CRM Food Cost Management & Pricing 3 — Questions and Answers
Question 1: A restaurant's monthly food sales are $95,000 and food cost is $31,350. What is the food cost percentage?
- 33% (Correct answer)
- 30%
- 28%
- 35%
Correct answer: 33%
Food cost % = Food Cost ÷ Food Sales × 100 = $31,350 ÷ $95,000 × 100 = 33%.
Question 2: Which technique involves reducing portion sizes while maintaining the same price to manage rising food costs?
- Shrinkflation (Correct answer)
- Price elasticity adjustment
- Menu engineering
- Contribution margin repricing
Correct answer: Shrinkflation
Shrinkflation reduces portion sizes rather than raising prices, allowing operators to maintain margins without visible price increases.
Question 3: In the Texas Restaurant Association's food cost formula, what does 'transfers out' refer to?
- Ingredients moved from the kitchen to the bar or other departments (Correct answer)
- Items removed from inventory due to spoilage
- Food purchased but not yet received
- Ingredients returned to suppliers
Correct answer: Ingredients moved from the kitchen to the bar or other departments
Transfers out are ingredients moved from food inventory to bar or other cost centers, reducing the food department's COGS.
Question 4: What is a 'phantom recipe' and why is it problematic for food cost control?
- An undocumented dish made by staff that consumes inventory without recorded sales (Correct answer)
- A recipe with theoretical costs higher than actual costs
- A dish that is listed on the menu but never ordered
- A recipe that uses substitute ingredients
Correct answer: An undocumented dish made by staff that consumes inventory without recorded sales
Phantom recipes are unofficial dishes staff create for themselves or give away, causing inventory shrinkage that inflates the apparent food cost percentage.
Question 5: When conducting a 'should-cost' analysis, a manager compares actual food cost to what figure?
- Theoretical food cost based on standardized recipe costs and sales mix (Correct answer)
- Last month's food cost percentage
- The industry benchmark food cost percentage
- The food cost from the highest-revenue day
Correct answer: Theoretical food cost based on standardized recipe costs and sales mix
Should-cost (theoretical) analysis calculates what food cost ought to be based on recipes and actual sales volume, then compares it to actual spending to find variances.
Question 6: Which menu engineering classification describes items with HIGH popularity but LOW profit margin?
- Plow horses (Correct answer)
- Stars
- Puzzles
- Dogs
Correct answer: Plow horses
Plow horses sell frequently but generate low contribution margins, so managers typically raise their prices or reduce portion costs to improve profitability.
Question 7: A restaurant sells 400 burgers at $14 each and 200 salads at $12 each. What is the weighted average selling price?
- $13.33 (Correct answer)
- $13.00
- $12.67
- $14.00
Correct answer: $13.33
Weighted average = (400 × $14 + 200 × $12) ÷ 600 = ($5,600 + $2,400) ÷ 600 = $8,000 ÷ 600 = $13.33.
CRM Food Cost Management & Pricing 3
A restaurant's monthly food sales are $95,000 and food cost is $31,350.
What is the food cost percentage?