Entrepreneurship, Costing and Career Opportunities
Entrepreneurship, Costing and Career Opportunities
This domain tests food cost, portion costing, pricing, break-even, menu engineering and the range of food service careers. Questions often require a short calculation and a business interpretation.
Core rules and concepts
- Portion cost is the cost of ingredients in one served portion, including trim and wastage.
- Food cost percentage = (food cost ÷ selling price) × 100. Mark-up is added to cost; margin is profit as a percentage of selling price.
- Contribution margin = selling price − variable cost per unit. Break-even units = fixed costs ÷ contribution margin per unit.
- Overheads include rent, salaries, utilities, insurance and depreciation; they are not part of direct food cost.
- Menu engineering classifies items by popularity and contribution margin: stars, plowhorses, puzzles and dogs.
- Careers include chef, baker, dietitian, food safety officer, catering manager, food stylist, entrepreneur and food technologist.
Worked example
A dish costs Rs. 45 in ingredients and sells for Rs. 150. Food cost percentage = 45 ÷ 150 × 100 = 30%. If the owner targets 35%, the minimum selling price = 45 ÷ 0.35 = Rs. 128.57, rounded to Rs. 129. At Rs. 150 the item is already below the target food cost percentage, so it is financially acceptable if other costs are covered.
Traps
Do not include labour and rent in direct food cost when calculating food cost percentage. A 30% food cost is not a 30% mark-up; mark-up is based on cost, margin on selling price. Break-even uses fixed costs, not total costs. A popular item with low margin is a plowhorse, not a star.