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  1. 1. Chapter 5 The Menu: The Foundation for Control Planning and Control for Food and Beverage Operations Seventh Edition (464TXT or 464CIN)© 2009, Educational Institute
  2. 2. Competencies for The Menu: The Foundation for Control 1. Explain how a system of food service control points helps managers carry out critical functions on a daily basis. 2. Describe factors that influence menu planning strategies and identify external and internal factors that influence menu changes. 3. Discuss subjective methods for pricing menu items, and calculate a base selling price for menu items using simple mark-up pricing methods. 4. Calculate a base selling price for menu items using the contribution margin pricing method .© 2009, Educational Institute (continued)
  3. 3. Competencies for The Menu: The Foundation for Control (continued) 5. Calculate a base selling price for menu items using the ratio pricing method. 6. Calculate a base selling price for menu items using prime costs pricing methods. 7. Describe important pricing considerations that affect the final selling price of menu items. 8. Explain the menu engineering method for pricing food and beverage items. 9. Describe menu planning in multi-unit organizations, and discuss how technology can help managers with menu planning, design, and management.© 2009, Educational Institute
  4. 4. Control Points in a Food and Beverage Operation • Menu planning • Purchasing • Receiving • Storing • Issuing • Preparing • Cooking • Holding • Serving • Service© 2009, Educational Institute
  5. 5. Operational Areas Affected by the Menu • Product control procedures • Cost control procedures • Production requirements • Nutritional content of meals • Equipment needs • Sanitation management • Layout and space requirements • Staffing needs • Service requirements • Revenue control procedures© 2009, Educational Institute
  6. 6. Factors in Menu Planning Guest wants/needs/expectations Quality of menu item • Flavor • Consistency • Texture/form/shape • Nutritional content • Visual appeal • Aromatic appeal • Temperature© 2009, Educational Institute (continued)
  7. 7. Factors in Menu Planning (continued) Cost Availability Peak volume production/operating concerns Sanitation Layout Equipment© 2009, Educational Institute
  8. 8. Menu Changes—External Factors • Consumer demands • Economic conditions • Competition • Supply levels • Industry trends© 2009, Educational Institute
  9. 9. Menu Changes—Internal Factors • Facility’s meal pattern • Concept/theme • Operational system • Menu mix© 2009, Educational Institute
  10. 10. Subjective Pricing Methods • Reasonable price • Highest price • Loss leader • Intuitive price© 2009, Educational Institute
  11. 11. Mark-Up Pricing Methods • Ingredients mark-up method • Prime-ingredient mark-up method • Mark-up with accompaniment costs method© 2009, Educational Institute
  12. 12. Mark-Up by Multiplier Issues • Impact of sales mix • Variations in labor and energy costs to produce items • Transfers to and from food department • Theft, overportioning, spoilage • Minor costs add up over time© 2009, Educational Institute
  13. 13. Contribution Margin Pricing Method Step 1 Determine the average contribution margin required per guest by adding non-food costs to required profit and dividing by the number of expected guests. Step 2 Determine the base selling price by adding required average contribution margin per guest to an item’s standard food cost.© 2009, Educational Institute
  14. 14. Ratio Pricing Method Step 1 Determine the ratio of food costs to all other costs plus profit requirements. Step 2 Calculate the amount of non-food costs and profit required for a menu item. Step 3 Determine base selling price by adding result of Step 2 to the standard food cost for the menu item.© 2009, Educational Institute
  15. 15. Prime Costs Pricing Method Step 1 Determine the labor cost per guest by dividing labor costs by the number of expected guests. Step 2 Determine the prime costs per guest by adding the labor cost per guest to the menu item’s food cost. Step 3 Determine the base selling price by dividing the prime costs per guest by the desired prime costs percentage.© 2009, Educational Institute
  16. 16. Pricing Considerations • Value (price relative to quality) • Supply and demand • Volume of business • Competition • Elasticity of demand© 2009, Educational Institute
  17. 17. Menu Engineering Popularity—ordered frequently by guests Profitability—contribution margin Stars: Highly popular and profitable Plowhorses: Not highly profitable but popular Puzzles: Profitable but not very popular Dogs: Not very profitable and not very popular© 2009, Educational Institute
  18. 18. Managing Stars • Maintain rigid specifications • Place in highly visible location on the menu • Test for selling price inelasticity • Use suggestive selling techniques© 2009, Educational Institute
  19. 19. Managing Plowhorses • Increase prices carefully • Test for demand • Relocate item to lower profile on the menu • Shift demand to more profitable items • Combine with lower cost products • Assess the direct labor factor • Consider portion reduction© 2009, Educational Institute
  20. 20. Managing Puzzles and Dogs Managing puzzles • Shift demand to these items • Consider a price decrease • Add value to the items Managing dogs • Remove from the menu • Increase the selling price© 2009, Educational Institute