Menu Analysis & Engineering

HRT383

By

Dr. Ben Dewald

04/12/23 HRT 382 2

References

Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp 114-116. Upper Saddle River, N.J. : Prentice Hall.

Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp. 101-115. 3rd ed. Upper Saddle River, N.J. : Prentice Hall, TX911.3.M45 D79 2002 

CD-ROM TX911.3.M45 D79 2002 

04/12/23 HRT 382 3

Objectives

By the completion of this presentation you should be able to: Analyze a menu for profitability Apply menu engineering to menu analysis Apply menu scoring methods to menu analysis.

04/12/23 HRT 382 4

Important Terms

Menu engineering Plowhorses Puzzles Stars Dogs

Menu scoring Placement Pricing

04/12/23 HRT 382 5

Introduction

This presentation explains how to evaluate a menu

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.

04/12/23 HRT 382 6

Stars, Plowhorses, Puzzles, & Dogs

1st Method, called menu engineering, developed by Donald Smith Ph.D., Westin Hotels Distinguished Professor at Washington State University

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.

Plow Horse

Dog

PuzzleStar

04/12/23 HRT 382 7

Contributing Margin

Determine the contributing margin (CM) of each item

CM same as item’s Gross Profit Use total food cost (include garnish,

accompaniments served with entrée such as salad, potatoes, rolls, butter etc.).

Selling Price – Food Cost = Contributing Margin

04/12/23 HRT 382 8

Contribution MarginDollars vs. Food Cost Percentage

Steak Dinner Fish Sandwich Coffee

Selling Price $15.00 $4.00 $0.75

Cost $7.50 $1.00 $0.15

Food Cost % 50% 25% 20%

Cont. Margin $ $7.50 $3.00 $0.60

04/12/23 HRT 382 9

(1) (2) (3) (4) (5) (6)

Menu Item Number Sold

Item Sales Price

Food Cost Percentage

Total Sales

(2) X (3)

Total Food Cost

(4) X (5)

Chicken 65 $9.95 35 $646.75 $226.36

Beef 75 11.95 38 896.25 340.58

Turkey 90 10.25 31 922.50 285.98

Filet 55 12.95 45 712.25 320.51

285 $3,177.75 $1,173.43

(7) Food Cost Percentage: (6) / (5) = (8) Total Contribution to Margin: (5) – (6) =(9) Average Contribution Margin/ Customer: (8) / (2) =(10) Contribution Margin per menu Item: (5) – (6)

(2)

(10)

C/M

$6.47

7.41

7.07

7.12

Menu Engineering

39.93%$2,004.32

$7.03

04/12/23 HRT 382 10

Menu Engineering

(11) Average Popularity80% of the average item sales per entrée: 100 / 4 X 80% = 20%

(12) Popularity of each menu item:Number of portions sold divided by total number of meals soldChicken: 65 / 285 = 22.8%Beef: 75 / 285 = 26.3%Turkey: 90 / 285 = 31.6%Filet: 55 / 285 = 19.3%

04/12/23 HRT 382 11

Menu Engineering AnalysisPlowhorse

*Chicken (6.47/22.8%)

Star

*Turkey (7.07/31.6%)

*Beef (7.4126.3%)

Dog

*Filet (7.12/19.3%)

Puzzle

100%

20%

Popularity

0 Contribution Margin 7.03 8

04/12/23 HRT 382 12

The Four Key Menu Categories

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

Stars have both high popularity and high CM Puzzles have relatively low popularity and high

margins. Dogs are both low in popularity and CM

04/12/23 HRT 382 13

Menu Engineering AnalysisPlowhorse

*Chicken (6.47/22.8%)

Star

*Turkey (7.07/31.6%)

*Beef (7.4126.3%)

Dog

*Filet (7.12/19.3%)

Puzzle

100%

20%

Popularity

0 Contribution Margin 7.03 8

04/12/23 HRT 382 14

Menu Scoring

Method developed by Michael Hurst, Professor of Restaurant Management at Florida International University, a restaurant owner and past president of the NRA.

Devised to ascertain whether menu changes (additions, deletions, and price adjustments) actually improved the profitability of the menu by comparisons of a menu score.

One advantage: quick to complete because it does not track every menu item.

04/12/23 HRT 382 15

Menu Scoring

Combines profitability and popularity of menu items to arrive a a consensus score

The higher the score, the better the menu An existing menu can be scored, then

compared with a proposed menu, after sales for the new menu have been estimated.

04/12/23 HRT 382 16

(1) (2) (3) (4) (5) (6)

Menu Item Number Sold

Item Sales Price

Food Cost Percentage

Total Sales

(2) X (3)

Total Food Cost

(4) X (5)

Chicken 65 $9.95 35 $646.75 $226.36

Beef 75 11.95 38 896.25 340.58

Turkey 90 10.25 31 922.50 285.98

Filet 55 12.95 45 712.25 320.51

Total 285 $3,177.75 $1,173.43

7) Meal Check Average: 5 / 2 = 8) Gross Profit: 5 – 6 =9) Gross Profit %: 8 / 5 =10) Gross Profit Average Meal: 7 x 9

=11) Total Meals Served:12) Popularity of Meals Analyzed: 2 / 11 =13) Menu Score: 10 x 12 =

$11.15$2,004.32

63%$7.02

45063%4.42

Menu Scoring

04/12/23 HRT 382 17

The Higher the Score the More Profitable the Menu

This method takes into account not only # of items sold, but also their contributing profit

04/12/23 HRT 382 18

Placement

Two Schools of thought

1. Menu Sequence Menu should follow progression of meal

2. Focal Points Use focal points on the menu to push certain

menu items

04/12/23 HRT 382 19

Focal Points

Focal Point

Focal Point

Single Sheet Menu Twofold Menu

04/12/23 HRT 382 20

Focal Points

2

3

4

5

Focal Point

Threefold Menu

04/12/23 HRT 382 21

Specials

Larger Bolder type than the rest of menu Longer description Concept of Closure

people’s eyes are drawn to what ever is enclosed by a box

Color, illustration, and/or pictures, bullets can be used to draw attention to signature items.

04/12/23 HRT 382 22

Branding

Fast food Coke / Pepsi TGIF Jack Daniels

04/12/23 HRT 382 23

Menu Pricing

Odd-Cents pricing Majority of prices end in either a “5” or a “9”

Price rounding. Within certain price bands, price increases have

little negative impact on customers

Placement

04/12/23 HRT 382 24

Price Placement

Baked Chicken……….$8.99

Lemon Sole………….$11.99

Lamb Steak………….$12.99

Swordfish Steak…..…$14.99

BAKED CHICKENTender pieces of chicken breast

$8.99

LEMON SOLEFresh filets sautéed with lemon caper sauce

$11.99

LAMB STEAK Center cut of lamb served on a bed of rice

$12.99

SWORDFISH STEAKCharcoal grilled served with beurre blanc

$14.99

04/12/23 HRT 382 25

Price Placement

BAKED CHICKENTender pieces of chicken breast

Eight dollars and ninety nine cents

LEMON SOLEFresh 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 STEAKCharcoal grilled served with beurre blanc Fourteen

dollars and ninety nine cents

04/12/23 HRT 382 26

Conclusion

Menu analysis is important If demographic studies, internal capacities, cost cards,

and markups have been executed correctly, the score should be a good one

Analysis should be done using either the Smith or the Hurst methods to ascertain the profitability of the menu

If the analysis shows a poor menu, make improvements Good menu: first step has been taken toward running a

profitable operation. It’s just that simple

04/12/23 HRT 382 27

Where to Get More Information

Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp 114-116. Upper Saddle River, N.J. : Prentice Hall.

Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp. 101-115. 3rd ed. Upper Saddle River, N.J. : Prentice Hall, TX911.3.M45 D79 2002 

CD-ROM TX911.3.M45 D79 2002  Most Menu & F&B Management Books