Menu Engineering

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  • Menu Engineering

    1. 1. Menu Engineering To : Mr Syed Akhtar Abbas Associate Professor Submitted by Rohit Bajaj Student of VIII Sem(Final) of 4 year Degree course in Hospitality Management at FHRAI IHM Greater Noida
    2. 2. Objectives <ul><li>By the completion of this presentation you should be able to: </li></ul><ul><ul><li>Analyze a menu for profitability </li></ul></ul><ul><ul><li>Apply menu engineering to menu analysis </li></ul></ul><ul><ul><li>Apply menu scoring methods to menu analysis. </li></ul></ul>
    3. 3. Important Terms <ul><li>Menu engineering </li></ul><ul><ul><li>Plowhorses </li></ul></ul><ul><ul><li>Puzzles </li></ul></ul><ul><ul><li>Stars </li></ul></ul><ul><ul><li>Dogs </li></ul></ul><ul><li>Menu scoring </li></ul><ul><li>Placement </li></ul><ul><li>Pricing </li></ul>
    4. 4. Introduction <ul><li>This presentation explains how to evaluate a menu </li></ul><ul><li>When measuring a menu to see if it is successful 2 criteria must be met to declare it a winner: </li></ul><ul><ul><li>Must be profitable in terms of individual item profitability </li></ul></ul><ul><ul><li>Most profitable item must be selling the best. </li></ul></ul>
    5. 5. Stars, Plowhorses, Puzzles, & Dogs <ul><li>1 st Method, called menu engineering, developed by Donald Smith Ph.D., Westin Hotels Distinguished Professor at Washington State University </li></ul><ul><li>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. </li></ul>
    6. 6. Contributing Margin <ul><li>Determine the contributing margin (CM) of each item </li></ul><ul><ul><li>CM same as item’s Gross Profit </li></ul></ul><ul><ul><li>Use total food cost (include garnish, accompaniments served with entrée such as salad, potatoes, rolls, butter etc.). </li></ul></ul>Selling Price – Food Cost = Contributing Margin
    7. 7. Contribution Margin Dollars vs. Food Cost Percentage $0.60 $3.00 $7.50 Cont. Margin $ 20% 25% 50% Food Cost % $0.15 $1.00 $7.50 Cost $0.75 $4.00 $15.00 Selling Price Coffee Fish Sandwich Steak Dinner
    8. 8. (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) Menu Engineering 39.93% $2,004.32 $7.03 $1,173.43 $3,177.75 285 320.51 712.25 45 12.95 55 Filet 285.98 922.50 31 10.25 90 Turkey 340.58 896.25 38 11.95 75 Beef $226.36 $646.75 35 $9.95 65 Chicken Total Food Cost (4) X (5) Total Sales (2) X (3) Food Cost Percentage Item Sales Price Number Sold Menu Item (6) (5) (4) (3) (2) (1) 7.12 7.07 7.41 $6.47 C/M (10)
    9. 9. Menu Engineering <ul><li>(11) Average Popularity </li></ul><ul><li>80% of the average item sales per entrée: </li></ul><ul><li>100 / 4 X 80% = 20% </li></ul><ul><li>(12) Popularity of each menu item: </li></ul><ul><li>Number of portions sold divided by total number of meals sold </li></ul><ul><li>Chicken: 65 / 285 = 22.8% </li></ul><ul><li>Beef: 75 / 285 = 26.3% </li></ul><ul><li>Turkey: 90 / 285 = 31.6% </li></ul><ul><li>Filet: 55 / 285 = 19.3% </li></ul>
    10. 10. Menu Engineering Analysis 100% 20% Popularity 0 Contribution Margin 7.03 8 *Filet (7.12/19.3%) Puzzle Dog Star *Turkey (7.07/31.6%) *Beef (7.4126.3%) Plowhorse *Chicken (6.47/22.8%)
    11. 11. The Four Key Menu Categories <ul><li>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 </li></ul><ul><li>Stars have both high popularity and high CM </li></ul><ul><li>Puzzles have relatively low popularity and high margins. </li></ul><ul><li>Dogs are both low in popularity and CM </li></ul>
    12. 12. Menu Engineering Analysis 100% 20% Popularity 0 Contribution Margin 7.03 8 *Filet (7.12/19.3%) Puzzle Dog Star *Turkey (7.07/31.6%) *Beef (7.4126.3%) Plowhorse *Chicken (6.47/22.8%)
    13. 13. Menu Scoring <ul><li>Method developed by Michael Hurst, Professor of Restaurant Management at Florida International University, a restaurant owner and past president of the NRA. </li></ul><ul><li>Devised to ascertain whether menu changes (additions, deletions, and price adjustments) actually improved the profitability of the menu by comparisons of a menu score. </li></ul><ul><li>One advantage: quick to complete because it does not track every menu item. </li></ul>
    14. 14. Menu Scoring <ul><li>Combines profitability and popularity of menu items to arrive a a consensus score </li></ul><ul><li>The higher the score, the better the menu </li></ul><ul><li>An existing menu can be scored, then compared with a proposed menu, after sales for the new menu have been estimated. </li></ul>
    15. 15. <ul><li>Meal Check Average: 5 / 2 = </li></ul><ul><li>Gross Profit: 5 – 6 = </li></ul><ul><li>Gross Profit %: 8 / 5 = </li></ul><ul><li>Gross Profit Average Meal: 7 x 9 = </li></ul><ul><li>Total Meals Served: </li></ul><ul><li>Popularity of Meals Analyzed: 2 / 11 = </li></ul><ul><li>Menu Score: 10 x 12 = </li></ul>$11.15 $2,004.32 63% $7.02 450 63% 4.42 Menu Scoring $1,173.43 $3,177.75 285 Total 320.51 712.25 45 12.95 55 Filet 285.98 922.50 31 10.25 90 Turkey 340.58 896.25 38 11.95 75 Beef $226.36 $646.75 35 $9.95 65 Chicken Total Food Cost (4) X (5) Total Sales (2) X (3) Food Cost Percentage Item Sales Price Number Sold Menu Item (6) (5) (4) (3) (2) (1)
    16. 16. The Higher the Score the More Profitable the Menu <ul><li>This method takes into account not only # of items sold, but also their contributing profit </li></ul>
    17. 17. Placement <ul><li>Two Schools of thought </li></ul><ul><li>Menu Sequence </li></ul><ul><ul><li>Menu should follow progression of meal </li></ul></ul><ul><li>Focal Points </li></ul><ul><ul><li>Use focal points on the menu to push certain menu items </li></ul></ul>
    18. 18. Focal Points Single Sheet Menu Twofold Menu Focal Point Focal Point
    19. 19. Focal Points Focal Point Threefold Menu 4 5 2 3
    20. 20. Specials <ul><li>Larger Bolder type than the rest of menu </li></ul><ul><li>Longer description </li></ul><ul><li>Concept of Closure </li></ul><ul><ul><li>people’s eyes are drawn to what ever is enclosed by a box </li></ul></ul><ul><li>Color , illustration, and/or pictures, bullets can be used to draw attention to signature items. </li></ul>
    21. 21. Branding <ul><li>Fast food </li></ul><ul><li>Coke / Pepsi </li></ul><ul><li>TGIF </li></ul><ul><li>Jack Daniels </li></ul>
    22. 22. Menu Pricing <ul><li>Odd-Cents pricing </li></ul><ul><ul><li>Majority of prices end in either a “5” or a “9” </li></ul></ul><ul><li>Price rounding. </li></ul><ul><ul><li>Within certain price bands, price increases have little negative impact on customers </li></ul></ul><ul><li>Placement </li></ul>
    23. 23. Price Placement Swordfish Steak…..…$14.99 Lamb Steak………….$12.99 Lemon Sole………….$11.99 Baked Chicken……….$8.99 SWORDFISH STEAK Charcoal grilled served with beurre blanc $14.99 LAMB STEAK Center cut of lamb served on a bed of rice $12.99 LEMON SOLE Fresh filets sautéed with lemon caper sauce $11.99 BAKED CHICKEN Tender pieces of chicken breast $8.99
    24. 24. Price Placement SWORDFISH STEAK Charcoal grilled served with beurre blanc Fourteen dollars and ninety nine cents LAMB STEAK Center cut of lamb served on a bed of rice Twelve dollars and ninety nine cents LEMON SOLE Fresh filets sautéed with lemon caper sauce Eleven dollars and ninety nine cents BAKED CHICKEN Tender pieces of chicken breast Eight dollars and ninety nine cents
    25. 25. Conclusion <ul><li>Menu analysis is important </li></ul><ul><li>If demographic studies, internal capacities, cost cards, and markups have been executed correctly, the score should be a good one </li></ul><ul><li>Analysis should be done using either the Smith or the Hurst methods to ascertain the profitability of the menu </li></ul><ul><li>If the analysis shows a poor menu, make improvements </li></ul><ul><li>Good menu: first step has been taken toward running a profitable operation. </li></ul><ul><li>It’s just that simple </li></ul>
    26. 26. Thank you
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