Menu Analysis

1
Menu Analysis

• HRT 383

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 

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.

4
Important Terms

• Menu engineering
• Plowhorses
• Puzzles
• Stars
• Dogs

• Menu scoring
• Placement
• Pricing

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
  
• Must be profitable in terms of individual item
  profitability
  
• Most profitable item must be selling the best.

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.

Puzzle
Plow Horse
Dog
Star
7
Contributing Margin

• Determine the contributing margin (CM) of each
  item
  
• CM same as items 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
8
Contribution MarginDollars vs. Food Cost
Percentage
9
Menu Engineering
36.93 2,004.32 7.03
(7) Food Cost Percentage (6) / (5)
(8) Total Contribution to Margin (5)
(6) (9) Average Contribution Margin/ Custom
er (8) / (2) (10) Contribution Margin per menu
Item (5) (6)

(2)
10
Menu Engineering

• (11) Average Popularity
• 80 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 sold
  
• Chicken 65 / 285 22.8
• Beef 75 / 285 26.3
• Turkey 90 / 285 31.6
• Filet 55 / 285 19.3

11
Menu Engineering Analysis
100
Popularity
20
0 Contribution Margin 7.03
8
12
The Four Key Menu Categories

• Plowhorses are items that are relatively popular
  but have a lower 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 resistantmust
  consider portions.
• Stars have both high popularity and high CM
• Puzzles have relatively low popularity, but high
  contribution margins.
  
• Dogs are both low in popularity and CM

13
Menu Engineering Analysis
100
Popularity
20
0 Contribution Margin 7.03
8
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.

15
Menu Scoring

• Combines profitability and popularity of menu
  items to arrive 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.

16
Menu Scoring

• Meal Check Average 5 / 2
• Gross Profit 5 6
• Gross Profit 8 / 5
• Gross Profit Average Meal 7 x 9
• Total Meals Served
• Popularity of Meals Analyzed 2 / 11
• Menu Score 10 x 12

11.15 2,004.32 63 7.02 450 63 4.42
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
  

18
Placement

• Two Schools of thought
• Menu Sequence
• Menu should follow progression of meal
• Focal Points
• Use focal points on the menu to push certain menu
  items
  

19
Focal Points
Single Sheet Menu
Twofold Menu
20
Focal Points
Focal Point
Threefold Menu
21
Specials

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

22
Branding

• Fast Food
• Coke / Pepsi
• TGIF
• Jack Daniels

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

24
Price Placement
25
Price Placement
26
Price Placement
27
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.
  
• Its just that simple

28
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 FB Management Books