This document discusses methods for analyzing and engineering menus to maximize profitability. It describes two key methods - menu engineering and menu scoring. Menu engineering involves categorizing menu items as stars, plowhorses, puzzles or dogs based on their profitability and popularity. Menu scoring combines profitability and popularity into a single score to compare existing and proposed menus. The document provides details on how to apply these methods and highlights other factors like placement, pricing and use of focal points to optimize a menu.

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

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.

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

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.

6. Stars, Plowhorses, Puzzles, & Dogs 1 st 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. Plow Horse Dog Puzzle Star

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

8. 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

9. (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)

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%

11. 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%)

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

13. 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%)

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.

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.

16. 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 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)

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

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

19. Focal Points Single Sheet Menu Twofold Menu Focal Point Focal Point

20. Focal Points Focal Point Threefold Menu 4 5 2 3

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.

22. Branding Fast food Coke / Pepsi TGIF Jack Daniels

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

24. 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

25. 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

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

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