Now Serving: The Art of the Menu (Last of a Series)-A A +A
Monday, August 4, 2014
MENU planning and development is a skill and an art that is acquired by great knowledge and years of experience.
Menu Analysis is an important aspect of menu development that covers the process of evaluating menus in terms of profitability and popularity, knowing menu mix percentages, menu engineering and planning appropriate menu improvements. To put it quite simply, it is the “systematic evaluation of a menu’s cost and sales data to identify opportunities for improved performance” (Kasavana & Smith: 1982) .
There are many ways to analyse the popularity and profitability of menus.
Menu Engineering in general is is a known concept in hospitality. The objective of menu engineering is to maximize a restaurant’s or outlet’s profitability by via menu merchandising done by servers.
In menu engineering, the contribution margin and the menu mix percentage of each item is analysed in relation to the average contribution margin. It is important for chefs, restaurateurs and hospitality practitioners to know the techniques for menu improvement decision making. What happens when you do menu engineering is, you utilize the marketing approach to evaluate menu pricing, design and content decisions, you classify menu on base selling price and margin pesos, not just percentages;
Some concepts in Menu Engineering which we need to know and understand:
Contribution / Gross Profit margin (CM) is defined as the “amount of revenue remaining once variable or direct expenses are accounted for”. In Menu Engineering, it refers to the difference between revenue and cost of sales and is therefore the same as the gross profit.
Menu Mix (MM) “refers to the percent of numbers sold per item as compared to the total sold for the menu items being analysed, usually within a menu category.
Why use Menu Engineering?
The advantages of using menu engineering lies not only in the degree of control over labor and food cost but also in using it as a tool to control contribution margin as well as due to the following factors:
• Changing economic, social and competitive climate
• Growth of price/value driver of spending behaviour
• Rising food and paper costs
• Need for pricing strategy models to support profitability
• Real time approach to decision-making
Menu Engineering requires four pieces of information: menu items, numbers sold in a four week time period, item selling prices and item food costs. The item food cost must be accurate and current. It is necessary to have standard recipes with current costs. Ideally, the menu item costs will correspond to the same time period that sales are being analyzed. This is the distinction between standard and ideal food costs. It also uses a matrix approach. This means that the menu items are evaluated on two variables and can be classified in four categories.
These categories are:
Stars are items that are the most popular and profitable in the menu mix. They usually turn out or become signature or flagship items for the obvious reasons. They have higher contribution margins and enjoy higher percentage in the menu mix. These are highly visible and well- positioned on menu; Stars require that operators should maintain its rigid quality, portion and presentation, and must be tested for price elasticity.
Plow Horse or Workhorse Plow are items that are highly popular but low in terms gross profit or contribution margin. These are usually the leader menu items that draw diners and guests to your door, but don’t significantly increase restaurant revenue. The strategy is to relocate workhorses to low profile on menu or package with lower cost menu item.
Puzzles are items on the menu that are high in contribution but low in popularity. They are difficult to sell. These are usually taken off menu if labor intensive, and are repositioned in higher profile part of the menu. In some cases, these items are renamed or improved and are pushed for merchandising.
Dogs are menu items that are considered menu “losers”; are unpopular and have low contribution. These are eliminated from the menu. In some cases, their prices are raised to achieve at least a puzzle status. Some of these items land in the menu specials offered on a limited time period to accommodate diner preferences.
Menu Engineering is an essential tool that plays a vital role in menu planning, design and pricing decisions. In the process, we recognize menu categories and items we want to sell (the most popular and profitable ones), and those items we want to eliminate that do not contribute to the bottom line. Our servers should have a good understanding of these items and we must train them to do aggressive merchandising.
Knowing these concepts also allows for more subtle menu planning by revelling, for example, a popular but unprofitable item which can be “reengineered” to provide more profit and items are identified for potential Identify items for potential price changes.
Life is a kitchen. Put on your prettiest apron and whip up something incredible.
Published in the Sun.Star Baguio newspaper on August 05, 2014.