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Final Test Your Knowledge Questions Module 4
Chapter 13
3. What are examples of operating ratios? Why would these be used by a foodservice manager?
For CWU’s dining services, the relative percentage of sales from catering, Surc market place, and
North cafe of interest and similarly, we need to divide the sales from each area by the total sales. It is
used by the food service managers because they can analysis the success of the operation in generating
revenues and in controlling expenses.
4. How do changes in fixed costs impact the break-even point?
The fixed costs represent the costs needed to run an operation. Changes in the volume of sales
do not affect the fixed costs. If the size of the physical plant or equipment capacity increase, than fixed
costs will increase. If the fixed costs increase, then so will the break even point.
5. Why might the chief financial officer of a hospital prefer that the food service director analyze a
proposed equipment purchase using NPV rather than the payback period?
The Net present value evaluates a proposed capital expenditure using the time value of money
and the current value of expected cash inflow and outflows. The Payback period estimates the amount
of time it will take for the organization to recover the money used for a project or equipment piece. The
CFO might prefer the food service director analyze a purchase equipment using the NPV because the
payback period doesn’t consider inflation or risk which is significant because the purchasing power of
money could decrease.
Chapter 14
1. What is the marketing environment? How does it impact the development and execution of a
marketing plan?
The marketing environment surrounds the buyer and the marketing mix. Political, legal,
regulatory, societal, economic, competitive and technological forces in the environment affect the
marketing manager’s ability to facilitate and expedite change. The marketing environment influences
customers’ preferences and needs for products. These forces also directly influence how a marketing
manager should perform certain marketing activities.
2. Define the term marketing concept and describe how it applies to a foodservice operation.
Marketing concept is the belief that organizations are responsible for determining the “needs
and wants of target markets.” With this information they should deliver those needs and wants more
efficiently than competition. This applies to a foodservice operation because to be successful and make
a profit, the operation should do its research to learn which products are desirable to the markets they
are aiming to sell to. This is important because often foodservice operations have similar items with
their competitors, so to be more successful they must be more efficient and effective with delivering
those items to the customers.
3. What are variables that influence the marketing mix and market segmentation?
The marketing mix is a combination of marketing variables in which an organization has control
over to satisfy their target market and achieve their set objectives. These elements include the products
(goods or services), price (money charged for a product), place (or location), and promotions (to
increase public awareness). Market segmentation is a way of dividing a total market into groups of
people with similar needs, wants, values and buying behaviors. These include variables such as
geographics (region, population, etc), demographics (age, gender, race, etc), psychographic (social class,
lifestyle or personality), and behavioristic (occasions, loyalty, etc).
4. Explain the four characteristics of services and describe how they impact marketing in foodservice
marketing.
Intangibility of services are the the terms of what services are not, they cannot be seen,
touched, tasted, smelled or possessed. Atmospherics is an example of an intangible service in
foodservice marketing. It describes the physical elements of an operation’s design that appeal to
customer’s emotions and encourages them to buy.
Inseparability is the inability to separate production and service. In a commercial foodservice
operation the wait staff, bartender, maitre d’hotel are producing services at the same time the customer
is consuming them. The knowledge and efficiency of the wait staff in taking order and serving the meal,
the desire of the bartender to mix a drink exactly the way the customer wants it and the concern of the
matre d’hotel that the customer is satisfied are examples of inseparability of the production and
consumption in a foodservice operation.
Perishability of services mean that those services cannot be stored for future sale because the
the service is produced and consumed simultaneously. The service operation must have the capacity
and capability to produce when demand occurs.
Heterogeneity of service is concerned with the variation and lack of uniformity and performance
of people. This is different from poor service caused by insufficient number of staff, rather it is
fluctuations in service caused by unskilled employees, customer perceptions and the customers
themselves.
Chapter 15
2. What information might a foodservice manager collect to determine whether customer are
satisfied?
There are several techniques food service managers can develop to collect customers’
satisfaction. For example gathering inputs from customers as they are finishing dining can be an
effective way to collect the most accurate information. In addition to talking to guests, comment cards,
interviews, mystery shopper reports, surveys, and focus groups. Collecting data can involve any type of
feedback process in which the consumer can provide any type of information that can help improve the
services provided at the food service operation.
5. In a menu engineering analysis, what is the difference between menu mix and contribution margin?
Menu mix is the indication of the popularity of an individual’s menu compared to other items on
the menu. It is calculated by dividing the number sold of individual menu item by the total sold of all
menu items. For example if you wanted to know what was popularity of tacos in a menu, I would divide
the number of tacos sold by the total sold menu items which will provide the popularity of the food
item. In contrast contribution margin is the difference between the selling price and cost of menu item.
Once again it is calculated by subtracting the cost of the menu item from the selling price. In other
words it is the money that is left after subtracting the selling price from the cost of the food menu item.
6. How would the manager’s strategy differ when working with a menu item classified as a plow horse
compared to one?
A manager should slowly increase a plow horse item to increase profit considering the demand
is high. For a puzzle item a manager should advertise more or attempt to offer a promotional discount
to sell those particular menu items at a higher frequency down the line.