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Menu Analysis & Engineering

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  1. Menu Analysis & Engineering HRT383 Dinner Winter 09

  2. References • Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp 114-116. Upper Saddle River, N.J. : Prentice Hall. • Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp. 101-115. 3rd ed. Upper Saddle River, N.J. : Prentice Hall, TX911.3.M45 D79 2002 • CD-ROM TX911.3.M45 D79 2002 HRT383

  3. Objectives By the completion of this presentation you should be able to: • Analyze a menu for profitability • Apply menu engineering to menu analysis HRT383

  4. Important Terms • Menu engineering • Plowhorses • Puzzles • Stars • Dogs HRT383

  5. Introduction This presentation explains how to evaluate a menu • When measuring a menu to see if it is successful 2 criteria must be met to declare it a winner: • Must be profitable in terms of individual item profitability • Most profitable item must be selling the best. HRT383

  6. Method, called menu engineering, developed by Donald Smith Ph.D., Westin Hotels Distinguished Professor at Washington State University This method rates the menu by measuring each entrée as to its profitability (gross profit) and its sales. It then combines these measurements and places each menu item into one of four classifications. Stars, Plowhorses, Puzzles, & Dogs Puzzle Plow Horse Star Dog HRT383

  7. Contributing Margin • Determine the contributing margin (CM) of each item • CM same as item’s Gross Profit • Use total food cost (include garnish, accompaniments served with entrée such as salad, potatoes, rolls, butter etc.). Selling Price – Food Cost = Contributing Margin HRT383

  8. Contribution MarginDollars vs. Food Cost Percentage HRT383

  9. Contribution MarginDollars vs. Food Cost Percentage Which one will/should your server sell ? HRT383

  10. Contribution MarginDollars vs. Food Cost Percentage Which one will/should your server sell ? HRT383

  11. Example HRT383

  12. Appetizers HRT383

  13. Popularity Average Popularity 80% of the average item sales per appetizer: 100 / 5 X 80% = 16% Popularity of each menu item: Number of portions sold divided by total number of meals sold Crab Cake : 54 / 117 = 34.62% HRT383

  14. Popularity HRT383

  15. HRT383 Dinner Appetizers 100% Popularity 16% 0 Contribution Margin $6.47 HRT383

  16. HRT383 Dinner Appetizers 100% Popularity *Ravioli $5.05/24.36% * En Croute $7.01/17.31% 16% * Duck $5.75/14.10% *Cheese $6.28/9.62% 0 Contribution Margin $6.47 HRT383

  17. Menu Engineering HRT383

  18. The Four Key Menu Categories • Plowhorses are items that are relatively popular but have a high contribution margin. Items in this category can have their menu prices increased or the portion size cut in a attempt to increase CM. If market is price resistant • Stars have both high popularity and high CM • Puzzles have relatively low popularity and high margins; lower price. • Dogs are both low in popularity and CM; eliminate HRT383

  19. HRT383 Dinner Appetizers 100% Increase $ $8 - ? Cut Portion ? Popularity *Ravioli $5.05/24.36% * En Croute $7.01/17.31% 16% * Duck $5.75/14.10% ELIMINATE ? *Cheese $6.28/9.62% ELIMINATE ? 0 Contribution Margin $6.47 HRT383

  20. Data Trap Winter 09 • See Dinner Hand Out for • Main Courses HRT383

  21. Main Courses HRT383

  22. Popularity Average Popularity 80% of the average item sales per appetizer: 100 / 9 X 80% = 8.88% Popularity of each menu item: Number of portions sold divided by total number of meals sold Steak: 59 / 464= 25.22% HRT383

  23. Main Courses HRT383

  24. Exercise • Please work with your fellow students and come up with suggestions/decisions. HRT383

  25. HRT383 Dinner M/C 100% Popularity 8.88% 0 Contribution Margin $17.61 HRT383

  26. Main Courses HRT383

  27. Main Courses HRT383

  28. Main Courses HRT383

  29. Main Courses HRT383

  30. The Four Key Menu Categories • Plowhorses are items that are relatively popular but have a high contribution margin. Items in this category can have their menu prices increased or the portion size cut in a attempt to increase CM. If market is price resistant • Stars have both high popularity and high CM • Puzzles have relatively low popularity and high margins; lower price. • Dogs are both low in popularity and CM; eliminate HRT383

  31. Main Courses

  32. Up Selling • Your Favorite HRT383

  33. Placement • Two Schools of thought • Menu Sequence • Menu should follow progression of meal • Focal Points • Use focal points on the menu to push certain menu items HRT383

  34. Focal Points Single Sheet Menu Twofold Menu HRT383

  35. Focal Points Focal Point Threefold Menu HRT383

  36. Specials • Larger Bolder type than the rest of menu • Longer description • Concept of Closure • people’s eyes are drawn to what ever is enclosed by a box • Color, illustration, and/or pictures, bullets can be used to draw attention to signature items. HRT383

  37. Branding • Fast food • Coke / Pepsi • TGIF • Jack Daniels HRT383

  38. Menu Pricing • Odd-Cents pricing • Majority of prices end in either a “5” or a “9” • Price rounding. • Within certain price bands, price increases have little negative impact on customers • Placement HRT383

  39. Price Placement HRT383

  40. Price Placement HRT383

  41. Conclusion • Menu analysis is important • If demographic studies, internal capacities, cost cards, and markups have been executed correctly, the score should be a good one • Analysis should be done using either the Smith or the Hurst methods to ascertain the profitability of the menu • If the analysis shows a poor menu, make improvements • Good menu: first step has been taken toward running a profitable operation. • It’s just that simple HRT383

  42. Where to Get More Information • Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp 114-116. Upper Saddle River, N.J. : Prentice Hall. • Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp. 101-115. 3rd ed. Upper Saddle River, N.J. : Prentice Hall, TX911.3.M45 D79 2002 • CD-ROM TX911.3.M45 D79 2002 • Most Menu & F&B Management Books HRT383