Menu Analysis & Engineering

Menu Analysis & Engineering HRT383 Dinner Winter 09

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

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

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

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

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

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

Contribution MarginDollars vs. Food Cost Percentage HRT383

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

Example HRT383

Appetizers HRT383

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

Popularity HRT383

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

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

Menu Engineering HRT383

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

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

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

Main Courses HRT383

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

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

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

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

Main Courses

Up Selling • Your Favorite HRT383

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

Focal Points Single Sheet Menu Twofold Menu HRT383

Focal Points Focal Point Threefold Menu HRT383

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

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

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

Price Placement HRT383

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

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

Menu Analysis & Engineering