Case ID: UV1739     Solution ID: 5979     Words: 2327 Price $ 75

Wendys Chili A Costing Conundrum Case Solution

Case Solution

This case puts forward the apparentlynaïve, easy and direct question, "what is the cost faced by Wendy’s in preparing a bowl of chili?” this is because a large portion of the meat used in preparing the chili is used from the overcooked hamburgers, however, thequery of cost distribution rises. Wendy's is contemplating introducing a salad bar to its "limited menu" and is thinking about if should then do away with a current menu item. A decision of this sort needs an assessment of current item-profitability.

Excel Calculations

Chili 8 ounce Cost

Total cost of Ingredients

Cost of 57 Chilis

Cost of one 8 ounce Chili

Other Direct costs

Cost of a packed 8 ounce Chili

Time taken for Chili Preparation

Questions Covered

How was Wendy’s able to achieve its initial success and to grow so rapidly at a time when the quick service hamburger business appeared to be saturated?

What benefits might have resulted from Wendy’s’ “limited menu” concept? What were the disadvantages of such a concept?

Why was the concept eventually discontinued?Why was Wendy’s’ drive through window successful when other quick-service- restaurant chains had been unsuccessful at implementing the same concept? 

How much does a bowl of chili cost on a full cost basis? An out-of-pocket basis?

For determining the true probability of chili, how much does a bowl of chili really cost?

Would you recommend dropping chili from the menu? Why or why not?