Menu Analysis Engineering HRT 383 Lunch Winter 09

Menu Analysis & Engineering HRT 383 Lunch Winter 09

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 11/29/2020 HRT 383 2

Objectives By the completion of this presentation you should be able to: n n Analyze a menu for profitability Apply menu engineering to menu analysis Price menu items Locate menu items on a menu. 11/29/2020 HRT 383 3

Important Terms w Menu engineering n n w Menu Plowhorses Puzzles Stars Dogs 11/29/2020 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. 11/29/2020 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 11/29/2020 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 CM same as item’s Gross Profit Use total food cost (include garnish, accompaniments served with entrée such as salad, potatoes, rolls, butter etc. ). 11/29/2020 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 11/29/2020 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 11/29/2020 HRT 383 9

Data Trap Winter ‘ 09 w See Lunch Hand Out 11/29/2020 HRT 383 10

Desserts Menu Plate F/C Contribution MENU ITEM Price Cost % Margin Sold Income Cost RKR Apple Crisp 5. 00 1. 35 27. 00% 3. 65 62 310. 00 83. 70 47. 69% Sampler 5. 00 0. 94 18. 80% 4. 06 27 135. 00 25. 38 20. 77% Cheesecake 5. 00 1. 50 30. 00% 3. 50 27 135. 00 40. 50 20. 77% Mngr Special 5. 00 1. 12 22. 40% 3. 88 14 70. 00 15. 68 10. 77% 25. 42% 130 650. 00 165. 26 TOTAL DESSERTS 11/29/2020 3. 73 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% 11/29/2020 HRT 383 12

Desserts Menu Plate F/C Contribution MENU ITEM Price Cost % Margin Sold Income Cost RKR Apple Crisp 5. 00 1. 35 27. 00% 3. 65 62 310. 00 83. 70 47. 69% Sampler 5. 00 0. 94 18. 80% 4. 06 27 135. 00 25. 38 20. 77% Cheesecake 5. 00 1. 50 30. 00% 3. 50 27 135. 00 40. 50 20. 77% Mngr Special 5. 00 1. 12 22. 40% 3. 88 14 70. 00 15. 68 10. 77% 25. 42% 130 650. 00 165. 26 TOTAL DESSERTS 11/29/2020 3. 73 HRT 383 Quantity Net Total Popularity Menu Engineering 20% 13

HRT 383 Lunch Desserts 100% Plowhorse Star Popularity 20% Dog Puzzle 11/29/2020 0 Contribution Margin $3. 73 HRT 383 14

HRT 383 Lunch Desserts 100% Plowhorse Star Popularity 20% 11/29/2020 * Apple Crisp $3. 65/47. 69% * Cheesecake * Sampler $3. 50/20. 77% $4. 06/20. 77% * Mngr Special $3. 88/10. 77% Dog Puzzle 0 Contribution Margin $3. 73 HRT 383 15

Desserts Menu Plate F/C Contribution MENU ITEM Price Cost % Margin Quantity Net Sold Income Total Popularity Menu Cost Engineering RKR Apple Crisp 5. 00 1. 35 27. 00% 3. 65 62 310. 00 83. 70 47. 69% Plow Horse Sampler 5. 00 0. 94 18. 80% 4. 06 27 135. 00 25. 38 20. 77% Star Cheesecake 5. 00 1. 50 30. 00% 3. 50 27 135. 00 40. 50 20. 77% Plow Horse Mngr Special 5. 00 1. 12 22. 40% 3. 88 14 70. 00 15. 68 10. 77% Puzzle 25. 42% 130 650. 00 165. 26 TOTAL DESSERTS 11/29/2020 3. 73 HRT 383 20% 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 11/29/2020 HRT 383 17

HRT 383 Lunch Desserts 100% Plowhorse Star Popularity 20% 11/29/2020 Increase $ Cut Portion ? * Apple Crisp $3. 65/47. 69% * Cheesecake * Sampler $3. 50/20. 77% $4. 06/20. 77% * Mngr Special $3. 88/10. 77% Dog Puzzle 0 Contribution Margin $3. 73 HRT 383 18

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Horsehill Salad w/ Chix 10. 00 3. 45 34. 50% 6. 55 9 90. 00 31. 05 2. 05% 4. 79% Horsehill Salad 8. 00 2. 85 35. 63% 5. 15 12 96. 00 34. 20 2. 74% South. Western Salad 10. 00 3. 09 30. 90% 6. 91 42 420. 00 129. 78 9. 59% Cobb Salad 10. 00 2. 05 20. 50% 7. 95 34 340. 00 69. 70 7. 76% Caesar Salad 8. 00 0. 67 8. 38% 7. 33 7 56. 00 4. 69 1. 60% 4. 79% Caesar Salad with Chicken 10. 00 1. 46 14. 60% 8. 54 9 90. 00 13. 14 2. 05% Caesar Salad with Shrimp 10. 00 3. 89 38. 90% 6. 11 5 50. 00 19. 45 1. 14% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 15 120. 00 48. 75 3. 42% 9. 36% Quesadilla with Chicken 10. 00 3. 45 34. 50% 6. 55 18 180. 00 62. 10 4. 11% Quesadilla with Shrimp 10. 00 3. 95 39. 50% 6. 05 8 80. 00 31. 60 1. 83% Reuben Sandwich 8. 00 1. 95 24. 38% 6. 05 21 168. 00 40. 95 4. 79% Burger 9. 00 2. 59 28. 78% 6. 41 24 216. 00 62. 16 5. 48% 15. 98% Burger - Cheese 10. 00 3. 05 30. 50% 6. 95 22 220. 00 67. 10 5. 02% Burger - Bacon 10. 00 2. 25 22. 50% 7. 75 9 90. 00 20. 25 2. 05% Burger - Cheese & Bacon 11. 00 3. 39 30. 82% 7. 61 15 165. 00 50. 85 3. 42% Turkado 8. 00 2. 81 35. 13% 5. 19 49 392. 00 137. 69 11. 19% Lasagna 10. 00 3. 17 31. 70% 6. 83 24 240. 00 76. 08 5. 48% Fish n Chips 10. 00 3. 32 33. 20% 6. 68 51 510. 00 169. 32 11. 64% Meatloaf 10. 00 2. 19 21. 90% 7. 81 36 360. 00 78. 84 8. 22% Duck Enchiladas 11. 00 2. 89 26. 27% 8. 11 22 242. 00 63. 58 5. 02% Chili Entrée 6. 00 1. 50 25. 00% 4. 50 6 36. 00 9. 00 1. 37% 29. 33% 438 4161. 00 1220. 28 SUBTOTAL MAIN DISHES 6. 71

Popularity w Average Popularity 80% of the average item sales per Main Dishes: 100 / 13 X 80% = 6. 15% 11/29/2020 HRT 383 20

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Horsehill Salad w/ Chix 10. 00 3. 45 34. 50% 6. 55 9 90. 00 31. 05 2. 05% 4. 79% Horsehill Salad 8. 00 2. 85 35. 63% 5. 15 12 96. 00 34. 20 2. 74% South. Western Salad 10. 00 3. 09 30. 90% 6. 91 42 420. 00 129. 78 9. 59% Cobb Salad 10. 00 2. 05 20. 50% 7. 95 34 340. 00 69. 70 7. 76% Caesar Salad 8. 00 0. 67 8. 38% 7. 33 7 56. 00 4. 69 1. 60% 4. 79% Caesar Salad with Chicken 10. 00 1. 46 14. 60% 8. 54 9 90. 00 13. 14 2. 05% Caesar Salad with Shrimp 10. 00 3. 89 38. 90% 6. 11 5 50. 00 19. 45 1. 14% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 15 120. 00 48. 75 3. 42% 9. 36% Quesadilla with Chicken 10. 00 3. 45 34. 50% 6. 55 18 180. 00 62. 10 4. 11% Quesadilla with Shrimp 10. 00 3. 95 39. 50% 6. 05 8 80. 00 31. 60 1. 83% Reuben Sandwich 8. 00 1. 95 24. 38% 6. 05 21 168. 00 40. 95 4. 79% Burger 9. 00 2. 59 28. 78% 6. 41 24 216. 00 62. 16 5. 48% 15. 98% Burger - Cheese 10. 00 3. 05 30. 50% 6. 95 22 220. 00 67. 10 5. 02% Burger - Bacon 10. 00 2. 25 22. 50% 7. 75 9 90. 00 20. 25 2. 05% Burger - Cheese & Bacon 11. 00 3. 39 30. 82% 7. 61 15 165. 00 50. 85 3. 42% Turkado 8. 00 2. 81 35. 13% 5. 19 49 392. 00 137. 69 11. 19% Lasagna 10. 00 3. 17 31. 70% 6. 83 24 240. 00 76. 08 5. 48% Fish n Chips 10. 00 3. 32 33. 20% 6. 68 51 510. 00 169. 32 11. 64% Meatloaf 10. 00 2. 19 21. 90% 7. 81 36 360. 00 78. 84 8. 22% Duck Enchiladas 11. 00 2. 89 26. 27% 8. 11 22 242. 00 63. 58 5. 02% Chili Entrée 6. 00 1. 50 25. 00% 4. 50 6 36. 00 9. 00 1. 37% 29. 33% 438 4161. 00 1220. 28 SUBTOTAL MAIN DISHES 6. 71 6. 15%

Exercise w Please work with your fellow students and come up with suggestions/decisions. 11/29/2020 HRT 383 22

HRT 383 Lunch Main Courses 100% Plowhorse Star Popularity 6. 15% Dog 11/29/2020 Puzzle 0 Contribution Margin $6. 71 HRT 383 23

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Horsehill Salad w/ Chix 10. 00 3. 45 34. 50% 6. 55 9 90. 00 31. 05 2. 05% 4. 79% Horsehill Salad 8. 00 2. 85 35. 63% 5. 15 12 96. 00 34. 20 2. 74% South. Western Salad 10. 00 3. 09 30. 90% 6. 91 42 420. 00 129. 78 9. 59% Cobb Salad 10. 00 2. 05 20. 50% 7. 95 34 340. 00 69. 70 7. 76% Caesar Salad 8. 00 0. 67 8. 38% 7. 33 7 56. 00 4. 69 1. 60% 4. 79% Caesar Salad with Chicken 10. 00 1. 46 14. 60% 8. 54 9 90. 00 13. 14 2. 05% Caesar Salad with Shrimp 10. 00 3. 89 38. 90% 6. 11 5 50. 00 19. 45 1. 14% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 15 120. 00 48. 75 3. 42% 9. 36% Quesadilla with Chicken 10. 00 3. 45 34. 50% 6. 55 18 180. 00 62. 10 4. 11% Quesadilla with Shrimp 10. 00 3. 95 39. 50% 6. 05 8 80. 00 31. 60 1. 83% Reuben Sandwich 8. 00 1. 95 24. 38% 6. 05 21 168. 00 40. 95 4. 79% Burger 9. 00 2. 59 28. 78% 6. 41 24 216. 00 62. 16 5. 48% 15. 98% Burger - Cheese 10. 00 3. 05 30. 50% 6. 95 22 220. 00 67. 10 5. 02% Burger - Bacon 10. 00 2. 25 22. 50% 7. 75 9 90. 00 20. 25 2. 05% Burger - Cheese & Bacon 11. 00 3. 39 30. 82% 7. 61 15 165. 00 50. 85 3. 42% Turkado 8. 00 2. 81 35. 13% 5. 19 49 392. 00 137. 69 11. 19% Lasagna 10. 00 3. 17 31. 70% 6. 83 24 240. 00 76. 08 5. 48% Fish n Chips 10. 00 3. 32 33. 20% 6. 68 51 510. 00 169. 32 11. 64% Meatloaf 10. 00 2. 19 21. 90% 7. 81 36 360. 00 78. 84 8. 22% Duck Enchiladas 11. 00 2. 89 26. 27% 8. 11 22 242. 00 63. 58 5. 02% Chili Entrée 6. 00 1. 50 25. 00% 4. 50 6 36. 00 9. 00 1. 37% 29. 33% 438 4161. 00 1220. 28 SUBTOTAL MAIN DISHES 6. 71 6. 15%

Lunch Main Courses Menu Plate Contribution Quantity Net Total Popularity Menu MENU ITEM Price Cost % Margin Sold Income Cost Engineering Horsehill Salad w/ Chix 10. 00 3. 45 34. 50% 6. 55 9 90. 00 31. 05 2. 05% 4. 79% Horsehill Salad 8. 00 2. 85 35. 63% 5. 15 12 96. 00 34. 20 2. 74% South. Western Salad 10. 00 3. 09 30. 90% 6. 91 42 420. 00 129. 78 9. 59% Cobb Salad 10. 00 2. 05 20. 50% 7. 95 34 340. 00 69. 70 7. 76% DOG STAR Caesar Salad 8. 00 0. 67 8. 38% 7. 33 7 56. 00 4. 69 1. 60% 4. 79% Caesar Salad with Chicken 10. 00 1. 46 14. 60% 8. 54 9 90. 00 13. 14 2. 05% PUZZLE Caesar Salad with Shrimp 10. 00 3. 89 38. 90% 6. 11 5 50. 00 19. 45 1. 14% Cheese Quesadilla 8. 00 3. 25 40. 63% 4. 75 15 120. 00 48. 75 3. 42% 9. 36% Quesadilla with Chicken 10. 00 3. 45 34. 50% 6. 55 18 180. 00 62. 10 4. 11% Quesadilla with Shrimp 10. 00 3. 95 39. 50% 6. 05 8 80. 00 31. 60 1. 83% Reuben Sandwich 8. 00 1. 95 24. 38% 6. 05 21 168. 00 40. 95 4. 79% PLOW HORSE DOG Burger 9. 00 2. 59 28. 78% 6. 41 24 216. 00 62. 16 5. 48% 15. 98% Burger - Cheese 10. 00 3. 05 30. 50% 6. 95 22 220. 00 67. 10 5. 02% STAR Burger - Bacon 10. 00 2. 25 22. 50% 7. 75 9 90. 00 20. 25 2. 05% Burger - Cheese & Bacon 11. 00 3. 39 30. 82% 7. 61 15 165. 00 50. 85 3. 42% Turkado 8. 00 2. 81 35. 13% 5. 19 49 392. 00 137. 69 11. 19% PLOW HORSE Lasagna 10. 00 3. 17 31. 70% 6. 83 24 240. 00 76. 08 5. 48% Fish n Chips 10. 00 3. 32 33. 20% 6. 68 51 510. 00 169. 32 11. 64% Meatloaf 10. 00 2. 19 21. 90% 7. 81 36 360. 00 78. 84 8. 22% Duck Enchiladas 11. 00 2. 89 26. 27% 8. 11 22 242. 00 63. 58 5. 02% Chili Entrée 6. 00 1. 50 25. 00% 4. 50 6 36. 00 9. 00 1. 37% 29. 33% 438 4161. 00 1220. 28 SUBTOTAL MAIN DISHES 6. 71 6. 15% PUZZLE STAR PUZZLE DOG

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 11/29/2020 HRT 383 26

MENU ITEM Horsehill Salad w/ Chix South. Western Salad Menu Engineering Recommendation DOG Main Courses STAR Eliminate? Cobb Salad STAR Caesar Salad PUZZLE Lower $? PLOW HORSE Increase Menu $ or Reduce Portion? DOG Eliminate? Quesadilla (Chix & Schrimp) Reuben Sandwich Burger (Cheese & Bacon) STAR Turkado PLOW HORSE Increase Menu $ or Reduce Portion Lasagna PUZZLE Lower $? Fish & Chips STAR Meatloaf STAR Duck Enchiladas PUZZLE 11/29/2020 Chili Entree HRT 383 DOG Lower $? Eliminate? 27

Up Selling w Manager’s Special 11/29/2020 HRT 383 28

Placement w Two Schools of thought 1. Menu Sequence n Menu should follow progression of meal 2. Focal Points n 11/29/2020 Use focal points on the menu to push certain menu items HRT 383 29

Focal Points Focal Point Single Sheet Menu 11/29/2020 Twofold Menu HRT 383 30

Focal Points 2 4 Focal Point 3 5 Threefold Menu 11/29/2020 HRT 383 31

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. 11/29/2020 HRT 383 32

Branding w Fast food w Coke / Pepsi w TGIF w Jack Daniels 11/29/2020 HRT 383 33

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 11/29/2020 HRT 383 34

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 11/29/2020 HRT 383 35

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 11/29/2020 HRT 383 36

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 11/29/2020 HRT 383 37

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 11/29/2020 HRT 383 38