Menu Analysis Engineering HRT 383 Lunch Fall

Menu Analysis & Engineering HRT 383 Lunch Fall 08

References w Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp 114 -116. Upper Saddle River, N. J. : Prentice Hall. w Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp. 101 -115. 3 rd ed. Upper Saddle River, N. J. : Prentice Hall, TX 911. 3. M 45 D 79 2002 w CD-ROM TX 911. 3. M 45 D 79 2002 3/16/2018 HRT 383 2

Objectives By the completion of this presentation you should be able to: n n 3/16/2018 Analyze a menu for profitability Apply menu engineering to menu analysis Price menu items Locate menu items on a menu. HRT 383 3

Important Terms w Menu engineering n n 3/16/2018 w Menu Plowhorses Puzzles Stars Dogs n n HRT 383 Placement Pricing 4

Introduction This presentation explains how to evaluate a menu w When measuring a menu to see if it is successful 2 criteria must be met to declare it a winner: 1. 2. 3/16/2018 Must be profitable in terms of individual item profitability Most profitable item must be selling the best. HRT 383 5

Stars, Plowhorses, Puzzles, & Dogs w Method, called menu engineering, developed by Donald Smith Ph. D. , Westin Hotels Distinguished Professor at Washington State University w 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. Star 3/16/2018 Do g Plow Horse HRT 383 Puzzle 6

Contributing Margin w Determine the contributing margin (CM) of each item Selling Price – Food Cost = Contributing Margin n n 3/16/2018 CM same as item’s Gross Profit Use total food cost (include garnish, accompaniments served with entrée such as salad, potatoes, rolls, butter etc. ). HRT 383 7

Contribution Margin Dollars vs. Food Cost Percentage Sirloin Pasta Coffee Selling Price $22. 00 $18. 00 $2. 00 Cost $10. 36 $4. 54 $0. 19 Food Cost % 47. 09% 25. 22% 9. 5% Cont. Margin $ $11. 64 $13. 46 $1. 81 3/16/2018 HRT 383 8

Contribution Margin Dollars vs. Food Cost Percentage Sirloin Pasta Coffee Selling Price $22. 00 $18. 00 $2. 00 Cost $10. 36 $4. 54 $0. 19 Food Cost % 47. 09% 25. 22% 9. 5% Cont. Margin $ $11. 64 $13. 46 $1. 81 3/16/2018 HRT 383 9

Data Trap Fall ‘ 08 w See Lunch Hand Out 3/16/2018 HRT 383 10

Desserts Menu Plate F/C Contribution MENU ITEM Price Cost % Margin Sold Income Cost RKR Apple Crisp 5. 00 0. 70 14. 00% 4. 30 58 290. 00 40. 60 46. 40% Sampler 5. 00 0. 84 16. 80% 4. 16 18 90. 00 15. 12 14. 40% Choc Bread Pudding 5. 00 1. 12 22. 40% 3. 88 32 160. 00 35. 84 25. 60% Mngr Special 5. 00 1. 12 22. 40% 3. 88 17 85. 00 19. 04 13. 60% 17. 7% 4. 12 125 6. 25 110. 60 TOTAL DESSERTS 3/16/2018 HRT 383 Quantity Net Total Popularity Menu Engineering 11

Popularity w Average Popularity 80% of the average item sales per Dessert: 100 / 4 X 80% = 20% 3/16/2018 HRT 383 12

Desserts Menu Plate F/C Contribution MENU ITEM Price Cost % Margin Sold Income Cost RKR Apple Crisp 5. 00 0. 70 14. 00% 4. 30 58 290. 00 40. 60 46. 40% Sampler 5. 00 0. 84 16. 80% 4. 16 18 90. 00 15. 12 14. 40% Choc Bread Pudding 5. 00 1. 12 22. 40% 3. 88 32 160. 00 35. 84 25. 60% Mngr Special 5. 00 1. 12 22. 40% 3. 88 17 85. 00 19. 04 13. 60% 17. 7% 4. 12 125 6. 25 110. 60 20% TOTAL DESSERTS 3/16/2018 HRT 383 Quantity Net Total Popularity Menu Engineering 13

HRT 383 Lunch Desserts 100% Plowhorse Star Popularity 20% Dog Puzzle 3/16/2018 0 Contribution Margin $4. 12 HRT 383 14

HRT 383 Lunch Desserts 100% Plowhorse Star * Apple Crisp $4. 30/46. 40% Popularity 20% 3/16/2018 * Choc BP $3. 88/25. 60% * Mngr Special $3. 88/19. 04% * Sampler $4. 16/14. 4% Dog Puzzle 0 Contribution Margin $4. 12 HRT 383 15

Desserts Menu Plate F/C Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering RKR Apple Crisp 5. 00 0. 70 14. 00% 4. 30 58 290. 00 40. 60 46. 40% Star Sampler 5. 00 0. 84 16. 80% 4. 16 18 90. 00 15. 12 14. 40% Puzzle Choc Bread Pudding 5. 00 1. 12 22. 40% 3. 88 32 160. 00 35. 84 25. 60% Plow Horse A la Carte Mngr Special 5. 00 1. 12 22. 40% 3. 88 17 85. 00 19. 04 13. 60% Dog 17. 7% 4. 12 125 6. 25 110. 60 20% TOTAL DESSERTS 3/16/2018 HRT 383 16

The Four Key Menu Categories w 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 w Stars have both high popularity and high CM w Puzzles have relatively low popularity and high margins; lower price. w Dogs are both low in popularity and CM; eliminate 3/16/2018 HRT 383 17

HRT 383 Lunch Desserts 100% Plowhorse Star Popularity 20% 3/16/2018 * Apple Crisp $4. 30/46. 40% Increase $ Cut Portion ? * Choc BP $3. 88/25. 60% * Mngr Special $3. 88/19. 04% * Sampler Eliminate? $4. 16/14. 4% Dog Puzzle 0 Contribution Margin $4. 12 HRT 383 18

HRT 383 Lunch Desserts 100% Plowhorse Star Popularity Increase $ * Apple Crisp Cut Portion ? $2. 98/44. 83% 20% 3/16/2018 * Crème Brulee $4. 55/22. 76% * Sampler $3. 29/18. 62% Eliminate? * Choc BP Puzzle $3. 30/13. 79% Dog 0 Contribution Margin $3. 44 HRT 383 19

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Asian Salad w/ Chix 10. 00 3. 67 36. 70% 6. 33 17 170. 00 62. 39 5. 25% 5. 56% Asian Salad 8. 00 2. 23 27. 88% 5. 77 1 8. 00 2. 23 0. 31% South. Western Salad 10. 00 2. 95 29. 50% 7. 05 24 240. 00 70. 80 7. 41% Cobb Salad 10. 00 1. 94 19. 40% 8. 06 16 160. 00 31. 04 4. 94% Caesar Salad 8. 00 0. 61 7. 63% 7. 39 2 16. 00 1. 22 0. 62% 3. 40% Caesar Salad with Chicken 10. 00 1. 26 12. 60% 8. 74 6 60. 00 7. 56 1. 85% Caesar Salad with Shrimp 10. 00 3. 49 34. 90% 6. 51 3 30. 00 10. 47 0. 93% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 16 128. 00 52. 00 4. 94% 16. 98% Quesadilla with Chicken 10. 00 3. 90 39. 00% 6. 10 25 250. 00 97. 50 7. 72% Quesadilla with Shrimp 10. 00 6. 13 61. 30% 3. 87 14 140. 00 85. 82 4. 32% Veggie Sandwich 7. 00 1. 36 19. 43% 5. 64 20 140. 00 27. 20 6. 17% Burger 9. 00 2. 89 32. 11% 6. 11 31 279. 00 89. 59 9. 57% 18. 52% Burger - Cheese 10. 00 2. 99 29. 90% 7. 01 8 80. 00 23. 92 2. 47% Burger - Bacon 10. 00 3. 09 30. 90% 6. 91 5 50. 00 15. 45 1. 54% Burger - Cheese & Bacon 11. 00 3. 19 29. 00% 7. 81 16 176. 00 51. 04 4. 94% Turkado 8. 00 2. 56 32. 00% 5. 44 38 304. 00 97. 28 11. 73% Spaghetti Mahi Steak 9. 00 12. 00 14. 00 1. 80 5. 90 7. 24 20. 00% 49. 17% 51. 71% 7. 20 6. 10 6. 76 18 37 27 162. 00 444. 00 378. 00 32. 40 218. 30 195. 48 5. 56% 11. 42% 8. 33% SUBTOTAL MAIN 3/16/2018 DISHES 36. 44% HRT 383 6. 31 324 3215. 00 1171. 69 20

Popularity w Average Popularity 80% of the average item sales per Main Dishes: 100 / 11 X 80% = 7. 27% 3/16/2018 HRT 383 21

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Asian Salad w/ Chix 10. 00 3. 67 36. 70% 6. 33 17 170. 00 62. 39 5. 25% 5. 56% Asian Salad 8. 00 2. 23 27. 88% 5. 77 1 8. 00 2. 23 0. 31% South. Western Salad 10. 00 2. 95 29. 50% 7. 05 24 240. 00 70. 80 7. 41% Cobb Salad 10. 00 1. 94 19. 40% 8. 06 16 160. 00 31. 04 4. 94% Caesar Salad 8. 00 0. 61 7. 63% 7. 39 2 16. 00 1. 22 0. 62% 3. 40% Caesar Salad with Chicken 10. 00 1. 26 12. 60% 8. 74 6 60. 00 7. 56 1. 85% Caesar Salad with Shrimp 10. 00 3. 49 34. 90% 6. 51 3 30. 00 10. 47 0. 93% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 16 128. 00 52. 00 4. 94% 16. 98% Quesadilla with Chicken 10. 00 3. 90 39. 00% 6. 10 25 250. 00 97. 50 7. 72% Quesadilla with Shrimp 10. 00 6. 13 61. 30% 3. 87 14 140. 00 85. 82 4. 32% Veggie Sandwich 7. 00 1. 36 19. 43% 5. 64 20 140. 00 27. 20 6. 17% Burger 9. 00 2. 89 32. 11% 6. 11 31 279. 00 89. 59 9. 57% 18. 52% Burger - Cheese 10. 00 2. 99 29. 90% 7. 01 8 80. 00 23. 92 2. 47% Burger - Bacon 10. 00 3. 09 30. 90% 6. 91 5 50. 00 15. 45 1. 54% Burger - Cheese & Bacon 11. 00 3. 19 29. 00% 7. 81 16 176. 00 51. 04 4. 94% Turkado 8. 00 2. 56 32. 00% 5. 44 38 304. 00 97. 28 11. 73% Spaghetti Mahi Steak 9. 00 12. 00 14. 00 1. 80 5. 90 7. 24 20. 00% 49. 17% 51. 71% 7. 20 6. 10 6. 76 18 37 27 162. 00 444. 00 378. 00 32. 40 218. 30 195. 48 5. 56% 11. 42% 8. 33% SUBTOTAL MAIN 3/16/2018 DISHES 36. 44% HRT 383 6. 31 324 3215. 00 1171. 69 7. 27% 22

Exercise w Please work with your fellow students and come up with suggestions/decisions. 3/16/2018 HRT 383 23

HRT 383 Lunch Main Courses 100% Plowhorse Star Popularity 7. 27% Dog 3/16/2018 Puzzle 0 Contribution Margin $6. 31 HRT 383 24

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Asian Salad w/ Chix 10. 00 3. 67 36. 70% 6. 33 17 170. 00 62. 39 5. 25% 5. 56% Asian Salad 8. 00 2. 23 27. 88% 5. 77 1 8. 00 2. 23 0. 31% South. Western Salad 10. 00 2. 95 29. 50% 7. 05 24 240. 00 70. 80 7. 41% Cobb Salad 10. 00 1. 94 19. 40% 8. 06 16 160. 00 31. 04 4. 94% Caesar Salad 8. 00 0. 61 7. 63% 7. 39 2 16. 00 1. 22 0. 62% 3. 40% Caesar Salad with Chicken 10. 00 1. 26 12. 60% 8. 74 6 60. 00 7. 56 1. 85% Caesar Salad with Shrimp 10. 00 3. 49 34. 90% 6. 51 3 30. 00 10. 47 0. 93% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 16 128. 00 52. 00 4. 94% 16. 98% Quesadilla with Chicken 10. 00 3. 90 39. 00% 6. 10 25 250. 00 97. 50 7. 72% Quesadilla with Shrimp 10. 00 6. 13 61. 30% 3. 87 14 140. 00 85. 82 4. 32% Veggie Sandwich 7. 00 1. 36 19. 43% 5. 64 20 140. 00 27. 20 6. 17% Burger 9. 00 2. 89 32. 11% 6. 11 31 279. 00 89. 59 9. 57% 18. 52% Burger - Cheese 10. 00 2. 99 29. 90% 7. 01 8 80. 00 23. 92 2. 47% Burger - Bacon 10. 00 3. 09 30. 90% 6. 91 5 50. 00 15. 45 1. 54% Burger - Cheese & Bacon 11. 00 3. 19 29. 00% 7. 81 16 176. 00 51. 04 4. 94% Turkado 8. 00 2. 56 32. 00% 5. 44 38 304. 00 97. 28 11. 73% Spaghetti Mahi Steak 9. 00 12. 00 14. 00 1. 80 5. 90 7. 24 20. 00% 49. 17% 51. 71% 7. 20 6. 10 6. 76 18 37 27 162. 00 444. 00 378. 00 32. 40 218. 30 195. 48 5. 56% 11. 42% 8. 33% SUBTOTAL MAIN 3/16/2018 DISHES 36. 44% HRT 383 6. 31 324 3215. 00 1171. 69 7. 27% 25

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Asian Salad w/ Chix 10. 00 3. 67 36. 70% 6. 33 17 170. 00 62. 39 5. 25% 5. 56% Asian Salad 8. 00 2. 23 27. 88% 5. 77 1 8. 00 2. 23 0. 31% South. Western Salad 10. 00 2. 95 29. 50% 7. 05 24 240. 00 70. 80 7. 41% Cobb Salad 10. 00 1. 94 19. 40% 8. 06 16 160. 00 31. 04 4. 94% Caesar Salad 8. 00 0. 61 7. 63% 7. 39 2 16. 00 1. 22 0. 62% 3. 40% Caesar Salad with Chicken 10. 00 1. 26 12. 60% 8. 74 6 60. 00 7. 56 1. 85% Caesar Salad with Shrimp 10. 00 3. 49 34. 90% 6. 51 3 30. 00 10. 47 0. 93% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 16 128. 00 52. 00 4. 94% 16. 98% Quesadilla with Chicken 10. 00 3. 90 39. 00% 6. 10 25 250. 00 97. 50 7. 72% Quesadilla with Shrimp 10. 00 6. 13 61. 30% 3. 87 14 140. 00 85. 82 4. 32% Veggie Sandwich 7. 00 1. 36 19. 43% 5. 64 20 140. 00 27. 20 6. 17% Burger 9. 00 2. 89 32. 11% 6. 11 31 279. 00 89. 59 9. 57% 18. 52% Burger - Cheese 10. 00 2. 99 29. 90% 7. 01 8 80. 00 23. 92 2. 47% Burger - Bacon 10. 00 3. 09 30. 90% 6. 91 5 50. 00 15. 45 1. 54% Burger - Cheese & Bacon 11. 00 3. 19 29. 00% 7. 81 16 176. 00 51. 04 4. 94% Turkado 8. 00 2. 56 32. 00% 5. 44 38 304. 00 97. 28 11. 73% Spaghetti Mahi Steak 9. 00 12. 00 14. 00 1. 80 5. 90 7. 24 20. 00% 49. 17% 51. 71% 7. 20 6. 10 6. 76 18 37 27 162. 00 444. 00 378. 00 32. 40 218. 30 195. 48 5. 56% 11. 42% 8. 33% SUBTOTAL MAIN 3/16/2018 DISHES 36. 44% HRT 383 6. 31 324 3215. 00 1171. 69 7. 27% 26

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Asian Salad w/ Chix 10. 00 3. 67 36. 70% 6. 33 17 170. 00 62. 39 5. 25% 5. 56% Asian Salad 8. 00 2. 23 27. 88% 5. 77 1 8. 00 2. 23 0. 31% PUZZLE /DOG South. Western Salad 10. 00 2. 95 29. 50% 7. 05 24 240. 00 70. 80 7. 41% PUZZLE Cobb Salad 10. 00 1. 94 19. 40% 8. 06 16 160. 00 31. 04 4. 94% PUZZLE Caesar Salad 8. 00 0. 61 7. 63% 7. 39 2 16. 00 1. 22 0. 62% 3. 40% Caesar Salad with Chicken 10. 00 1. 26 12. 60% 8. 74 6 60. 00 7. 56 1. 85% PUZZLE Caesar Salad with Shrimp 10. 00 3. 49 34. 90% 6. 51 3 30. 00 10. 47 0. 93% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 16 128. 00 52. 00 4. 94% 16. 98% Quesadilla with Chicken 10. 00 3. 90 39. 00% 6. 10 25 250. 00 97. 50 7. 72% PLOW HORSE Quesadilla with Shrimp 10. 00 6. 13 61. 30% 3. 87 14 140. 00 85. 82 4. 32% Veggie Sandwich 7. 00 1. 36 19. 43% 5. 64 20 140. 00 27. 20 6. 17% DOG Burger 9. 00 2. 89 32. 11% 6. 11 31 279. 00 89. 59 9. 57% 18. 52% Burger - Cheese 10. 00 2. 99 29. 90% 7. 01 8 80. 00 23. 92 2. 47% STAR Burger - Bacon 10. 00 3. 09 30. 90% 6. 91 5 50. 00 15. 45 1. 54% Burger - Cheese & Bacon 11. 00 3. 19 29. 00% 7. 81 16 176. 00 51. 04 4. 94% Turkado 8. 00 2. 56 32. 00% 5. 44 38 304. 00 97. 28 11. 73% PLOW HORSE Spaghetti Mahi Steak 9. 00 12. 00 14. 00 1. 80 5. 90 7. 24 20. 00% 49. 17% 51. 71% 7. 20 6. 10 6. 76 18 37 27 162. 00 444. 00 378. 00 32. 40 218. 30 195. 48 5. 56% 11. 42% 8. 33% PUZZLE SUBTOTAL MAIN 3/16/2018 DISHES 36. 44% HRT 383 6. 31 324 3215. 00 1171. 69 7. 27% PLOW HORSE STAR 27

The Four Key Menu Categories w 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 w Stars have both high popularity and high CM w Puzzles have relatively low popularity and high margins; lower price. w Dogs are both low in popularity and CM; eliminate 3/16/2018 HRT 383 28

MENU ITEM Menu Engineering Asian Salad w/ Chix PUZZLE/DOG South. Western Salad PUZZLE Lower $? Cobb Salad PUZZLE Lower $? Caesar Salad PUZZLE Lower $? PLOW HORSE Increase Menu $ or Reduce Portion DOG Eliminate Quesadilla (Chix & Schrimp) Veggie Sandwich Burger (Cheese & Bacon) Recommendation Lower Main Courses $? /Eliminate STAR Turkado PLOW HORSE Increase Menu $ or Reduce Portion Spaghetti PUZZLE Lower $? PLOW HORSE Increase Menu $ or Reduce Portion Mahi 3/16/2018 Steak HRT 383 STAR 29

Up Selling w Manager’s Special 3/16/2018 HRT 383 30

Placement w Two Schools of thought 1. Menu Sequence n Menu should follow progression of meal 2. Focal Points n 3/16/2018 Use focal points on the menu to push certain menu items HRT 383 31

Focal Points Focal Point Single Sheet Menu 3/16/2018 Twofold Menu HRT 383 32

Focal Points 2 4 Focal Point 3 5 Threefold Menu 3/16/2018 HRT 383 33

Specials w Larger Bolder type than the rest of menu w Longer description w Concept of Closure n people’s eyes are drawn to what ever is enclosed by a box w Color, illustration, and/or pictures, bullets can be used to draw attention to signature items. 3/16/2018 HRT 383 34

Branding w Fast food w Coke / Pepsi w TGIF w Jack Daniels 3/16/2018 HRT 383 35

Menu Pricing w Odd-Cents pricing n Majority of prices end in either a “ 5” or a “ 9” w Price rounding. n Within certain price bands, price increases have little negative impact on customers w Placement 3/16/2018 HRT 383 36

Price Placement Baked Chicken………. $8. 99 Lemon Sole…………. $11. 99 Lamb Steak…………. $12. 99 Swordfish Steak…. . …$14. 99 BAKED CHICKEN Tender pieces of chicken breast $8. 99 LEMON SOLE Fresh filets sautéed with lemon caper sauce $11. 99 LAMB STEAK Center cut of lamb served on a bed of rice $12. 99 SWORDFISH STEAK Charcoal grilled served with beurre blanc $14. 99 3/16/2018 HRT 383 37

Price Placement BAKED CHICKEN Tender pieces of chicken breast Eight dollars and ninety nine cents LEMON SOLE Fresh filets sautéed with lemon caper sauce Eleven dollars and ninety nine cents LAMB STEAK Center cut of lamb served on a bed of rice Twelve dollars and ninety nine cents SWORDFISH STEAK Charcoal grilled served with beurre blanc Fourteen dollars and ninety nine cents 3/16/2018 HRT 383 38

Conclusion w Menu analysis is important w If demographic studies, internal capacities, cost cards, and markups have been executed correctly, the score should be a good one w Analysis should be done using either the Smith or the Hurst methods to ascertain the profitability of the menu w If the analysis shows a poor menu, make improvements w Good menu: first step has been taken toward running a profitable operation. w It’s just that simple 3/16/2018 HRT 383 39

Where to Get More Information w Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp 114 -116. Upper Saddle River, N. J. : Prentice Hall. w Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp. 101 -115. 3 rd ed. Upper Saddle River, N. J. : Prentice Hall, TX 911. 3. M 45 D 79 2002 w CD-ROM TX 911. 3. M 45 D 79 2002 w Most Menu & F&B Management Books 3/16/2018 HRT 383 40