycle indicates the par level is set too low and must be raised to cover actual usage plus a safety buffer.
Which costing approach assigns a fixed overhead cost to each menu item in addition to direct food cost?
Answer: Full absorption costing
Full absorption costing spreads fixed overhead (rent, utilities, equipment depreciation) across menu items so prices reflect total cost, not just ingredients.
A restaurant's beverage cost is tracked separately from food cost primarily for what reason?
Answer: Beverages have different cost structures and profit margins than food items
Beverage cost percentages (typically 18–24%) differ significantly from food cost percentages (28–35%), so blending them would mask performance problems in either category.
What is 'price elasticity of demand' in the context of restaurant menu pricing?
Answer: The measure of how sensitive guest demand is to a change in menu price
Price elasticity measures whether a price increase causes a large drop in orders (elastic) or little change in demand (inelastic), guiding how aggressively managers can raise prices.
Which best describes 'standard portion cost' and its role in food cost control?
Answer: The predetermined cost of one serving based on a standardized recipe, used to set prices and measure variance
Standard portion cost establishes the expected cost per serving from a standardized recipe, giving managers a benchmark to compare against actual costs and identify waste or theft.