A turkey sandwich has a food cost of $.75 and is sold for $2.25. If the manager wanted to achieve a 40% food cost, which of the following should occur?

A turkey sandwich has a food cost of $.75 and is sold for $2.25. If the manager wanted to achieve a 40% food cost, which of the following should occur?

• A. Increase the selling price
• B. Maintain current price
• C. Decrease the price
• D. Increase the portion size

Answer: (C)

Food cost percentage is the cost of the item divided by its selling price. For this sandwich, that’s 0.75 / 2.25 = 0.333, or 33.3%. To reach a 40% food cost with a fixed cost of 0.75, you need the selling price to satisfy 0.75 / price = 0.40. Solving gives price = 0.75 / 0.40 = 1.875, about $1.88. Lowering the price moves the percentage up toward 40%; raising the price would actually lower the percentage, maintaining it would keep it at 33.3%, and increasing portion size changes the cost and doesn’t guarantee hitting exactly 40% without further adjustments. So decreasing the price is the action that achieves the target.

Food cost percentage is the cost of the item divided by its selling price. For this sandwich, that’s 0.75 / 2.25 = 0.333, or 33.3%. To reach a 40% food cost with a fixed cost of 0.75, you need the selling price to satisfy 0.75 / price = 0.40. Solving gives price = 0.75 / 0.40 = 1.875, about $1.88. Lowering the price moves the percentage up toward 40%; raising the price would actually lower the percentage, maintaining it would keep it at 33.3%, and increasing portion size changes the cost and doesn’t guarantee hitting exactly 40% without further adjustments. So decreasing the price is the action that achieves the target.