menu engineering
DESCRIPTION
F&B Service Important FunctionTRANSCRIPT
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Menu Engineering
To : Mr Syed Akhtar AbbasAssociate Professor
Submitted by Rohit Bajaj Student of VIII Sem(Final) of 4 year Degree course in Hospitality Management at FHRAI IHM Greater Noida
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Objectives
By the completion of this presentation you should be able to: Analyze a menu for profitability Apply menu engineering to menu analysis Apply menu scoring methods to menu analysis.
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Important Terms
Menu engineering Plowhorses Puzzles Stars Dogs
Menu scoring Placement Pricing
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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:
1. Must be profitable in terms of individual item profitability
2. Most profitable item must be selling the best.
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Stars, Plowhorses, Puzzles, & Dogs
1st 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.
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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
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Contribution MarginDollars vs. Food Cost Percentage
Steak Dinner Fish Sandwich Coffee
Selling Price $15.00 $4.00 $0.75
Cost $7.50 $1.00 $0.15
Food Cost % 50% 25% 20%
Cont. Margin $ $7.50 $3.00 $0.60
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(1) (2) (3) (4) (5) (6)
Menu Item Number Sold
Item Sales Price
Food Cost Percentage
Total Sales
(2) X (3)
Total Food Cost
(4) X (5)
Chicken 65 $9.95 35 $646.75 $226.36
Beef 75 11.95 38 896.25 340.58
Turkey 90 10.25 31 922.50 285.98
Filet 55 12.95 45 712.25 320.51
285 $3,177.75 $1,173.43
(7) Food Cost Percentage: (6) / (5) = (8) Total Contribution to Margin: (5) – (6) =(9) Average Contribution Margin/ Customer: (8) / (2) =(10) Contribution Margin per menu Item: (5) – (6)
(2)
(10)
C/M
$6.47
7.41
7.07
7.12
Menu Engineering
39.93%$2,004.32
$7.03
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Menu Engineering
(11) Average Popularity80% of the average item sales per entrée: 100 / 4 X 80% = 20%
(12) Popularity of each menu item:Number of portions sold divided by total number of meals soldChicken: 65 / 285 = 22.8%Beef: 75 / 285 = 26.3%Turkey: 90 / 285 = 31.6%Filet: 55 / 285 = 19.3%
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Menu Engineering AnalysisPlowhorse
*Chicken (6.47/22.8%)
Star
*Turkey (7.07/31.6%)
*Beef (7.4126.3%)
Dog
*Filet (7.12/19.3%)
Puzzle
100%
20%
Popularity
0 Contribution Margin 7.03 8
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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. Dogs are both low in popularity and CM
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Menu Engineering AnalysisPlowhorse
*Chicken (6.47/22.8%)
Star
*Turkey (7.07/31.6%)
*Beef (7.4126.3%)
Dog
*Filet (7.12/19.3%)
Puzzle
100%
20%
Popularity
0 Contribution Margin 7.03 8
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Menu Scoring
Method developed by Michael Hurst, Professor of Restaurant Management at Florida International University, a restaurant owner and past president of the NRA.
Devised to ascertain whether menu changes (additions, deletions, and price adjustments) actually improved the profitability of the menu by comparisons of a menu score.
One advantage: quick to complete because it does not track every menu item.
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Menu Scoring
Combines profitability and popularity of menu items to arrive a a consensus score
The higher the score, the better the menu An existing menu can be scored, then
compared with a proposed menu, after sales for the new menu have been estimated.
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(1) (2) (3) (4) (5) (6)
Menu Item Number Sold
Item Sales Price
Food Cost Percentage
Total Sales
(2) X (3)
Total Food Cost
(4) X (5)
Chicken 65 $9.95 35 $646.75 $226.36
Beef 75 11.95 38 896.25 340.58
Turkey 90 10.25 31 922.50 285.98
Filet 55 12.95 45 712.25 320.51
Total 285 $3,177.75 $1,173.43
7) Meal Check Average: 5 / 2 = 8) Gross Profit: 5 – 6 =9) Gross Profit %: 8 / 5 =10) Gross Profit Average Meal: 7 x 9
=11) Total Meals Served:12) Popularity of Meals Analyzed: 2 / 11 =13) Menu Score: 10 x 12 =
$11.15$2,004.32
63%$7.02
45063%4.42
Menu Scoring
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The Higher the Score the More Profitable the Menu
This method takes into account not only # of items sold, but also their contributing profit
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Placement
Two Schools of thought
1. Menu Sequence Menu should follow progression of meal
2. Focal Points Use focal points on the menu to push certain
menu items
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Focal Points
Focal Point
Focal Point
Single Sheet Menu Twofold Menu
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Focal Points
2
3
4
5
Focal Point
Threefold Menu
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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.
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Branding
Fast food Coke / Pepsi TGIF Jack Daniels
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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
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Price Placement
Baked Chicken……….$8.99
Lemon Sole………….$11.99
Lamb Steak………….$12.99
Swordfish Steak…..…$14.99
BAKED CHICKENTender pieces of chicken breast
$8.99
LEMON SOLEFresh filets sautéed with lemon caper sauce
$11.99
LAMB STEAK Center cut of lamb served on a bed of rice
$12.99
SWORDFISH STEAKCharcoal grilled served with beurre blanc
$14.99
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Price Placement
BAKED CHICKENTender pieces of chicken breast
Eight dollars and ninety nine cents
LEMON SOLEFresh filets sautéed with lemon caper sauce
Eleven dollars and ninety nine cents
LAMB STEAK Center cut of lamb served on a bed of rice
Twelve dollars and ninety nine cents
SWORDFISH STEAKCharcoal grilled served with beurre blanc
Fourteen dollars and ninety nine cents
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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
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Thank you