Menu Engineering

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An article on Menu Engineering written by Restaurant Solutions, Inc. co-founder, Matt Vannini and Director of Restaurant Management Systems at Heartland Payment Systems

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Menu Engineering

  1. 1. 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 100 Re-plate Retain Appetizers 4 6 75 1 3 5 2 Appetizers Qty. % Margin Margin % q1 Fried cheese 82 72 50 q2 RI calamari 63 66.8 q3 Crab cakes 61 71.4 q4 Garlic shrimp 27 80 25 Re-price Re-think q5 Chinese rib 18 71.7 q6 Deviled eggs 132 76.9 0 100 Quantity 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 bottom line. 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). 6 | www.WRAhome.com
  2. 2. 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.) President Call 360.695.1229 for a free one hour fred@sterenberggroup.com Next, take your menu items and Fax: 360.695.1393 consultation today!* rank them within their menu types 1321 C Officers Row Vancouver, WA 98661 *WRA members only (appetizers, soups/salads, entrées, etc.). www.sterenberggroup.com 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 quantity sold. 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 item? 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 |
  3. 3. 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 www.restacct.net. Johnathan Sundstrom receives James Beard Award for best Northwest chef. 18 | www.WRAhome.com

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