Menu Analysis Engineering HRT 383 Dinner Fall

Menu Analysis & Engineering HRT 383 Dinner 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 HRT 383 3

Important Terms w Menu engineering Plowhorses n Puzzles n Stars n Dogs n 3/16/2018 HRT 383 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 Steak Salmon Coffee Selling Price $33. 00 $2. 00 Cost $20. 96 $7. 12 $0. 19 Food Cost % 63. 52% 30. 69% 9. 5% Cont. Margin $ $12. 04 $15. 88 $1. 81 3/16/2018 HRT 383 8

Contribution Margin Dollars vs. Food Cost Percentage Steak Salmon Which one will/should your server sell ? Selling Price $33. 00 $23. 00 Coffee Cost $20. 96 $7. 12 $0. 19 Food Cost % 63. 52% 30. 69% 9. 5% Cont. Margin $ $12. 04 $15. 88 $1. 81 3/16/2018 HRT 383 $2. 00 9

Contribution Margin Dollars vs. Food Cost Percentage Steak Salmon Coffee Which one will/should your server sell ? Selling Price $33. 00 $2. 00 Cost $20. 96 $7. 12 $0. 19 Food Cost % 63. 52% 30. 69% 9. 5% Cont. Margin $ $12. 04 $15. 88 $1. 81 3/16/2018 HRT 383 10

Example 3/16/2018 HRT 383 11

Appetizers Menu Plate Contribu tion Quantity Net Total MENU ITEM Price Cost % Margin Sold Income Cost Crab Cake 10. 00 2. 46 24. 60% 7. 54 54 540. 00 132. 84 Ravioli 7. 00 1. 95 27. 86% 5. 05 38 266. 00 74. 10 Duck 8. 00 2. 25 28. 13% 5. 75 22 176. 00 49. 50 En Croute 10. 00 2. 99 29. 90% 7. 01 27 270. 00 80. 73 Cheese 8. 00 1. 72 21. 50% 6. 28 15 120. 00 25. 80 SUBTOTAL APPETIZERS 43. 00 11. 37 26. 44% 117 1372. 00 362. 97 3/16/2018 HRT 383 12

Popularity Average Popularity 80% of the average item sales per appetizer: 100 / 5 X 80% = 16% Popularity of each menu item: Number of portions sold divided by total number of meals sold Crab Cake : 54 / 117 = 34. 62% 3/16/2018 HRT 383 13

Popularity Menu Plate Contribut ion MENU ITEM Price Cost % Margin Sold Income Cost Crab Cake 10. 00 2. 46 24. 60% 7. 54 54 540. 00 132. 84 34. 62% Ravioli 7. 00 1. 95 27. 86% 5. 05 38 266. 00 74. 10 24. 36% Duck 8. 00 2. 25 28. 13% 5. 75 22 176. 00 49. 50 14. 10% En Croute 10. 00 2. 99 29. 90% 7. 01 27 270. 00 80. 73 17. 31% Cheese 8. 00 1. 72 21. 50% 6. 28 15 120. 00 25. 80 9. 62% SUBTOTAL APPETIZERS 43. 00 11. 37 26. 44% 156 1372. 00 362. 97 3/16/2018 HRT 383 $6. 47 Quantity Net Total Popularity 16% 14

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $7. 75/34. 62% Popularity 16% Dog 3/16/2018 Puzzle 0 Contribution Margin $6. 47 HRT 383 15

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $7. 75/34. 62% Popularity *Ravioli $5. 05/24. 36% 16% Dog 3/16/2018 * En Croute $7. 01/17. 31% * Duck $5. 75/14. 10% *Cheese $6. 28/9. 62% Puzzle 0 Contribution Margin $6. 47 HRT 383 16

Menu Engineering Menu Plate Contri- bution MENU ITEM Price Cost % Margin Sold Income Cost Crab Cake 10. 00 2. 46 24. 60% 7. 54 54 540. 00 132. 84 34. 62% STAR Ravioli 7. 00 1. 95 27. 86% 5. 05 38 266. 00 74. 10 24. 36% Plow Horse Duck 8. 00 2. 25 28. 13% 5. 75 22 176. 00 49. 50 14. 10% DOG En Croute 10. 00 2. 99 29. 90% 7. 01 27 270. 00 80. 73 17. 31% STAR Cheese 8. 00 1. 72 21. 50% 6. 28 15 120. 00 25. 80 9. 62% DOG SUBTOTAL APPETIZERS 43. 00 11. 37 26. 44% 156 1372. 00 362. 97 3/16/2018 Quantity Net Total Popular ity $6. 47 HRT 383 Menu Engineering 16% 17

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 18

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $7. 75/34. 62% Popularity Increase $ $8 - ? Cut Portion ? *Ravioli $5. 05/24. 36% 16% * Duck $5. 75/14. 10% ELIMINATE ? Dog 3/16/2018 * En Croute $7. 01/17. 31% ELIMINATE ? *Cheese $6. 28/9. 62% Puzzle 0 Contribution Margin $6. 47 HRT 383 19

Data Trap Fall ‘ 08 w See Dinner Hand Out for l 3/16/2018 Main Courses HRT 383 20

Main Courses MENU ITEM Menu Price Plate Cost Contribu Menu tion Quantity Food Net Popularit Engineerin Cost % Margin Sold Income Total Cost y g Loin Steak 45. 00 23. 00 51. 11% 22. 00 59 $2, 655 $1, 357. 00 13. 50% Lamb 32. 00 16. 26 50. 81% 15. 74 64 $2, 048 $1, 040. 64 14. 65% Chicken 26. 00 13. 14 50. 54% 12. 86 42 $1, 092 $551. 88 9. 61% Halibut 35. 00 17. 71 50. 60% 17. 29 57 $1, 995 $1, 009. 47 13. 04% Pork 30. 00 15. 00 50. 00% 15. 00 73 $2, 190 $1, 095. 00 16. 70% Ravioli 24. 00 17. 33 72. 21% 6. 67 32 $768 $554. 56 7. 32% Rabbit 28. 00 14. 85 53. 04% 13. 15 22 $616 $326. 70 5. 03% Paella 30. 00 13. 32 44. 40% 16. 68 35 $1, 050 $466. 20 8. 01% Duck 32. 00 17. 51 54. 72% 14. 49 53 $1, 696 $928. 03 12. 13% 53. 05% HRT 383 437 14. 88 $14, 110 $7, 329 SUBTOTAL 3/16/2018 MAIN DISHES 21

Popularity Average Popularity 80% of the average item sales per appetizer: 100 / 9 X 80% = 8. 88% Popularity of each menu item: Number of portions sold divided by total number of meals sold Rib Eye : 59 / 4. 97 = 13. 5% 3/16/2018 HRT 383 22

Main Courses MENU ITEM Menu Price Plate Cost Contribu Menu tion Quantity Food Net Popularit Engineerin Cost % Margin Sold Income Total Cost y g Loin Steak 45. 00 23. 00 51. 11% 22. 00 59 $2, 655 $1, 357. 00 13. 50% Lamb 32. 00 16. 26 50. 81% 15. 74 64 $2, 048 $1, 040. 64 14. 65% Chicken 26. 00 13. 14 50. 54% 12. 86 42 $1, 092 $551. 88 9. 61% Halibut 35. 00 17. 71 50. 60% 17. 29 57 $1, 995 $1, 009. 47 13. 04% Pork 30. 00 15. 00 50. 00% 15. 00 73 $2, 190 $1, 095. 00 16. 70% Ravioli 24. 00 17. 33 72. 21% 6. 67 32 $768 $554. 56 7. 32% Rabbit 28. 00 14. 85 53. 04% 13. 15 22 $616 $326. 70 5. 03% Paella 30. 00 13. 32 44. 40% 16. 68 35 $1, 050 $466. 20 8. 01% Duck 32. 00 17. 51 54. 72% 14. 49 53 $1, 696 $928. 03 12. 13% 53. 05% HRT 383 14. 88 437. 00 $14, 110 $7, 329 8. 88% 23 SUBTOTAL 3/16/2018 MAIN DISHES

Exercise w Please work with your fellow students and come up with suggestions/decisions. 3/16/2018 HRT 383 24

HRT 383 Dinner M/C 100% Plowhorse Star Popularity 8. 88% Dog Puzzle 3/16/2018 0 Contribution Margin $14. 88 HRT 383 25

Main Courses MENU ITEM Menu Price Plate Cost Contribu Menu tion Quantity Food Net Popularit Engineerin Cost % Margin Sold Income Total Cost y g Loin Steak 45. 00 23. 00 51. 11% 22. 00 59 $2, 655 $1, 357. 00 13. 50% Lamb 32. 00 16. 26 50. 81% 15. 74 64 $2, 048 $1, 040. 64 14. 65% Chicken 26. 00 13. 14 50. 54% 12. 86 42 $1, 092 $551. 88 9. 61% Halibut 35. 00 17. 71 50. 60% 17. 29 57 $1, 995 $1, 009. 47 13. 04% Pork 30. 00 15. 00 50. 00% 15. 00 73 $2, 190 $1, 095. 00 16. 70% Ravioli 24. 00 17. 33 72. 21% 6. 67 32 $768 $554. 56 7. 32% Rabbit 28. 00 14. 85 53. 04% 13. 15 22 $616 $326. 70 5. 03% Paella 30. 00 13. 32 44. 40% 16. 68 35 $1, 050 $466. 20 8. 01% Duck 32. 00 17. 51 54. 72% 14. 49 53 $1, 696 $928. 03 12. 13% 53. 05% HRT 383 14. 88 437. 00 $14, 110 $7, 329 8. 88% 26 SUBTOTAL 3/16/2018 MAIN DISHES

Main Courses MENU ITEM Menu Price Plate Cost Contribu tion Quantity Food Net Popular Menu Cost % Margin Sold Income Total Cost ity Engineering Loin Steak 45. 00 23. 00 51. 11% 22. 00 59 $2, 655 $1, 357. 00 13. 50% STAR Lamb 32. 00 16. 26 50. 81% 15. 74 64 $2, 048 $1, 040. 64 14. 65% Chicken 26. 00 13. 14 50. 54% 12. 86 42 $1, 092 STAR PLOW HORSE Halibut 35. 00 17. 71 50. 60% 17. 29 57 $1, 995 $1, 009. 47 13. 04% STAR Pork 30. 00 15. 00 50. 00% 15. 00 73 $2, 190 $1, 095. 00 16. 70% STAR Ravioli 24. 00 17. 33 72. 21% 6. 67 32 $768 $554. 56 7. 32% DOG Rabbit 28. 00 14. 85 53. 04% 13. 15 22 $616 $326. 70 5. 03% DOG Paella 30. 00 13. 32 44. 40% 16. 68 35 $1, 050 $466. 20 8. 01% PUZZLE Duck SUBTOTAL 3/16/2018 MAIN DISHES 32. 00 17. 51 54. 72% 14. 49 53 53. 05% HRT 383 14. 88 437. 00 $551. 88 9. 61% $1, 696 $928. 03 12. 13% PLOW HORSE $14, 110 $7, 329 8. 88% 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

Main Courses MENU ITEM Menu Price Plate Cost Contribu tion Quantity Food Net Popular Menu Cost % Margin Sold Income Total Cost ity Engineering Loin Steak 45. 00 23. 00 51. 11% 22. 00 59 $2, 655 $1, 357. 00 13. 50% STAR Lamb 32. 00 16. 26 50. 81% 15. 74 64 $2, 048 $1, 040. 64 14. 65% 26. 00 13. 14 50. 54% 12. 86 42 $1, 092 STAR PLOW HORSE 35. 00 17. 71 50. 60% 17. 29 57 $1, 995 $1, 009. 47 13. 04% STAR 50. 00% 15. 00 73 $2, 190 $1, 095. 00 16. 70% STAR Ravioli 30. 00 15. 00 Eliminate 24. 00 17. 33 72. 21% 6. 67 32 $768 $554. 56 7. 32% DOG Rabbit Eliminate 28. 00 14. 85 53. 04% 13. 15 22 $616 $326. 70 5. 03% DOG 44. 40% 16. 68 35 $1, 050 $466. 20 8. 01% PUZZLE Increase $ Chicken Halibut Pork Lower $ 30. 00 Paella 13. 32 $551. 88 9. 61% Increase $ Duck $1, 696 $928. 03 12. 13% PLOW HORSE $14, 110 $7, 329 8. 88% 29 Reduce size SUBTOTAL 3/16/2018 MAIN DISHES 32. 00 17. 51 54. 72% 14. 49 53 53. 05% HRT 383 14. 88 437. 00

Up Selling w Your Favorite 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