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Pricing Menu Items

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Assume that you have a menu item that costs $3.43 in food cost and 18 minutes of direct labor to create. Price the menu item using at least two of the methods identified in the text. Include your math in a clear format so that others can see how you obtained that price. Explain how the two pricing methods you used differ. Then, identify the method that you would use in your establishment, and explain why you have made this decision.

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Assume that you have a menu item that costs $3.43 in food cost and 18 minutes of direct labor to create. Price the menu item using at least two of the methods identified in the text. Include your math in a clear format so that others can see how you obtained that price. Explain how the two pricing methods you used differ. Then, identify the method that you would use in your establishment, and explain why you have made this decision.

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The first pricing method will be cost plus pricing. To calculate pricing via this method, let us make an assumption that fixed cost per unit for a given volume is $1 per unit. The food cost is #3.43 and assuming labor @ $15/hour, 18 minutes of labor will result in $4.5 per unit. Hence, the total cost is $1+ $3.43+ $4.5 or $8.88. Let's say that we want to add 20% ...

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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