De La Salle University

Ramon V. Del Rosario College of Business

Management and Organization Department

Case Analysis on
Food and Beverages at Southwestern University Football Games

In Partial Fulfillment
of the Course Requirements in
MSC530M GM92
Term 1, Academic Year 2019 - 2020
 Submitted By: Group 1

de Leon, Rachel Anne

Dukha, Rose Ann
Liu, Alex
Renomeron, Jason

I. Case Background
Southwestern University (SWU) is a large state college in Stephenville, Texas with close to
20,000 students. The school is a football powerhouse and a member of the Big Eleven
Conference, with the aim of being number one in college football rankings. In 2013, SWU hired
legendary Billy Bob Dillon as its new football head coach and immediately season ticket sales
increased by 10,000 from a previous average of 25,000 to 29,000. (Render, Stair, Hanna & Hale,
2015)
SWU President Dr. Marty Starr was contemplating between expanding the existing stadium or
building a new stadium. He wanted the parking lots, game programs and food services to be
handled as individual profit centers capable of generating revenues adequate to pay for all costs
and earn income. (Render, Stair, Hanna & Hale, 2015)
Stadium Manager Hank Maddux was tasked to develop break-even charts for each profit center
starting with the food service area break-even report. (Render, Stair, Hanna & Hale, 2015)

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 II. Problem Definition
Stadium Manager Hank Maddux needs to submit a report to SWU President Dr. Marty Starr
showing the break-end levels for each of the food service area, specifically analysis on below:
1. The total fixed cost that must be covered at each of the games
2. The portion of the fixed cost allocated to each food item
3. Break-even unit sales for each food item
4. Break-even dollar sales for each food item
5. Dollar spending on food per attendee to break-even if the numbers of attendees are
60,000 and 35,000

III. Case Facts, Limitations and Constraints

The table below shows Maddux’s suggested selling prices and variable costs for each food item.

Food Items Unit Selling Price Unit Variable Cost Percent Revenue
Soft Drinks $ 1.50 $ 0.75 25 %
Coffee 2.00 0.50 25 %
Hot dogs 2.00 0.80 20 %
Hamburgers 2.50 1.00 20 %
Miscellaneous snacks 1.00 0.40 10 %

The stadium fixed costs are enumerated below, with each cost item to be proportionately
allocated to the food items identified above based on the percentage revenue. No other fixed cost
items were mentioned in the case.
Cost Items One Home Game Five Home Games

Salaries for Food Services $ 20,000 $ 100,000

Stadium Space 4,800 24,000

Labor Cost (36 people) 1,260 6,300

Total $ 26,060 $ 130,300

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IV. Alternative Approaches to Solving the Problem
Group 1 utilized the 7-step Quantitative Analysis Approach to analyze and solve the assigned
case.
Quantitative Analysis Approach Action Taken
A clear and concise problem statement based
on the case facts and analysis requirements
Defining the problem
was defined as indicated in the Problem
Definition of Section Two.
Break-even Analysis and Profit = Revenue –
Developing a model Expenses formula were utilized for our
mathematical analysis.
Input data were sourced from the case facts
Acquiring input data
given.
Mathematical calculations were performed
Developing a solution
with the help of QM for Windows.
Peer review within the group was conducted
Testing the solution to check for accuracy and completeness of
calculations and analysis performed.
A written report was created to document our
Analyzing the results results and processes in analyzing the
assigned case.
The final step of the process was uploading
Implementing the results
our written report on Canvass.

V. Quantitative Methods Employed and Solutions to the Problems

The group used the Profit and Break-even Point (BEP) mathematical models to solve the
problem in the case.
Question 1: The total fixed cost that must be covered at each of the games
Cost Items One Home Game Five Home Games
Salaries for Food Services $ 20,000 $ 100,000
Stadium Space 4,800 24,000
Labor Cost (36 people) 1,260 6,300
Total $ 26,060 $ 130,300

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Answer 1: The total fixed cost per home game is $26,060 and the total fixed cost for the five
home games is $130,300.

Question 2: The portion of the fixed cost allocated to each food item
Percentage Revenue Allocation
Cost per
Misc.
Cost Items Home Soft Drinks Coffee Hot dogs Hamburgers
snacks
Game
25% 25% 20% 20% 10%
Salaries for Food
$20,000 $5,000 $5,000 $4,000 $4,000 $2,000
Services
Stadium Space 4,800 1,200 1,200 960 960 480
Labor Cost (36
1,260 315 315 252 252 126
people)
Total $26,060 $6,515 $6,515 $5,212 $5,212 $2,606

Answer 2: The fixed cost allocation per food item for one home game is shown in the blue
columns.

Question 3: Break-even unit sales for each food item

Break-Even Break-Even
Unit Selling Unit Variable Percent Unit Sales Unit Sales
Food Items
Price Cost Revenue 1 Home 5 Home
Game Games
Soft Drinks $ 1.50 $ 0.75 25 % 8,687 43,433
Coffee 2.00 0.50 25 % 4,344 21,717
Hot dogs 2.00 0.80 20 % 4,344 21,717
Hamburgers 2.50 1.00 20 % 3,475 17,373
Misc. snacks 1.00 0.40 10 % 4,344 21,717

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Answer 3: Using Break-even Analysis on QM for Windows, Column 5 shows the break-even
unit sales per food item for each home game. Column 6 shows the break-even unit sales per food
item for five home games.

Question 4: Break-even dollar sales for each food item

Break-Even Break-Even
Unit Selling Unit Variable Percent Dollar Sales Dollar Sales
Food Items
Price Cost Revenue 1 Home 5 Home
Game Games
Soft Drinks $ 1.50 $ 0.75 25 % $ 13,030 $ 65,150
Coffee 2.00 0.50 25 % 8,687 43,434
Hot dogs 2.00 0.80 20 % 8,687 43,434
Hamburgers 2.50 1.00 20 % 8,687 43,433
Misc. snacks 1.00 0.40 10 % 4,344 21,717
Total $43,433.34 $217,168

Answer 4: Using Break-even Analysis on QM for Windows, Column 5 shows the break-even
dollar sales per food item for each home game. Column 6 shows the break-even dollar sales per
food item for five home games.
Question 5: Dollar spending on food per attendee
Answer 5: Thus, to break even, the total sales must be $43,433.34. If the attendance is 35,000
people, then each person would have to spend an average of $1.24 ($43,433.34/35,000 = $1.24).
If the attendance is 60,000, then each person would have to spend an average of $0.72
($43,433.34/60,000 =$0.72). Both of these sales estimates are relatively lower compared to the
selling price per food item. Thus, the purchase of one food item by each attendee will be enough
to cover the fixed costs. The group believes that this food and beverage service operations can
generate revenues that will break even the costs.

VI. Reflection on Ethical Considerations

The ethical considerations considered were the following:
1. Introduction of healthier food choices

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 2. Utilization of eco-friendly food and beverage containers and packaging
3. Adoption of green energy technologies if a new stadium is built or the existing stadium is
expanded
4. Introduction of profit-sharing or performance bonus incentives for fixed wage-earning
stadium personnel to boost revenues

VII. Overall Conclusion and Recommendations

Based on the above analysis, we have calculated that if a new football stadium can
accommodate 35,000 people, the per capita consumption needs to reach $1.24 in order to
break-even; while if a new football stadium can accommodate 60,000 people, the per capita
consumption needs to reach $0.72. If the attendance will reach higher than the normal
capacity the SWU also need to consider building additional booth and worker in each
booth.

However, the given data in the case can only answer the break-even point in order to
continue operations based on the existing stadium capacity. To decide whether SWU can
expand or build a new stadium, Construction, Funding and Maintenance costs have to be
considered.

The major sales revenue contributor is soft drinks. We may consider selling this item more
than the rest of the food items.

VIII. References
Render, B., Stair, R., Hanna, M., & Hale, T. (2015). Quantitative Analysis for Management (12th
ed., p. 39). Pearson Education Limited.