What the exam looks like

• About 30 points of multiple choice, true/false and matching. These mostly test concepts from Lectures 12–16 and 21.
• About 20 points of open-ended math problems. These test recipe costing (Lectures 17–18) and menu pricing (Lectures 19–20).
• Readings are tested only at the level of detail covered in class.

Deadlines this week

How to study, in order

1. Menu pricing math. Learn the factor, prime cost and modified actual cost methods, then proportional vs. semi-proportional cost allocation. Start with the Menu pricing guide.
2. Recipe costing math. Practice unit conversions, yields (APQ = EPQ ÷ yield %), Q-factors, portion cost and food cost %. Start with the Recipe costing guide.
3. Work every practice problem on paper with a basic calculator before you look at the answers.
4. Read each lecture page and take its quiz. A green score in the sidebar means you've finished that quiz.
5. Finish with the mixed quiz the night before.

Every lecture on the exam

Two basic kinds of menu

Why menus differ by segment

A segment is a category of restaurant (quick service, fast casual, midscale, fine dining). Guests in each segment want different things, so the menu is built around those wants. The faster and cheaper the restaurant, the simpler and more visual the menu. The more upscale, the more the menu shows off creativity and service.

Menu labeling

Onsite foodservice

Onsite foodservice means food served inside an organization whose main business isn't food: hospitals, schools, colleges, offices. Each has its own menu challenges.

Sustainability in menu planning

Planning a menu that does less harm to the environment and supports the community:

• Use ingredients from renewable sources (ones that can be replenished, like sustainably caught fish)
• Buy local, seasonal and organic produce
• Build long-term relationships with suppliers
• Think about the carbon footprint: how much greenhouse gas an ingredient creates, e.g., from shipping it far
• Tell guests about it on the menu
• Use guides like the Monterey Bay Aquarium Seafood Watch, which rates which seafood is sustainable to buy

The menu planning process

Creating a menu happens in four phases, from first idea to checking how it performs:

1. Menu planning: deciding the range of products when the restaurant concept is being created. (1) Gather the inputs below. (2) Set the menu philosophy and categories (starters, mains…). (3) Choose items for each category, balancing four kinds of variety: food (chicken, fish, beef…), preparation (grilled, fried, raw…), cost/price (cheap and premium), and organoleptic qualities, meaning how food tastes, smells, looks and feels.
2. Menu development: refining the planned menu. (4) Develop and test recipes. (5) Calculate what each dish costs. (6) Set prices.
3. Menu design: (7) creating the physical menu card, using research on where people look and how they choose (Lecture 13).
4. Menu analysis: (8) checking how each item performs. Margin analysis looks at how much profit each item makes. Menu engineering uses profit and popularity together to decide what to keep, promote, reprice or drop.

How many choices should a menu have?

Ambiance: the room affects spending

The surroundings can be used to change how long guests stay and how much they spend:

• Sound: louder, faster music makes people eat faster, which turns tables quicker. Slow, quiet music makes them linger.
• Light: changing how bright it is affects how long people stay, and so how fast tables turn over.
• Visuals: color and design draw guests in and stimulate them.
• Furniture: attractive, but not so comfortable that guests camp out for hours.
• Scent: good smells please people waiting in line.

How memory affects menu choices

Is the menu a sales tool? Conventional wisdom vs. research

Restaurants follow many "rules" about menu design. The lecture tested four of them against research. When a study finds no significant difference, it means any change was so small it could have happened by chance, so the trick didn't reliably work.

Reach vs. frequency

A restaurant marketer's job comes down to traffic (number of customers) and sales. There are only two ways to get more traffic:

• Frequency matters a lot: 62% of restaurant sales come from returning guests. Yet 70% of customers visited a restaurant only once in the past 6 months. Most first-timers never come back, so the opportunity is building a genuine connection.
• Why customers return: great service (rated more important than the food), great food (quality and consistency), cleanliness, the restaurant becoming part of who they are, and a genuine connection with them.

Marketers have a huge toolbox (ads, social media, loyalty programs, promotions, PR). The lecture's point: don't focus on the tools over the goals, and measure whether marketing pays off (its ROI, return on investment).

Market segmentation

Market segmentation means dividing potential customers into groups with something in common, so you can target each group with the right message. Four types:

Media channels and how they're measured

Channels: TV, radio, outdoor (billboards, posters), social media (Instagram, Facebook, Yelp), digital/mobile (Google ads, banners), and database/CRM (email, text, loyalty programs). CRM means customer relationship management, i.e., using your customer list to market directly to them.

Why restaurant marketing is unique

US chains were built on national TV ads, which made marketing very centralized for a business that is really local. Social and mobile media are now disrupting that. Four things make restaurants different:

How restaurants reach new customers

1. Accurate targeting: show relevant information to the right people.
2. Product or service innovation: something new gives people a reason to try you (e.g., Burger King's Impossible Whopper).
3. Mind your online reputation: keep information the same across Google, Yelp and your website, and respond to reviews.
4. Use existing guests: they bring friends and business partners.

The geospatial approach

A way to plan marketing around the neighborhood, since customers come from nearby. It starts with three questions: who lives near the restaurant, who works or spends the day nearby (the daytime population), and what do they need?

The problem: how much should you make?

Every day the kitchen has to guess how much of each item to prepare before knowing how many guests will order it. There are two ways to get it wrong, and each has a cost:

If you only cared about happy guests, you'd always overproduce. If you only cared about cost, you'd underproduce. You need a balance.

Overage and underage

Weaknesses of the overage/underage method

The class version is simplified. It leaves out:

1. Labor cost: it only counts food cost, not the staff time to make the item.
2. Data needs: it needs more than 60 days of past and forecast demand to work well.
3. The true cost of an unhappy customer: it counts only one lost sale, not the future visits you lose or bad word of mouth.
4. Shelf life: some items last 48 hours, so leftovers aren't always waste.
5. Prep time: some items can't be made quickly if you run short.
6. Substitution: a guest who can't get one item may happily order another, so a stockout isn't always a lost sale.

How food moves through the kitchen

BOH means back of house (the kitchen). FOH means front of house (dining room, servers). In the back of house, food is received → stored → prepped → cooked → plated and picked up.

The goal of prep and production management (scheduling the kitchen's work) is to do as much of each dish in advance as possible, without hurting quality. The less that's left to do when an order comes in, the faster service is.

Kitchen work is split into two kinds of prep done before service, plus the final steps done after an order comes in.

Menu prep vs. station prep

The station's capacity and the skill needed also matter. To find the parts of a dish you can prep separately, look for sub-recipes (a sauce with its own recipe), groups of ingredients (main, side, sauce), shelf-life clues in the recipe ("can be made ahead," "store up to 3 days," "marinate overnight"), and past-tense verbs ("chopped onions," "cooked rice"), which mean that step happens before the dish is assembled.

Assigning menu items to stations

Each part of a dish has to be assigned to a station. You decide based on two sets of factors:

• Menu factors: what components the dish has, what cooking technique each needs (grilling goes to the grill station), and whether it's prepped in advance or cooked à la minute (to order, at the moment it's ordered).
• Structural factors: how much each station can handle right now, how skilled each station's cook is, how many of the item you expect to sell, and whether there's a dedicated prep person or team.

From class: steak to the grill station, green beans and scallops to sauté, fries to fry, potatoes and fennel salad to the pantry (cold) station.

Final production steps (after the order comes in)

The expeditor ("expo") is the person at the pass who runs the flow of orders between the kitchen and the servers.

1. Order in: the expeditor receives a table's order and calls out to the stations what's needed. Stations get those items ready, and some may start cooking right away.
2. Fire: the expeditor tells stations to start cooking particular items, timed so a table's dishes finish together.
3. Plate: food is put on plates at the station, or passed to another station for plating.
4. Inspect and garnish: the expeditor checks each plate and may add garnish.
5. Service: the finished dishes go to FOH staff to deliver to guests.

Par, inventory and prep lists

What new product development (NPD) means

NPD is the process of creating new products, here mostly new menu items. A "new product" can be either:

1. Something the company has never made before, or
2. An existing product presented in a new way: a new form, package, name or label. A rebrand counts.

What drives NPD

• Customer demand: changing tastes, trends and demographics (e.g., more vegetarians).
• Technology: advances in food science and production (e.g., plant-based meat that cooks like beef).
• Competition and the economy: the need to stand out from competitors; cheaper options in a downturn.
• Regulation, environment and society: new health rules, environmental concern, social media trends.
• The product life cycle (below).

From class, the Impossible Whopper: demand from vegetarians and flexitarians (people who mostly eat plants but sometimes eat meat); a crowded market where Burger King wanted to look forward-thinking; technology that makes plants behave like beef; and social pressure for sustainable food.

The product life cycle

Every product goes through stages. Sales and profits rise and then fall, which is why companies keep developing new ones.

1. Development: being created. No sales yet, and money is being spent, so profit is negative.
2. Introduction: just launched. Sales are low, and profit is often still negative because of launch costs.
3. Growth: catching on. Sales and profits rise quickly.
4. Maturity: sales level off at their peak. Competitors copy it.
5. Decline: people lose interest. Sales and profits fall, so it's time for something new.

Limited time offers (LTOs)

An LTO is a menu item sold only for a short period, like the McRib or a seasonal pumpkin drink. From class: Olive Garden's "Giant Italian Classics." Why restaurants use them:

1. They boost sales and give an edge over competitors.
2. They let food manufacturers test new products and concepts.
3. Guests who buy LTOs tend to visit more and be more valuable customers.
4. They can spark sales before a quarter ends, and let you try an item without committing to it. If it flops, it quietly disappears. If people love it, it can replace a slow seller on the permanent menu.

The NPD process (stage-gate)

New items go through five stages of work. After each stage there's a gate: a review meeting where managers look at that stage's deliverable (the document or result it produced) and decide go (move on), no-go, incubate (set the idea aside for later) or kill (drop it). The process isn't strictly one-way: teams often go back a step.

Strategic vs. tactical considerations

Before adding an item, you check two kinds of questions. A good way to remember it: strategic = the guest and the brand; tactical = operations and money.

From class, the Impossible Whopper. Strategic: it tastes like a beef burger, fits the plant-based trend, works for vegetarians and flexitarians, has less saturated fat, and a smaller carbon footprint. Tactical: a premium price is justified; a steady patty supply is needed; staff must learn to cook it and keep it separate from beef to avoid cross-contact; there must be grill space; and it's assembled like a regular Whopper, so it's easy to keep making.

Food trends

From the Datassential Menu Adoption Cycle. These slides were mostly images, so check the deck for exact wording.

New foods spread through restaurants in a predictable path, from high-end and niche places to everywhere:

1. Inception: the food first appears in fine dining and authentic ethnic restaurants. Most people have never heard of it.
2. Adoption: trendier casual restaurants and specialty grocery stores pick it up. Early adopters start to know it.
3. Proliferation: chain restaurants adapt it for mainstream menus, often in a milder or familiar form.
4. Ubiquity: it's everywhere: fast food, family restaurants, regular grocery stores. Think sriracha or avocado toast.

Why recipe costing is tricky

If you bought ingredients in exactly the amounts and form a recipe uses, costing would be easy. In reality:

• You buy in different units than you cook with: a 50 lb bag of onions, but the recipe says "1.5 cups."
• You lose part of what you buy: peels, stems, bones and fat get trimmed off, so you pay for more than you use.
• A product often comes in several purchase options (a 1 lb bag or a 25 lb bag), each with a different price per pound.

The tools below solve each of these problems.

Key terms

When does yield apply?

Only when the recipe needs the ingredient in a different form than you bought it, so EPQ ≠ APQ.

• Bought whole carrots, recipe says "carrots, peeled and diced" → apply the yield.
• Bought already diced carrots, recipe says "diced carrots" → yield is 100%. Nothing gets trimmed.
• Butter, milk, flour, chicken stock → usually 100%, because you use all of it.

What affects yields

Yield isn't fixed. The same product can give different amounts depending on:

• Intended use: diced vs. finely trimmed gives different waste.
• Quality and condition: bruised produce has more waste.
• Size: big onions waste less, proportionally, than small ones.
• Skill and care of the person prepping.
• Equipment: a sharp knife or a good peeler wastes less.

You can look up yield estimates in the Book of Yields (a reference book of standard yields and weights), culinary texts or online, but you should confirm them by testing yourself.

Q-factor (also called "wrap cost")

Some costs come with a dish but aren't really controlled by the recipe, or are too small to measure. Instead of costing them individually, you add a Q-factor: a fixed dollar amount, or a percentage of the recipe cost. It covers:

• Free items served with the meal: bread, an amuse-bouche (a free bite from the chef), included sides
• Condiments or garnishes the guest adds: ketchup, lemon wedges
• Paper goods and containers that aren't specifically for takeout (napkins, ramekins)
• Tiny "to taste" amounts: salt, pepper (written "T.T." in recipes)

Total recipe cost = ingredient cost × (1 + Q-factor %)

From class: a batch of ice cream has $590.40 of ingredients and a 3% Q-factor. Total = 590.40 × 1.03 = $608.11.

Dimensional analysis (the "bridge method")

A step-by-step way to convert units, like cups to ounces, without mistakes. You multiply by fractions that each equal 1 (like "4 qt / 1 gal") until only the unit you want is left.

1. Write what you have as a fraction over 1: 0.0625 gal / 1.
2. List the conversions you know: 1 gal = 4 qt, 1 qt = 2 pt, 1 pt = 2 C.
3. Line up the fractions so each unit you don't want appears once on top and once on the bottom, so it cancels.
4. Multiply across the tops, then the bottoms, and divide.
5. Check the units left over and whether the answer makes sense.

• 0.0625 gal × (4 qt / 1 gal) × (2 pt / 1 qt) × (2 C / 1 pt) = 1 C
• 4.5 C of flour × (1 lb / 3.48 C) × (16 oz / 1 lb) = 72 ÷ 3.48 = 20.69 oz

Terms you'll need

The recipe costing flow chart, in plain words

Do this for each ingredient:

1. Find the right product in the purchasing guide (e.g., whole yellow onions in a 50 lb bag).
2. Do the units match? If the recipe says cups but you buy by the pound, convert the recipe amount into pounds (dimensional analysis). Then find the AP cost per pound.
3. Is the form different? If the recipe wants it peeled, diced or trimmed and you buy it whole, divide by the yield %: APQ = EPQ ÷ yield %.
4. Ingredient cost = APQ × AP cost per unit.

Then for the whole recipe:

5. Add up all the ingredient costs to get the recipe subtotal.
6. Add the Q-factor if there is one. That's the total recipe cost.
7. Divide by the number of portions to get the portion cost.
8. If you know the price: food cost % = portion cost ÷ price. If you don't: price = portion cost ÷ target food cost %. If the numbers don't work, change the recipe or the price.

The costing template, column by column

The template from class is a spreadsheet version of the flow chart, with one row per ingredient:

Why cost recipes systematically

Costing tools range from expensive software to a simple spreadsheet. All of them rely on the same three things: data inputs (prices, yields, conversions), defined relationships between them (the formulas), and standard procedures for using them. Doing it the same way every time:

• Makes costings easy to keep up to date when prices change
• Takes the guesswork out of food costs and menu prices
• Makes running the kitchen's paperwork more efficient

Terms you'll need

Other things to consider when pricing

• Elasticity of demand: how much sales drop when you raise the price. If guests are very price-sensitive (elastic), a price increase can lose more sales than it gains.
• Perceived value: whether guests feel the dish is worth the price.
• Competition: what similar restaurants charge.
• Menu, price and volume together: how pricing one item affects sales of others.
• Costs and profit: the price has to cover costs and leave a profit.
• Pricing and contribution margins: the contribution margin is price minus the item's variable costs, i.e., what each sale "contributes" toward fixed costs and profit.

The pricing approaches

Non-structured pricing isn't a formula: you just ask "what will the market bear?" and charge what you think guests will pay. The three structured methods each count more of the costs:

Cost allocation: proportional vs. semi-proportional

Cost allocation means splitting a menu price into the costs it pays for, to see how much profit one item really makes. Each pricing method pairs with one way of doing this:

The full side-by-side table is on the Menu pricing guide.

Vyba Vive: should the price be high or low?

The case ("Vyba: Is the Price Right?") is about a company choosing a launch price for its product, Vyba Vive. Neither option is free: each has benefits and costs.

The sample problem, step by step

Given: food sales $500,000 a year. Food cost is 35% of sales. Labor = $100,000 + 5% of sales (a mixed cost). Variable costs are 15% of sales. Other fixed costs are $50,000. Occupation is $22,500 (fixed). The restaurant serves 50,000 covers a year. One dish has a food cost of $3.15.

1. Factor price at a 35% food cost: 3.15 ÷ 0.35 = $9.00.
2. Proportional allocation at $9.00: multiply the price by each cost's % of sales. Labor 25% → $2.25. Variable 15% → $1.35. Fixed 10% → $0.90. Occupation 4.5% → $0.405. What's left is profit: $0.945, or 10.5%.
3. Turn the fixed costs into dollars per cover (divide each yearly amount by 50,000 covers). Fixed labor: 100,000 ÷ 50,000 = $2.00. Other fixed: 50,000 ÷ 50,000 = $1.00. Occupation: 22,500 ÷ 50,000 = $0.45.
4. MAC price for a 12% profit. Top: food plus every fixed per-cover cost = 3.15 + 2.00 + 1.00 + 0.45 = $6.60. Bottom: 1 minus every percentage = 1 − (0.15 variable + 0.05 variable labor + 0.12 profit) = 0.68. Price = 6.60 ÷ 0.68 = $9.71.
5. Semi-proportional allocation at $9.71. Labor = $2.00 + 5% × 9.71 = $2.49. Variable = 15% × 9.71 = $1.46. Fixed = $1.00. Occupation = $0.45. Profit = 9.71 − 3.15 − 2.49 − 1.46 − 1.00 − 0.45 = $1.16, which is 12%. The profit target is met.

What a supply chain is

A supply chain is "the sequence of processes involved in the production and distribution of a commodity": every step from the farm to the plate (grower → processor → distributor → restaurant → guest). Modern food supply chains are long and complex, with many companies and countries involved.

Common problems in the chain:

• Economic: shortages and rising prices (inflation).
• Food safety: contaminated ingredients from suppliers, improper handling or storage, no traceability (you can't track where a product came from), and adulteration (a product secretly cut with something cheaper or harmful).
• Sustainability: environmental damage, transportation emissions, packaging waste, food waste.
• Labor practices: unsafe conditions, child labor, exploiting vulnerable workers.

Is a restaurant responsible for its suppliers' workers?

Managers clearly owe fairness to their own employees. The question here is whether they're also responsible for how their suppliers treat workers. Class used a two-step framework:

Four ways a business can respond to big problems

Transparency and blockchain

Takeaways from class: supply chains are complex. Simple ≠ safe: a short chain isn't automatically safer. Demand for transparency is rising. Blockchain can reduce risk.

The five distribution arrangements

A distributor is the middleman that buys from producers, stores products in a warehouse, and delivers to restaurants. The five arrangements differ in who does that job and for whom.

Purchasing

Purchasing (procurement) means buying the right product, at the right quality, right price and right time, from the right source. At a small restaurant the head chef or sous chef does it; large restaurants and hotels have a whole purchasing department.

Receiving

Receiving is checking in deliveries when they arrive, to make sure you got what you ordered and are paying the right amount.

The four scenarios

Unit conversions to know

Fluid ounces measure volume (space). Ounces measure weight. They're only the same for water-like liquids. Going from volume to weight always needs a product-specific number, like "1 C of diced onion weighs 3.9 oz" or "1 lb of flour = 3.48 C." The exam gives you these.

Worked example: carrot soup

From Lectures 17–18. The recipe makes 4 portions of 12 fl oz each and sells for $3.99.

The three formulas

In-class example (Lecture 19)

Food cost $4.00. Per cover: labor $4.48 (all fixed), other fixed $1.03, occupation $1.38. As % of sales: food 32%, labor 26%, variable 18%, target profit 10.1%.

• Factor: 4.00 ÷ 0.32 = $12.50
• Prime cost: (4.00 + 4.48) ÷ (0.32 + 0.26) = 8.48 ÷ 0.58 = $14.62
• MAC: (4.00 + 4.48 + 1.03 + 1.38) ÷ (1 − (0.18 + 0.101)) = 10.89 ÷ 0.719 = $15.14

Allocating the costs means splitting each price into what it pays for:

Proportional: every line = price × its % from the income statement. Semi-proportional: fixed lines are the same dollars per guest (labor $4.48, fixed $1.03, occupation $1.38), and only the variable line is price × %.

Recipe costing

Menu pricing

Production

By lecture