Menu Analysis Engineering HRT 383 HRT 382 References

Menu Analysis & Engineering HRT 383 HRT 382

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 1/7/2022 HRT 383 2

Objectives By the completion of this presentation you should be able to: n n 1/7/2022 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 1/7/2022 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. Must be profitable in terms of individual item profitability 2. Most profitable item must be selling the best. 1/7/2022 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. 1/7/2022 HRT 383 6

Contributing Margin w Determine the contributing margin (CM) of each item Selling Price – Food Cost = Contributing Margin n n 1/7/2022 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 Lamb Salmon Coffee Selling Price $24. 00 $22. 00 $2. 00 Cost $10. 78 $5. 97 $0. 19 Food Cost % 44. 92% 27. 14% 9. 5% Cont. Margin $ $13. 22 $16. 03 $1. 81 1/7/2022 HRT 383 8

Contribution Margin Dollars vs. Food Cost Percentage Lamb Salmon Coffee Which one will/should your server sell ? Selling Price $24. 00 $22. 00 $2. 00 Cost $10. 78 $5. 97 $0. 19 Food Cost % 44. 92% 27. 14% 9. 5% Cont. Margin $ $13. 22 $16. 03 $1. 81 1/7/2022 HRT 383 9

Contribution Margin Dollars vs. Food Cost Percentage Lamb Salmon Coffee Which one will/should your server sell ? Selling Price $24. 00 $22. 00 $2. 00 Cost $10. 78 $5. 97 $0. 19 Food Cost % 44. 92% 27. 14% 9. 5% Cont. Margin $ $13. 22 $16. 03 $1. 81 1/7/2022 HRT 383 10

Data Trap Spring ‘ 06 w See Dinner Hand Out 1/7/2022 HRT 383 11

Menu Engineering (1) (2) Menu Item Number Sold (3) (4) Item Sales Food Cost Percentage Price Soup/Salad (5) Total Sales (2) X (3) (6) (10) Total Food C/M Cost (4) X (5) Crab Cake 38 $10. 00 12. 9% $380 $49. 02 $8. 71 Tapas 19 8. 00 18. 9% 152 28. 69 6. 49 Shrimp 30 10. 00 32. 9% 300 98. 70 6. 71 G Cheese 37 8. 00 36. 0% 296 106. 56 5. 12 Ravioli 34 7. 00 30. 6% 238 76. 76 4. 86 $1, 366 $355. 73 158 (7) Food Cost Percentage: (6) / (5) = 25. 8% (8) Total Contribution to Margin: (5) – (6) = $1010. 27 (9) Average Contribution Margin/ Customer: (8) / (2) = $6. 39 (10) Contribution Margin per menu Item: (5) – (6) (2) 1/7/2022 HRT 383 12

Popularity (11) (12) 1/7/2022 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 : 38 / 158 = 24. 05% Ceviche : 19 / 158 = 12. 03% J Shrimp: 30 / 158 = 18. 99% G Cheese : 37 / 158 = 23. 42% Ravioli: 34 / 158 = 21. 52% HRT 383 13

HRT 383 Dinner Appetizers 100% Plowhorse Star Popularity 16% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 14

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% Popularity 16% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 15

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% Popularity 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 16

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% Popularity *Shrimp $6. 71/18. 99% 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 17

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% *G Cheese $5. 12/23. 42% Popularity *Shrimp $6. 71/18. 99% 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 18

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% *G Cheese $5. 12/23. 42% Popularity *Ravioli $4. 86/21. 52% *Shrimp $6. 71/18. 99% 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 19

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 1/7/2022 HRT 383 20

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% Popularity Reduce portion *G Cheese $5. 12/23. 42% *Ravioli $4. 86/21. 52% *Shrimp $6. 71/18. 99% 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 21

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% Reduce portion *G Cheese $5. 12/23. 42% Popularity $ *Ravioli $4. 86/21. 52% *Shrimp $6. 71/18. 99% 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 22

HRT 383 Dinner Appetizers 100% Plowhorse Star *Crab Cake $8. 71/24. 05% Reduce portion *G Cheese $5. 12/23. 42% Popularity $ *Ravioli $4. 86/21. 52% *Shrimp $6. 71/18. 99% 16% * Tapas $6. 49/12. 03% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $6. 39 23

Data Trap Winter ‘ 06 w See Dinner Hand Out for Main Courses & l Desserts l 1/7/2022 HRT 383 24

Exercise w Please work with your fellow students and come up with suggestions/decisions. 1/7/2022 HRT 383 25

HRT 383 Dinner Main Courses 100% Plowhorse Star Popularity 13. 33% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $14. 14 26

HRT 383 Dinner Main Courses 100% Plowhorse Star *Sirloin $13. 75/40. 62% Popularity *Salmon $16. 03/14. 14% 13. 33% *Chix *Pork $10. 85/12. 08% $14. 48/11. 05% *Lamb $13. 22/11. 31% *Risotto $14. 91/10. 80% Puzzle Dog 1/7/2022 0 Contribution Margin HRT 383 $14. 14 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 1/7/2022 HRT 383 28

HRT 383 Dinner Desserts 100% Plowhorse Star Popularity 16. 0% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $4. 73 29

HRT 383 Dinner Desserts 100% Plowhorse Star $ up *Cheese Cake $3. 59/19. 05% Popularity * Apple Crisp $4. 92/38. 12% 4. 51/18. 03% *Cookie * Tiramisu $4. 64/16. 33% 16. 0% $ Down* Choc $6. 45/11. 90% Dog 1/7/2022 0 Puzzle Contribution Margin HRT 383 $4. 34 30

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 1/7/2022 HRT 383 40

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 1/7/2022 HRT 383 41