http://rrgconsulting.com/menu_engineering.htmIs Your Menu Working For You or Against You?
By John NesselRestaurant Resource Group
As a restaurant operator you already know the importance of keeping your food costs in line. Pretty obvious stuff huh? That’s because combined with your wages and other payroll expenses, food and beverage costs account for anywhere from 60-70+ percent of your total revenue. Moreover, your food and labor are relatively controllable costs compared to rent, utilities, insurance and most of the remaining expenses that make up your monthly payables list.
Menu Engineering
We’re going to save the labor conversation for another day. Today we’ll take a unique look at controlling your food costs. More specifically I’m going to introduce to you a powerful tool to help you achieve this. This tool, along with techniques for utilizing it, has been called menu engineering. In simpler terms I would describe the process as the methodical selecting, costing, pricing and evaluating of your menu items.
Menu engineering provides the manager with information about a menu item’s profitability, as well as popularity, so that proactive planning, recipe design and customer pricing decisions can be made. Menu engineering is not a substitute for proper purchasing, food rotation, standard recipes or any of the other basic kitchen controls that can negatively impact your costs. Rather it is a method of evaluating every item on your menu relative to its present contribution to bottom line dollars, thereby allowing managers to recognize the items they want to sell!
Contribution Margins
While the concept of food cost percentage (an item’s ingredient cost divided by it’s menu price) is the most commonly used criteria for assessing effective cost controls, the concept of contribution margin (an item’s menu price less it’s food cost) is the basis of menu engineering. A simple question should make the distinction clear. If you could sell one more item before your restaurant closed today, would it be a sirloin steak for $20 that costs you $8 or a plate of pasta primavera for $10 that costs you $2. While the food cost percentage of the pasta is 20% versus 40% for the steak, the steak will contribute $12 to gross revenue as opposed to $8 for the pasta. I’ll take the $12… thank you very much. Contribution margin then is based on the dollars you take to the bank.
Accounting for the Popularity of Menu Items
While a menu item's contribution margin tells us how many dollars each individual sale of the item contributes to the cash register, you need to know how popular the item is to determine the total dollars it contributes to the restaurant’s revenue. A popular item with a high contribution margin is a “star” while an unpopular item with a low contribution margin would fairly be called a “dog”. Menu engineering therefore takes each menu items contribution margin and its popularity into account to
determine into which of four categories it falls: star, workhorse, challenge or dog. We’ll get back to these categories shortly.
The Evaluation
I have included a completed Menu Engineering spreadsheet to demonstrate how the process is performed based on the required information listed below (click on the image to enlarge it). This fully automated spreadsheet is available for sale along with other useful restaurant operations spreadsheets at www.rrgconsulting.com/spreadsheets.htm
click on the above image to enlarge...
The information that you need to perform a menu engineering exercise is as follows:
1. Column A. A list of your competing menu items (a separate evaluation should be performed for each menu category e.g. appetizers, entrees, and desserts)
2. Column B. A periodic (weekly or monthly) total of the number of each item sold (use your POS report)
3. Column D. The ingredient cost of each menu item (not just the “center of the plate” cost but the entire cost of the item)
4. Column E. A list of the menu selling price for each item being evaluated
You can perform the evaluation yourself by manually calculating the numbers in the following: Columns C, F, G, H, L, N, I, J, M, K, O, and Q. (Note that the spreadsheet above automatically calculates these numbers)
The inputs in Columns P, R and S are calculated as follows:
Column P: Profit Category is LOW if the menu item profit is less than the menu’s Average item profit ($4.16 in this example). Conversely, enter HIGH in the cell if the menu items profit is greater than average for the menu.
Column R: Popularity Category is LOW if the menu item's menu-mix percentage (e.g. the total number of the item sold divided by the total number of items) is less than 80% of the average. Conversely this means that we are considering an item to be popular, and placing the word HIGH in the column, if it sells at least 80% of an average item’s popularity. In the example below, the average menu popularity equals 8.3% (100% divided by 12 items = 8.3%). Therefore we consider an item popular (HIGH) if it sells 80% of 8.3% or 6.7%.
Column S: The Menu Item Class is determined by the results of Columns P and R. If an item is both profitable and popular then it’s a STAR. It it’s profitable but relatively unpopular then enter the word CHALLENGE. If the item is relatively unprofitable but popular then enter the word WORKHORSE. Finally, a DOG is an unprofitable and unpopular menu item.
How to Take Action Based on the Results
Let’s start with the obvious. Keep the STARS and dump the DOGS.
Your creativity is now required dealing effectively with your CHALLENGES and WORKHORSES. Lets start with the CHALLENGES. These items are profitable but relatively unpopular. Your “challenge” is to make them more popular. There are many ways to accomplish this including changing the preparation (Veal Marsala may be more popular than Veal Putanesca, but still just as profitable). Re-naming or re-plating the item to make it sound and/or appear more appealing is another alternative. Alternatively you might want to create a whole new menu item using the same “center of the plate” ingredient, but doing it in a way that will be more appealing to your customers.
As for the WORKHORSES, they are popular items with less than ideal profit margins. Here is where your best opportunities lie. Your job is to re-engineer the menu item to reduce its cost while not sacrificing what makes it popular. This can involve substituting a single relatively expensive ingredient for a one that is less costly (e.g Assiago cheese in a Caesar salad for Reggiano Parmesan). It may involve substituting one cut of meat for a less expensive one knowing that the preparation is what makes the item popular. It might be as simple as using a less expensive garnish. How about increasing the items selling price? Your chef’s imagination and talent takes over here. If I knew how to perform this magic I would be wearing an apron and a tocque instead of sitting in this chair banging on my keyboard!
Hopefully it is now easy to see how this information allows you to proactively manage your menu. From collaborations with your chef to tinkering with your prices you can use menu engineering to effectively manage a key aspect of your food costs!
http://www.benjaminchristie.com/blog/menu-engineering-food-costing-for-chefs
Benjamin Christie Menu Engineering & Food Costing
Posted in: Professional Cooking 01 / 01 / 2008
Most executive chefs and head chefs know the basic costs of a particular dish, but do most know how that particular dish performs as part of the restaurant sales mix? From my experience, the majority of chefs around the world have no idea what menu engineering is and how it can play an important role in determining overall profitability and food costs.
Menu engineering examines the sales history for each dish on the menu, and examines the item's selling price and cost price. It then relates their profit margins and their menu mix percentages to see which items are proving popular and thus profitable.
The best resource about menu engineering was written by Michael L. Kasavana and Donald J. Smith and is titled Menu Engineering: A Practical Guide to Menu Analysis. The book was published in 1982 and is difficult to locate today. The book includes various case studies as well as detailing the process of menu engineering. Menu Engineering involves dividing the menu and its dishes into 4 categories;
StarsStars are extremely popular and have a high contribution margin. Ideally Stars should be your flagship or signature menu item
Plow HorsePlow Horses are high in popularity but low in contribution margin. Plow horse menu items sell well, but don’t significantly increase revenue.
PuzzlesPuzzles are generally low in popularity and higher contributions. Puzzle dishes are very difficult to sell, but have a high profit margin.
DogsDogs are low in popularity and low in contribution margin. Basically they are difficult to sell and when you do they are not all that profitable.
Recently Philip Norman emailed me a copy of a menu engineering spreadsheet which takes the Kasavana and Smith theory on menu engineering and automates the process in a excel spreadsheet. The results are automatically charted in the spreadsheet for complete menu analysis.
It’s well worth getting the menu engineering file and applying it to your current menu to better analyse the menu. Then simply use it when developing a menu in the future. After all isn’t it important to understand the financial position of your menu?
To get a copy of menu engineering spreadsheet, simply register at Kitchen Profitability and you’ll be emailed the file straight away.
http://www.olivermagro.com/Spreadsheets/Menu_engineering.htm
menu Engineering The concept of menu engineering is a common one and is found in a number of text books (amongst others refer to Menu Engineering by Michael L. Kasavana and Donald J. Smith).
Menu engineering examines the sales history of a number of menu items, their selling price and their cost price. It then relates their profit margins (also referred to as contribution margins) and their menu mix percentages to see which items are proving both popular and profitable. The worksheet provides a menu engineering worksheet, with field names for you to follow. The worksheet determines the classification of every menu item into one of the following classifications, discussed briefly below:
Stars These are the most profitable items on your menu. One should maintain rigid specifications for quality, portion size and presentation. These items should be in a highly visible position on the menu and well be your restaurant's
signature items. Plowhorses These items are popular, even though they do not yield a high contribution margin. They are normally items popular with
your price-conscious clientele. Puzzles These items are low in popularity yet yield high contribution margins. You may have to consider whether these items
should be on your menu at all. Dogs These are your losers - they are both unpopular and yield low contribution margins. These items may have to be eliminated or their price increased to see whether they can at least reach the status of Puzzles.
http://www.syscohamptonroads.com/BBTOps/Menu%20Engineering.pdf
Why is menu engineering so important?As you try to fi nd ways to increase profi ts in your restaurant, the easiest way to do that is to maximizethe profi t dollars from your existing customers. In other words...if you have the exact same numberof people eat at your restaurant in a given year, you still have the opportunity to achieve higher profi tsby encouraging your guests to order more profi table items. This menu engineering exercise will allowyou, as a business owner, to take the emotion out of decisions you make pertaining to your menu andallow you to base those decisions on data and facts.
Menu Engineering is a Three Step ProcessStep 1 : Gather Your DataThere are four things you will need to gather to complete a Menu Engineering Exercise....1. A Menu Engineering Spreadsheet• This can be found in the member section of www.RestaurantOwner.com.2. Your current pricing for each item on your menu3. The food cost of every item you sell on your menu• For help with this, please contact your Sysco Hampton Roads Marketing Associate. They havea menu analysis program that will break down the cost of each ingredient that goes into amenu item. This program also updates pricing automatically, so as prices fl uctuate, it adjustsyour costs.• Be sure to include some of the all too often “forgotten costs” such as plate garnish andsauces.4. Your sales of each item on your menu for a given time frame• With most POS systems, a sales report can be generated for a given time frame.• For an accurate menu engineering analysis, at least one month of sales totals is needed;however, the longer the time frame, the better information you will obtain.
Step 2 : Enter Your DataThere are several tabs on the spreadsheet, the fi rst of which is a detailed set of instructions and the
second tab is an example spreadsheet for you to refer to. The rest of the tabs are actual worksheetsfor you to enter in your data. The only information that you are required to enter is an itemdescription, the quantity sold, the item food cost and the item sell price. The rest of the worksheetpopulates automatically.
What to do with Stars:• Do give these items the best placement on your menu.• Do use these items in sales promotions and contests.• Don’t change the price too drastically.• Don’t change the presentation or recipe...your customerslike it the way it is.• Do encourage your staff to suggest these items tocustomers.• Do highlight these on your menu as “house favorites” or“signature dishes”.What to do with Workhorses:• Don’t raise the price on these items above what the localmarket can bear. For a competitive comparison of chainrestaurant pricing, refer to our Operational Tool called KeyComponents to Consider When Pricing Your Menu or compareyour pricing as it relates to local competitive restaurants.• Do look at alternative products to decrease the food costwithout compromising the quality. Remember thatWorkhorses sell well, so your customers like the item.• Do hide these items on your menu so it is easier for thecustomer to be drawn to more profi table items.What to do with Challenges:• Do evaluate the price on these items to be sure they are notpriced above what the local market will bear. For a competitivecomparison of chain restaurant pricing, refer to our OperationalTool called Key Components to Consider When Pricing Your Menuor compare your pricing as it relates to local competitiverestaurants.• Do get staff and customer input on the menu item...it mightnot sell well because it doesn’t taste good or fi t the market.• If you determine that the item is a good one, highlight these itemson your menu to increase sales and use these items in salespromotions and contests.What to do with Dogs:• Do consider removing these items completely since they donot positively contribute to the profi t or popularity of yourbusiness.• Do visit Sysco Hampton Roads for a Customer MenuConsultation to have our Chefs show you ideas for moreprofi table and unique items to replace your Dogs. If youdecide to keep a Dog on the menu, our Chefs can also give
you ideas on how to make enhancements to increase theprofi tability and popularity of the item.• Do get staff and customer feedback on the menu item to fi ndout why it doesn’t sell well.
Step 3 : Analyze the DataBelow is a copy of the sample spreadsheet that is provided in the Menu Engineering Worksheet from www.RestaurantOwner.com. The last column on the far right provides you with valuable information to make educated businessdecisions regarding items on your menu. Each item falls into a “Menu Item Class”: Star, Workhorse, Challenge or Dog. Below is an explanation of what each Menu Item Class means and what to do with those items.
StarMakes GoodMoney Sells Well
WorkhorseDoesn’t MakeGood Money Sells Well
ChallengeMakes GoodMoneyDoesn’tSell Well
DogDoesn’tSell WellDoesn’t MakeGood Money
M E N U E N G I N E E R I N GG o t o w w w . S y s c o H a m p t o n R o a d s . c o m f o r m o r e i n f o r m a t i o n .Stars are menu items that have a high gross profi tand are very popular! The more you can infl uencethe consumer towards these items, the moreprofi table your operation will be.Workhorses are menu items that sell well but donot contribute all that well to your bottom lineprofi ts.Challenges are items that have a high gross profi t, but arenot very popular. Typically, these are the more expensiveitems on your menu.Dogs are menu items that are not very popular anddo not contribute very much to your profi ts.
What to do with stars• Do give these items the best placement on your menu.• Do use these items in sales promotions and contests.• Don’t change the price too drastically.• Don’t change the presentation or recipe...your customerslike it the way it is.• Do encourage your staff to suggest these items tocustomers.• Do highlight these on your menu as “house favorites” or“signature dishes”.What to do with Workhorses:• Don’t raise the price on these items above what the localmarket can bear. For a competitive comparison of chainrestaurant pricing, refer to our Operational Tool called KeyComponents to Consider When Pricing Your Menu or compareyour pricing as it relates to local competitive restaurants.• Do look at alternative products to decrease the food costwithout compromising the quality. Remember thatWorkhorses sell well, so your customers like the item.• Do hide these items on your menu so it is easier for thecustomer to be drawn to more profi table items.What to do with Challenges:• Do evaluate the price on these items to be sure they are notpriced above what the local market will bear. For a competitivecomparison of chain restaurant pricing, refer to our OperationalTool called Key Components to Consider When Pricing Your Menuor compare your pricing as it relates to local competitiverestaurants.• Do get staff and customer input on the menu item...it mightnot sell well because it doesn’t taste good or fi t the market.• If you determine that the item is a good one, highlight these itemson your menu to increase sales and use these items in salespromotions and contests.What to do with Dogs:• Do consider removing these items completely since they donot positively contribute to the profi t or popularity of yourbusiness.• Do visit Sysco Hampton Roads for a Customer MenuConsultation to have our Chefs show you ideas for moreprofi table and unique items to replace your Dogs. If youdecide to keep a Dog on the menu, our Chefs can also giveyou ideas on how to make enhancements to increase theprofi tability and popularity of the item.• Do get staff and customer feedback on the menu item to fi ndout why it doesn’t sell well.
http://72.14.235.132/search?q=cache:HShoxxzn2ycJ:www.indiangaming.com/istore/Jul06_Schwartz.pdf+menu+engineering&cd=5&hl=en&ct=clnk&gl=inFOOD & BEVERAGEby Bill Schwartz
The concept of menu engineering was developed by Michigan State University's Dr. Michael Kasavana andDonald Smith in the early 1980s, and has been used widely inthe restaurant industry since that time. Based on Boston Consulting Group's (BCG) matrix conceptualization model,Kasavana and Smith extended and specialized the BCG concept for the foodservice industry.In a nutshell, menu engineering is an approach that can beused to classify menu items into four basic categories - stars,plow horses, puzzles or dogs, and based on the classification,determine what to do with those items to make the menu perform more profitably. Among the decisions menu engineer-ing helps operators make are when to keep items on and whento take items off the menu. It helps operators determine whichitems are under or overpriced, and which items need to be repo-sitioned on the menu to gain more popularity. It also helps topoint out when item recipes should be changed to reduce por-tions or otherwise reduce the cost of the menu item in ques-tion. Experts claim the use of this approach results in signif-icantly improved menu performance.The BasicsTo understand menu engineering, it is first necessary tounderstand some of the key values used. First and foremost,menu engineering ignores food cost percentages and focusesstrictly on dollars. Since banks don't accept percentages ondeposit slips, this approach to menu analysis is all about theactual money made on each menu item, also known as the item'sgross margin. For example, using the traditional mindset, a steakdinner with a 40% food cost might be considered less profitablethan the pasta dish with a 20% food cost. However, since per-centages can't be banked, consider the dollars. If the steak din-ner sells for $25 and has a cost of $10 (40%), its gross marginis $15. On the other hand, if the pasta dish sells for $15 andhas a cost of $3 (20%), the margin is $12. Using this view, thedeposit slip is larger with the steak sale than the pasta sale, eventhough the pasta has a much lower food cost percentage.Second, in order to make sense of the importance of amenu item, it is also necessary to consider its popularity, mak-ing the other key factor in the analysis the number sold of theitem for the study period. These two factors must be consid-ered together in order to properly rank items on the menu. For
example, compare the overall profitability of coffee to overallprofitability of the steak dinner. Coffee sells for $1.50 per cupin the restaurant, and has a cost of $.10 per cup (ignoring refillsand sweeteners for now), giving the coffee a gross margin of$1.40. Even though coffee is far less profitable than the steakdinner in terms of raw dollars, when we multiply the numbersold by the gross margin for coffee and for steak dinners, we cancompare the two equally as to their impact on profits. If we sold3,000 coffees and 100 steak dinners, the profit from coffee wouldbe $3,300, while the profit for steak dinners would be $1,500.Obviously we make more money on coffee than steak, eventhough the per-item margin is much higher for steak.Menu engineering takes this approach a few steps farther.Using the margin and menu mix information along with totalcustomer counts, the menu engineering model places each menuitem into one of four categories. The categories are as follows:Stars - high popularity and high marginPlow horses - high popularity and low marginPuzzles - low popularity and high marginDogs - low popularity and low marginObviously everyone wants stars and nobody wants dogs.Therefore, the common actions associated with these classifi-cations are to maintain the status quo for stars (no changes),and to replace the dogs with something that will be more pop-ular, more profitable or hopefully both. Plow horses are itemsthat sell well, but don't make enough money. These items shouldtypically be retained on the menu, but to make them more prof-itable it might be necessary to raise their price or reduce theircost by changing the portion sizes. Puzzles have good marginsbut aren't very popular, so they need to be repositioned on themenu to gain higher visibility, their name needs to be changedto make them more appealing, or they need to be replaced ifthese things don't work.Easy to Calculate, Harder to ImplementWhat could be simpler than a system that allows you to clas-sify all your menu items and scientifically decide what to do withthem? Of course, nothing worthwhile is quite that simple,and in addition to software for performing menu engineering,entire books have been written about menu analysis usingmenu engineering techniques. A number of consultants maketheir living helping operators implement and get the most ofthe menu engineering approach. Rather than focus on calculation methods or other techni-cal details in this article, the necessary information can befound using Google or other internet search engines (type“menu engineering” as the search text) to get a list of web sitesand articles which can be helpful. Another good source for infor-mation is the National Restaurant Association's website,www.restaurant.org. Instead, let's focus on some of the issuesassociated with implementing a menu engineering approach.
Page 2July 2006
Indian Gaming 31Plenty of software is available to calculate the necessary
information. Some software is specifically designed for menu engineering as a stand-alone product. Most full-featured foodand beverage inventory systems include menu engineeringreports. Some web sites offer menu engineering reports freeor for a small fee. And of course, spreadsheets are fully capable of handling the fairly simple calculations associated withthe approach.The problem really isn't getting the math done, or even getting the data gathered. The point of sale system generatessale mix information routinely. Recipe costing is a bit more difficult, but many of the systems on the market help with thatas well. However, as with any other management system,expertise separates success and failure. A great deal can belearned from reading the books about menu engineering, butthere is no substitute for experience.“A menu is like a real estate development,” says Greg Rapp,menu engineering consultant and president of MenuTech-nologies.net based in Palm Springs, California. “Knowingwhere to place things, how they should look, what their perceived value needs to be and how to attract customers tothe right products are critical aspects of successful real estatedevelopment and successful menu engineering implementation.That's why operators use specialists to help them get the mostbenefit from their investment in time, money and effort.”Menu engineering has been used by the food service indus-try for many years now, and casino operators are approachingthe sophistication level where work in this area could be veryhelpful. It is important to note that, like other managementapproaches, it is not something that can simply be purchased.Success depends on the right mix of products and services, andof course the necessary expertise. In the end, a well-implementedapproach for menu engineering can be a significant way toimprove food and beverage profitability. pBill Schwartz is President of System Concepts, Inc. (SCI).Based in Scottsdale Arizona, SCI is the developer of theFOOD-TRAK Food and Beverage Management System. He can be reached by calling (480) 951-8011 or [email protected]
http://jan.ucc.nau.edu/~grc3/ha270/class/restaurant/menu/menueng.htm
MENU ENGINEERING EXERCISE
Instructions: The purpose of this exercise is fourfold:
Step 1. To learn basic menu engineering principles.
Step 2. To learn menu engineering strategies (Menu Magic, 1993).
Step 3. To use a spreadsheet program in generating two menu engineering reports.
Step 4. To evaluate the information found in the menu engineering reports using the menu engineering strategy model presented in this exercise. This will be accomplished by answering 9 questions found at the end of this document. Please e-mail the two engineering reports (Excel attachment) and answers to [email protected].
Read Menu Engineering Principles - Step 1
Definition. Menu engineering is a concept developed at Michigan State to help food service professionals track variables, which influences a menus' profitability.
Important questions. Can we influence the customers' decisions towards menu items that generate more profit? It is important to remember that the menu is the primary marketing tool where items compete with one another - some offer more profit, others offer higher sales, others offer both and some neither.
Tool. This is a key tool that a college graduate should have in their tool chest. Because it enables you to evaluate why certain menu items do better than others - is it visibility, a poor sales program, food presentation, etc. It is a tool that provides you with
the necessary information to make decisions about menu items to improve the overall profitability of the menu.
Individual merits. However, it also important to judge each item on its individual merits. We look at two basic attributes:
1. Menu item popularity or demand.
2. Menu item contribution margin or profitability.
How do you compute menu item popularity and contribution margin?
1. Contribution Margin= Menu price - food cost. If a menu item's contribution margin is greater than the average contribution margin for the entire menu, it receives a rating of "H" indicating that it has an above average contribution margin.
Example - Sum of CMs = $30 # of items on menu = 10 Avg. CM= 30/10 = $3
If a menu item had a contribution margin of $4.00 it would receive a "H."
If a menu item had a contribution margin of $2.00 it would receive a "L."
2. Demand = Number of items sold of a particular menu item/total number of menu items sold. If a menu item's percentage of sales is greater than the average sales percentage for the entire menu, it receives a rating of "H" indicating that particular item has a higher sales percentage than the demand mix.
Example - If there are 10 items on the menu, the demand mix would equal 1/10 X .70= .7 or 7%.
Any menu item with a sales percentage equal to or greater than 7% would receive a rating of "H."
Any item with a sales percentage less than 7% would receive a rating of "L."
Menu Classification System. All menu items can be classified into four types:
1. Stars or Gold = HH. (Items which are both profitable and popular)
2. Plow Horses or Silver = HL (Items which are high in popularity but low in profit)
3. Puzzles or Bronze = LH (Items are low in popularity but high in profit)
4. Dogs or DQ = LL (Items are both low in popularity and profit)
Read Menu Engineering Strategies - Step 2
In the menu engineering reports you will classify each competing menu item against two benchmarks: Contribution Margin and Menu Mix (or percentage of sales). Each item is classified as "High" or "Low" using the rating scale denoted above.
Gold/Stars - These are premier items of the menu. They are relatively popular and generate above average profits per sale. Some strategies to follow to enhance their profit potential:
1. Maintain rigid specifications. Special attention should be given to these items to ensure they are of the highest quality.
2. Give high menu visibility. The menu can be a great sales tool. Customers tend to order items which "stand out". Make sure your gold items present themselves well on the menu.
3. Test for price elasticity. Be proud of gold items. If the customer is willing to pay more without affecting your total demand, logic says, increase the price.
4. Push a "sales" program. Have the wait staff suggest these items when asked by customers.
Silver/Plowhorse - These items trudge along doing a great deal of work (sales) while actually doing very little (making profits). They reflect good volume sales, but generate little profit compared to the gold items. A silver item is a good candidate for inventory control. Some strategies to follow:
1. Don't offer as a special. If a silver item does not exceed the average contribution margin, why offer it as a special? Instead, turn the demand to high profit items (e.g., gold and bronze).
2. Maintain low menu visibility. Try to hide these items on the menu.
3. Reduce portion sizes slightly. This will reduce food cost, and in turn help to increase contribution margin. This can sometimes turn silver into gold.
4. Find alternative ingredients. See if less expensive ingredients can be utilized without sacrificing quality and consistency.
5. Test for price elasticity. Will raising the price significantly reduce demand?
Bronze/Puzzles - These are the most misunderstood items on the menu. They manage to make above average contribution margin, but are weak in demand. The issues that arise are twofold: why aren't they selling well and how can we increase demand without sacrificing the high profitability? Some strategies to follow:
1. Offer as daily specials. A quick and easy way to attract consumer attention and increase demand is to offer an item as a "Special."
2. Give the item high menu visibility. Make it "stand out" on the menu.
3. Reduce the price. The item may be overpriced. Test for price elasticity.
4. Drop from the menu. Especially if it has a poor shelf life, or it is difficult to prepare.
DQ/Dogs - These items are the poorest performers of the menu and may often be dropped from the menu entirely (e.g., disqualified). Some strategies to follow:
1. Drop from the menu. These items may be nothing more than dead space on the menu, and thus serve no purpose. By dropping them you can free space, reduce clutter, and concentrate on more profit bearing items. This also may reduce inventory.
2. Rename and describe to make more attractive. A catchy name and description may be all it takes to increase demand and turn a DQ into a silver or gold.
Complete Menu Engineering Reports - Step 3
MENU ENGINEERING REPORT
Menu Item # Sold Sales% Item Cost
Selling
Price
Item
CM
DM
Class
CM
Class
Item
Rank
Baked Snapper 100 5.00 4.06 14.50 10.44
Blackened Chicken 200 10.00 3.98 12.98 9.00
Chicken Kiev 150 7.50 2.98 14.50 11.52
Crabmeat Chateuabriand
400 20.00 11.20 29.90 18.70
Famous Catfish Dinner 500 25.00 2.59 12.50 9.91
Prime Rib 100 5.00 4.98 13.50 8.52
Sirloin Strip 300 15.00 3.67 14.95 11.28
Southwestern Chicken 250 12.50 1.74 7.25 5.51
P & L REPORT
Entree Quantity Sold Total Item Costs Total Item Revenues
Total Contribution Margin
Baked Snapper
Blackened Chicken
Chicken Kiev
Crabmeat Chateuabriand
Famous Catfish Dinner
Prime Rib
Sirloin Strip
Southwestern Chicken
Total
Answer Questions - Step 4
Please review the attached engineering reports and answer the following questions:
1. What is the total contribution of the menu?_________________________(Look at P & L report)
2. What item generates the highest contribution margin in terms of gross dollars?___________(Look at P & L report)
3. How would you characterize the price elasticity for Southwestern Chicken?_________
Crabmeat Chateubriand?_________________ (Look at Menu Engineering report)
4. What are the weakest menu items?_______________________ (Look at Menu Engineering report)
5. What specific menu items would it make sense to offer as a daily special?__________________ (Look at Menu Engineering report)
6. What specific menu items should be given high menu visibility?_________________
(Look at Menu Engineering report)
7. What specific menu items could be possibly renamed to transform them into silver or gold?
_____________________________ (Look at Menu Engineering report)
8. What specific menu items may be overpriced? ___________________________ (Look at Menu Engineering report)
9. Why would it make sense to possibly hide the blackened chicken menu item?_____________
______________(Look at Menu Engineering report)
http://www.restaurantchecklists.com/article2.html
Restaurant Business Articles
Engineering your menu for profit...
By Andreas BreitfussRestaurant Checklists.com
Today I wanted to talk to you about your menu and more specifically about engineering it
for profit.
Menu engineering is the analysis of your menu which look at the sales price, sales history
and the cost of each item of the menu. From the collected data engineering refers to the
calculation of the profit or contribution margin of each item in relation to all the other items
on the menu for a period of time.
Menu engineering is an integral part of hospitality management in today’s robust and
competitive market. Each of the items once calculated will be classed into one of four
categories:
1. Stars (popular and profitable)
2. Plow Horses (popular but not as profitable)
3. Puzzles (not popular but highly profitable)
4. Dogs (neither popular or profitable)
And it is with this information you are able to make an informed and calculated decision on
what to do with the items on your menu. Engineering is not a one time calculation it is done
on a regular basis like monthly or quarterly. It will allow you to maximise cost reduction in
food and beverage costs and enhance your profitability of your menu. Engineering does
not stop there as it allows you to position items on your menu to gain the maximum
exposure to your customers to gain maximum profit. Engineering allows you to focus on
the profit or contribution of each item rather that the usual practice of the individual cost
percentage.
Some of the benefits of menu engineering include:
1. Increased average gross profit per customer
2. Item analysis for decision making on what item to keep or get rid of
3. Cost control analysis to decrease your F & B costs
4. Sales promotion analysis allows you to promote higher profit items
5. Staff sales analysis and linked incentive programs
6. Menu pricing analysis
7. New menu evaluation
8. Menu layout analysis for increased profitability
9. Trend analysis for food styles on your menu
Remember dollars pays the bills not percentages.
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