Menu Analysis & Engineering

1. Menu Analysis & Engineering HRT383 Lunch Fall 08

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 • Price menu items • Locate menu items on a menu. HRT383

4. Menu engineering Plowhorses Puzzles Stars Dogs Menu Placement Pricing Important Terms 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 HRT383

10. Data Trap Fall ‘08 • See Lunch Hand Out HRT383

11. Desserts HRT383

12. Popularity • Average Popularity 80% of the average item sales per Dessert: 100 / 4 X 80% = 20% HRT383

13. Desserts HRT383

14. HRT383 Lunch Desserts 100% Popularity 20% 0 Contribution Margin $4.12 HRT383

15. HRT383 Lunch Desserts 100% Popularity 20% 0 Contribution Margin $4.12 HRT383

16. Desserts HRT383

17. 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

18. HRT383 Lunch Desserts 100% Increase $ Cut Portion ? Popularity 20% Eliminate? 0 Contribution Margin $4.12 HRT383

19. HRT383 Lunch Desserts 100% Increase $ Cut Portion ? Popularity 20% Eliminate? 0 Contribution Margin $3.44 HRT383

20. Lunch Main Courses HRT383

21. Popularity • Average Popularity 80% of the average item sales per Main Dishes: 100 / 11 X 80% = 7.27% HRT383

22. Lunch Main Courses HRT383

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

24. HRT383 Lunch Main Courses 100% Popularity 7.27% 0 Contribution Margin $6.31 HRT383

25. Lunch Main Courses HRT383

26. Lunch Main Courses HRT383

27. Lunch Main Courses HRT383

28. 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

29. Main Courses HRT383

30. Up Selling • Manager’s Special HRT383

31. 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

32. Focal Points Single Sheet Menu Twofold Menu HRT383

33. Focal Points Focal Point Threefold Menu HRT383

34. 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

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

36. 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

37. Price Placement HRT383

38. Price Placement HRT383

39. 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

40. 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