Maximizing your profits with menu engineering
entirely another to understand the relationship between the
Restaurants operate on thin margins. A major component in
margin made on an item and the quantity of the item sold. In
maximizing your profit is menu engineering. Costing your
order to master menu engineering, you must understand how
recipes, reviewing the menu item sales and understanding
this relationship works and what to do with the results.
their relationship against other items within their categories
are keys to success.
Begin by making a chart similar to the one below, which
details four rules of thumb and provides suggested actions for
Many restaurant operators spend years chasing after the
items in each category. By placing your own menu items on a
explanation for the variance between theoretical food cost and
chart, you will be able to see which category your menu items
actual food cost. Do not mistake menu engineering for recipe
fall into and what action should be taken. (Note: these are
costing. Some operators say they should have a 33 percent
only a few of what could be several solutions.)
food cost because that is how they cost out their recipes. It’s
one thing to cost out your recipes at a certain percent. It’s
MENU ENGINEERING REPORT
Appetizers Qty. % Margin
q1 Fried cheese 82 72
q2 RI calamari 63 66.8
q3 Crab cakes 61 71.4
q4 Garlic shrimp 27 80
Re-think q5 Chinese rib 18 71.7
q6 Deviled eggs 132 76.9
Re-plate items with a high margin and low sales. Retain items with a high margin and high sales.
For example, increase the sales of menu items in this category These are your gold stars. Make sure that you can maximize
by making them the daily special. your margins on these items in hope of driving income to the
Re-think items with a low margin and low sales.
Re-price items with a low margin and high sales.
Either change the recipe to increase the margin or remove it
from the menu. With high demand comes the ability to increase the sale price
of an item. Hopefully, the increase in price will increase the
margin (and the bottom line).
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When plotting your menu items on the
chart, remember that each has a recipe
and a sale price. In order to obtain an
accurate margin, each recipe must first
The Sterenberg Group, Inc. is an independent,
be costed out. Margin is defined as sale
visionary certiﬁed public accounting ﬁrm that
price minus recipe cost. In order to
focuses on the needs of people associated with
place an item on its corresponding point
the hospitality, restaurant and bar industry.
on the grid, you also need the quantity
sold. (If you don’t have a menu costing Quality thoughts, quality results.
Tax Management Payroll Services
program, it is suggested that you update Accounting Services Business Valuations
Fred Sterenberg, CPA, CMA
this information monthly.)
Call 360.695.1229 for a free one hour
Next, take your menu items and Fax: 360.695.1393
rank them within their menu types 1321 C Ofﬁcers Row
Vancouver, WA 98661 *WRA members only
(appetizers, soups/salads, entrées, etc.).
It is important to keep the items within
their menu types; trying to evaluate
appetizers against entrées is not an
accurate comparison. Once they are
ranked, plot them on the grid according
to the relationship between margin and
Now, you will be able to assess each
item. Is the relationship between margin
and quantity sold a growing trend, or
the result of a spike in one of the recipe
ingredients or a decline in the sales of an
The next step is to take the results of
each menu item and chart them over
several months (weeks with a menu
engineering program). Understanding
the relationship between sales and
margin over a period of time will lessen
the chances of making a knee-jerk
decision based on temporary situations.
What should you do with all this
information? It’s funny how we
sometimes talk ourselves out of the
things that we know to be true: “That’s
my mom’s secret recipe for spinach
walnut salad! I can’t believe it doesn’t
sell!” At the end of the day, numbers are
not good or bad, they are either justified
continued on page 18 7
June 2007 |
menu engineering continued from page 7 James Beard continued from page 15
or unjustified. You need to identify the specific reasons restaurant.
why items either are not selling or are not profitable and do
something about it. “We didn’t want to create a special occasion restaurant that you go
to once or twice a year. We wanted a more casual place that you
Keep in mind that this is not a game played by one person could come to often,” said Sundstrom.
in your organization. Your guests, team and vendors all play
a role in your success. Share your results with your staff and Sundstrom was one of many Northwest chefs nominated for the
solicit their input. More often than not, you will validate award. Other nominees included Scott Dolich (Park Kitchen,
what they have long suspected. And, they may have additional Portland, Ore.); Maria Hines (Tilth, Seattle, Wash.); Joseba Jiménez
input to provide, given to them from your guests. de Jiménez (The Harvest Vine, Seattle, Wash.); and Holly Smith
(Café Juanita, Kirkland, Wash.).
Also share your results with key vendors. By being informed
and providing them with good information, they can assist
you in sourcing key items, helping you in not only moving
the item into the proper quadrant on the grid, but also
keeping an item in that quadrant longer.
Matt Vannini is partner at Restaurant Solutions Inc. (RSI). RSI
takes restaurant accounting off your plate, allowing you to focus
on food, not finances. Call 253.405.6259 or visit them online at
Johnathan Sundstrom receives
James Beard Award for best
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