Menu Analysis & Engineering

1. Menu Analysis & Engineering HRT383 By Dr. Ben Dewald

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 HRT 382

3. 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. HRT 382

4. Menu engineering Plowhorses Puzzles Stars Dogs Menu scoring Placement Pricing Important Terms HRT 382

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. HRT 382

6. 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. Stars, Plowhorses, Puzzles, & Dogs Puzzle Plow Horse Star Dog HRT 382

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 HRT 382

8. Contribution MarginDollars vs. Food Cost Percentage HRT 382

9. Menu Engineering 39.93% $2,004.32 $7.03 (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) HRT 382

10. Menu Engineering (11) Average Popularity 80% 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 sold Chicken: 65 / 285 = 22.8% Beef: 75 / 285 = 26.3% Turkey: 90 / 285 = 31.6% Filet: 55 / 285 = 19.3% HRT 382

11. Menu Engineering Analysis 100% Popularity 20% 0 Contribution Margin 7.03 8 HRT 382

12. 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 HRT 382

13. Menu Engineering Analysis 100% Popularity 20% 0 Contribution Margin 7.03 8 HRT 382

14. 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. HRT 382

15. 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. HRT 382

16. Menu Scoring • Meal Check Average: 5 / 2 = • Gross Profit: 5 – 6 = • Gross Profit %: 8 / 5 = • Gross Profit Average Meal: 7 x 9 = • Total Meals Served: • Popularity of Meals Analyzed: 2 / 11 = • Menu Score: 10 x 12 = $11.15 $2,004.32 63% $7.02 450 63% 4.42 HRT 382

17. The Higher the Score the More Profitable the Menu • This method takes into account not only # of items sold, but also their contributing profit HRT 382

18. 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 HRT 382

19. Focal Points Single Sheet Menu Twofold Menu HRT 382

20. Focal Points Focal Point Threefold Menu HRT 382

21. 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. HRT 382

22. Branding • Fast food • Coke / Pepsi • TGIF • Jack Daniels HRT 382

23. 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 HRT 382

24. Price Placement HRT 382

25. Price Placement HRT 382

26. 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 HRT 382

27. 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 HRT 382