Mr, Ib

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Food and Beverages at Southwestern University Football Games? Food and Beverages at Southwestern University Football Games Southwestern University (SWU), located 30 miles southwest of the Dallas/Fort Worth metroplex, has witnessed tremendous growth in its football program. With that growth, fueled by the hiring of legendary coach Bo Pitterno, has come more fame, the need for a bigger stadium, and more complaints about seating, parking, long lines, and concession stand prices. Southwestern University s president, Dr. Marty Starr, was not only concerned about the cost of expanding the existing stadium versus building a new stadium, but also about the ancillary activities. He wants to be sure that these various support activities generate revenue adequate to pay for themselves. Consequently, he wants the parking lots, game programs, and food service to all be handled as profit centers. At a recent meeting discussing the new stadium, Starr told the stadium manager, Hank Maddux, to develop a break-even chart and related data for each of the centers. He instructed Maddux to have the food service area break-even report ready for the next meeting. After discussion with other facility managers and his subordinates, Maddux developed the table below. This table shows the expected percent of revenue by item, the suggested selling prices, and his estimate of variable costs. Selling Variable Percent Item Price/Unit Cost/Unit Revenue Soft drink $1.50 $ .75 25% Coffee 2.00 .50 25% Hot dogs 2.00 .80 20% Hamburgers 2.50 1.00 20% Misc. snacks 1.00 .40 10% Maddux s fixed costs are interesting. He estimated that the prorated portion of the stadium cost would be: salaries for food services at $100,000 ($20,000 for each of the five home games); 2,400 square feet of stadium space at $2 per square foot per game; and six people in each of the six booths for 5 hours at $7 an hour. These fixed cost will be proportionately allocated to each of the products based on percentages provided in...
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