MENU PLANNING

From design to evaluation

1

Rationale
Everything starts with the menu. The menu dictates much about how your operation will be organized and managed, the extent to which it meet its goals, and even how the building itself - certainly the interior - should be designed and constructed.

2

Objectives
 To explain the importance of a menu  To explain the basic rules of menu planning  To identify factors to be considered when planning a menu  To identify constraints in menu planning  To plan and write a menu
3

Must Satisfy Guest Expectations
 Reflect your guests’ tastes  Reflect your guests’ food preferences  Ascertain your guests’ needs

4

Must attain Marketing Objectives
 Locations  Times  Prices  Quality  Specific food items

5

Must help to achieve Quality Objectives
 Quality standards: flavor, texture, color, shape, flair, consistency, palatability, visual appeal, aromatic apparel, temperature  Nutritional concerns: low-fat, high-fiber diets, vegetarian

6

Must be Cost-Effective
 Commercial financial restraints profit objectives  Institutional minimizing costs operational budget
7

Must be Accurate
 Truth-in-menu laws exist in some localities, cannot mislabel a product
   

“butter” must use butter not margarine “fresh” must be fresh, not fresh frozen “homemade” not purchased “ready-to-heat” “USDA Choice” actually “USDA Good”

8

Menu Planning Constraints

9

Facility Layout/Design and Equipment
 Space  Equipment available  Work flow  Efficiency

10

Available Labor
 Number of Employees  Required Skills  Training Programs

11

Ingredients
 Standard recipe  Availability of the ingredients required during the life span of the menu  Seasonal ingredients  Cost  Miscellaneous cost (flight charges, storage)
12

Marketing Implications
 Social needs  Physiological needs  Type of service (fast food, leisure dinning)  Festival  Nutrition
13

Quality Levels and Costs
 Guests’ expectation  Employees’ skills and knowledge  Availability of equipment  Specific ingredients  Food costs and selling prices

14

The Menu and the Food Service Operation

15

The Menu Helps to Determine Staff Needs
 Variety and complexity increases, number of personnel increases
  

Production staff Service staff Back-of-house staff

16

The Menu Dictates Production and Service Equipment Needs
Tableside service  carving utensils, trolleys, gueridon, salad bowls, suzette pans, souffle dishes, soup tureens, large wooden salad bowl, rechaud, Voiture (heated cart for serving roasts) and ......
17

The Menu Dictates Dining Space
 A take-out sandwich or pizza operation would require no dining space and the amount of square feet required per person would be minimal.  On the other hand, if a restaurant offers a huge salad buffet, dessert selection or an after-dinner trolley, wide aisles would be needed to allow guests ease of movement and moving of equipment.

18

Purchase Specifications May Be Dictated By The Menu
 If the menu offers such items as USDA Choice New York strip steaks, quarter-pound lean beef burgers, grade AA eggs, freshly squeezed Florida orange juice, or vineripened tomatoes, back -of-house procedures will not only include receiving, storing, issuing, and producing the menu items but also purchasing the specific products described. (When such factors as grade and portion size are not dictated by the menu, managers and chefs must determine purchase specifications and related quality factors.)

19

How and When Items Must Be Prepared
 To stimulate guest interest, the menu planner may offer a dish prepared in a variety of ways:
 

Cooking methods Poached, broiled, batter-dipped, deep fried

 The finished product must be prepared using the method indicated on the menu  Small quantities cooking (a la carte)  Batch cooking
20

The Menu is a Factor in the Development of Cost Control Procedures
 As the menu requires more expensive food items and more extensive labor or capital (equipment) needs, the property’s overall expenses and the procedures to control them will reflect these increased cost.

21

The Menu and the Service Plan
       Type and size of dinnerware Types of flatware Garnishes (place be service or production staff) Timing requirement for ordering Additional dining service supplies to serve the item Special serving produces Special information (doneness of the steaks, over easy or sunny side eggs, etc.)
22

Menu Design
 First impression is always important, the entire menu should complement the operation - Theme - Interior Decor - Design (Merchandising) - Creativity - Material - Color - Space
23

Menu Design
Type style and/or lettering Names of food items Description Popular items are at the top of a list Clip-ons, inserts (daily specials) Operations address Beverage service notice Separate menus for each meal period Separate menu for host/hostess and guests
24

Menu Styles
 A table d'hôte (a complete meal for one price)  A la Carte (items are listed and priced separately)  Combination (combination of the table d'hôte and a la carte pricing styles)  Fixed menus: a single menus for several months  Cycle menus: designed to provide variety for guests who eat at an operation frequently - or even daily

25

Types Of Menus
 Breakfast (offers fruits, juices, eggs, cereals, pancakes, waffles, and breakfast meats)  Lunch (features sandwiches, soups, salads, specials; usually lighter than dinner menu items)  Dinner (more elaborate, steaks, roasts, chicken, sea food and pasta; wines, cocktails, etc..)
26

Types Of Menus - Specialty
        Children’s Senior citizens’ Alcoholic beverage Dessert Room service Take-out Banquet California (breakfast, lunch and dinner menu items on one menu)  Ethnic
27

Basic Rules Of Menu Planning
 Know your guest - Food preference - Price - Age  Know your operation - Theme or cuisine - Equipment - Personnel - Quality standards - Budget

28

Selecting Menu Items
 Menu category:
 Appetizers  Salads  Entrees  Starch

items (potatoes, rice, pasta)  Vegetables  Desserts  Beverages
29

Common Sources For Menu Item Recipes
 Old menus  Books  Trade magazines  Cookbooks for the home market

30

Menu Balance
 Business balance - balance between food cost, menu prices, popularity of items, financial and marketing considerations  Aesthetic balance - colors, textures, flavors of food  Nutritional balance
31

Elements Of Menu Copy
 Headings - Appetizers - Soups - Entrees  Sub-heading - Under entree:

Steak, seafood, today’s specials
32

Elements Of Menu Copy
 Descriptive copy (describe the menu items) should be believable and made in short, easy-to-read sentences - no description is needed for selfexplanatory item. i.e. Low Fat Milk

33

Truth-in-menu
 Grading (foods are graded by size, quality, in line with official standards)  “Freshness” (cannot be canned, frozen or fresh-frozen)  Geographical origin (cannot make false claims about the origin of a product)  Preparation (if the menu says baked, it cannot be fried instead)  Dietary or nutrition claims (supportable by scientific data)

34

Supplemental Merchandising Copy
Includes information such as:  Address  Telephone number  Days and hours of operation  Meals served  Reservations and payment policies  History of the restaurant  A statement about management’s commitment to guest service

35

Menu Layout
 Sequence:  Appetizers, soups, entrees, desserts

Depends on the operation (side orders, salads, sandwiches, beverages) Depends on popularity and profitability

 Placement:  artworks; space; boxes; clip-on; etc.
36

Menu Layout
Format:  Menu’s size  General makeup Typeface:  Printed letters  Font size  Type face
37

Menu Layout
Artwork:  Drawings, photographs, decorative patterns, borders Paper:  Texture Cover:  Color  Texture
38

Common Menu-design Mistakes
Menu is too small Type is too small No descriptive copy Every item treated the same Some of the operations’ food and beverages are not listed Clip-on problems Basic information about the property and its policies are not included  Blank pages       

39

Evaluating Menus
 Must set standards  Determine how menu is helping to meet standards

40

Menu Evaluation: Questions Most Often Asked
 Is the menu attractive?  Do the colors and other design elements match the operation’s theme and decor?  Are menu items laid out in an attractive and logical way?  Is there too much descriptive copy? Not enough? Is the copy easy to understand?  Is attention called to the items managers most want to sell, through placement, color, description, type size, etc.?

41

Menu Evaluation: Questions Most Often Asked
       Have guests complained about the menu? Have guests said good things about the menu? How does the menu compare with the menus of competitors? Has the average guest check remained steady or increased? Is there enough variety in menu items? Are menu items priced correctly? Are you selling the right mix of high-profit and low-profit items?

42

Menu Evaluation: Questions Most Often Asked
 Is the typeface easy to read and appropriate to the restaurant’s theme and decor?  Is the paper attractive and stainresistant?  Have the menus been easy to maintain so that guests always receive a clean, attractive menu?
43

Menu Pricing
SUBJECTIVE PRICING:  The reasonable price method: from the guest’s perspective - what charge is fair and equitable  The highest price method: sets the highest price that the manager thinks guests are willing to pay  The loss leader price method: an unusually low price is set for an item to attract guests  The intuitive price method: takes a wild guess, trial-and-error
44

Menu Pricing
DESIRED FOOD COST PERCENTAGE PRICING METHOD:  manager determines a reasonable food cost percent  then divides a menu item’s standard food cost by its reasonable food cost percent
Selling price = $1.50 (item’s standard food cost) 0.33 (desired food cost percent) = $4.55

45

Menu Pricing
PROFIT PRICING: factors profit requirements and non-food expenses into menu item selling prices
Allowable = $300,000 - $189,000 - $15,000 = $96.000 food costs (forecasted (non-food (profit food sales) expenses) requirements) Budgeted food cost % = $96,000 (allowable food costs) = 0.32 or 32% $300,000 (forecasted food sales)

46

Menu Pricing
COMPETITION AND PRICING:  Know competitor’s menus, selling prices, and guest preferences  Lower your prices  Raise your prices  Elasticity of demand: Elastic: price change creates a larger % in the quantity demanded (prices-sensitive) Inelastic: the % change in quantity demanded is less than the % change in price
47

The Menu:The Foundation For Control
GUEST SATISFACTION SERVING HOLDING COOKING PREPARING
PRODUCTION ACTIVITIES

BASIC OPERATING ACTIVITIES: CONTROL POINTS

MENU PLANNING PURCHASING RECEIVING

STORING ISSUING
48

The Menu Influences
 Product Control Procedures every item on the menu represents a product to be controlled  Cost Control Procedures careful cost control procedures must be followed, particularly when expensive products and labor-intensive service styles are used  Production Requirement product quality, staff productivity and skills, timing and scheduling, and other back-of-the-house functions are all dictated by the menu
49

The Menu Influences
 Equipment Needs equipment must be available to prepare products required by the menu  Sanitation Management  management must consider menu items in light of possible sanitation hazards  Layout and Space Requirements the physical space within which food production and service take place - must be adequate for purchasing, receiving, storing, issuing, producing, and serving every item on the menu

50

The Menu Influences
 Staffing Needs as menu becomes more complex, greater demands may be placed upon the staff  Service Requirements the menu affects the skill levels required for service personnel, along with equipment, inventory, and facilities needed in the front of the house  Sales Income Control Procedures elaborate menus require more stringent controls than simple menus
51

Menu Planning
is also.. A Tool for:
 Sales lists the items an operation is offering for sale  Advertising communicates a property’s food and beverage marketing plans  Merchandising target market expectations - products, service, ambience (theme and atmosphere), perceived value  Marketing Tool strive to meet or exceed the expectations of its target market
52

Priority Concerns Of The Menu Planner
Priority Concerns of menu Planner Wants and needs Guest Quality of Item Flavour Consistency Concept of Value Item Price Object of Property Visit Socio-Economic Factors Demographic Concerns Sanitation Concerns Ethnic Factors Layout Concerns Religious Factors Aromatic Appeal

Cost Availability Peak Volume Production and Operating Concerns

Texture/Form/Shape Nutritional Content Visual Appeal

Temperature Equipment Concerns

53

Menu Planning Strategies
 Rationalization its objective is simplification for the sake of operational efficiency i.e., cross-utilization menu items use the same raw ingredients - Menu when carefully plan can be a streamlining of the purchasing, receiving, storing, issuing, production, and serving control points. - High-quality convenience foods make it easier to offer new items without having to buy additional raw ingredients

54

Factors That Influence Menu Planning Strategies
 Needs and wants of target markets  Several items from same ingredients  Storage requirements  Personnel skill levels  Product availability / seasonality  Quality and price stability  Sanitation procedures
55

External Factors That Influence Menu Changes
 Consumer Demands decide which potential markets wants to attract  Economic Conditions cost of ingredients, potential profitability of new menu items  Competition many not want to serve next door’s best  Supply Levels seasonal items, price to the quality and quantity  Industry Trends industry’s response to new demands
56

Internal Factors That Influence Menu Changes
 Facility Meal Patterns existing meal periods - breakfast, lunch and dinner  Concept and Theme the image may rule out certain foods that do not blend with its theme and decor  Operational System costs for new equipment to the successful production and service of new menu items
57

Pricing Approaches
 Subjective Price Methods intuition and knowing your guests (failed to relate profit and costs)  The Reasonable Price Methods presumes value to the guest (what charge is fair and equitable)  The Highest Price Method sets the highest price the guests are willing to pay

58

Pricing Approaches
 The Loss Leader Method an unusually low price is set for an item (or items) to bring guests in  The Intuitive Price Method wild guess about the selling price (pricing methods based on assumptions, hunches and guesses)

59

Pricing Approaches
 Simple Mark-up Pricing Methods designed to cover all costs and to yield the desired profit. Three Steps: 1. Determine the ingredients’ costs 2. Determine the multiplier 3. Establish a base selling price
60

Multiplier
If food cost is to be 40% Multiplier = 1 / desired food cost% = 1 / .40 = 2.5

61

Base Selling Price
If ingredient cost is $3.32 Base Selling Price = Ingredient Cost x Multiplier

$8.30

= $3.32 x 2.5

A base selling price in not necessarily the final selling price

62

Prime-Ingredient Mark-Up Method
Base selling price = Prime Ingredient Cost x Multiplier

$8.30

= $1.59 x 5.22

or food cost is about 19%

63

Mark-Up with Accompaniment Costs
Entree / Primary Costs Plate Cost Food Cost Mark-Up Multiplier Base Selling Price $3.15 +$1.25 $4.40 x 3.3 (30% food cost) $14.52
64

Determining the Price Multiplier
     Based upon: experience or “rule of thumb” contribution margin impact of sales mix does not reflect higher or lower labor cost assume food cost associated with producing menu item are know

65

Contribution Margin Pricing Method
Contribution Margin refers to the amount left after a menu item’s food cost is subtracted from its selling price. Two steps in setting base selling price: 1. Determine the average contribution margin required per guest
Non-Food + Required Profit No. of Expected guests $295,000 + $24,000 85,000 = Ave. Contribution Margin Required/guest

=

$3.75

66

Contribution Margin Pricing Method
2. Determine the base selling price for a menu item
Base selling price = average contribution margin + Standard food cost

$7.35

=

$3.75 + $3.60

67

Ratio Pricing Method
The ratio pricing method determines the relationship between food costs and all non-food costs plus profit requirements and uses this ratio to develop base selling price for menu items. Three steps 1. Determine the ratio of food costs to all other cost plus profit requirements
All non-food costs + Required profit Food costs $160,000 + $21,000 = 1.34 $135,000 = Ratio

68

Ratio Pricing Method
2. Calculate the amount of non-food cost and profit required for a menu item
Non-food cost and profit required = Standard food cost $5.03 = $3.75 x 1.34 x ratio

3.

Determine the base selling price for the menu item

Base Selling Price = Non-food cost and profit required + Standard food cost $8.78 = $5.03 + $3.75

69

Simple Prime Costs Method
The term prime cost refers to the most significant costs in a food service operation: food, beverage and labor. A simple prime costs pricing method involves assessing the labor costs for the food service operation and factoring these costs into the pricing equation. Three steps: 1. Determine the labor costs per guest
Labour Cost per guest = Labour costs / No. of expected guests $2.80 = $210,000 / 75,000

70

Simple Prime Costs Method
2. Determine the prime costs per guest
Prime Cost per guest = Labour cost per guest + menu item’s food cost

$6.55 3.

= $2.80 + $3.75

Determine base selling price

Base Selling Price = Prime costs Per guest Desired Prime Costs%

$10.56

=

$6.55 / 0.62

71

Specific Prime Cost Method
Specific Prime Cost Method - develops mark-ups for menu items so that the base selling prices for the items cover their fair share of labor costs.  Divide the menu items into 2 categories: (A) extensive preparation (B) non extensive preparation  clean up, and other non-preparation activities

72

Specific Prime Cost Method
 Allocates appropriate % of total food costs and labor costs to each category (A) 60% of the total food cost (B) 40% of the total food cost (A) & (B) 55% of all labor costs 45% of all labor costs is incurred for service,

73

Specific Prime Cost Method Calculations

Budget Item Preparation) (1) 
Food Cost35% Labour Cost All Other Cost Profit Total Mark-Up Multiplier 60% of 35% = 21% 30% 20% 15% 100% 100% =2.9% 35%

Operating Budget %
(2)

Category A (extensive preparation)
(3)

Category B (Non-extensive
(4)

Items

40% of 35% = 14%

Items

55% of 30% = 17% 60% of 13% = 8% 60% of 15% = 9% 67% 67% = 3.2 21%

40% of 13% = 5% 40% of 20% = 8% 40% of 15% = 6% 33% 33% = 2.4 14%

74

Important Pricing Considerations
 The Concept of Value (price relative to quality)  The Basic Law of Supply and Demand  Volume Concerns Must be Considered  Price Charged by the Competition for a similar Product

75

Evaluating The Menu: Menu Engineering
Basic Menu Engineering Process:  Stars - items that are popular profitable  Plowhorses - items that are not profitable but popular  Puzzles - items that are profitable but no popular  Dogs - items that are neither profitable nor popular
76

Defining Profitability
 Contribution Margin a “high” contribution margin for an individual menu item would be one that is equal to or greater than the average contribution margin
Average Contribution Margin = Total Contribution Margin Total Number of Item Sold
77

Defining Popularity
Popular Index bases upon the notion of “expected popularity” For example: 4 items on a menu and each is assumed to be equally popular, the sales of each would be expected to be 25% 100% ÷ 4 = 25% Menu engineering assumes that an item is popular if its sales equal 70% of what is expected.. For example: a food item is considered popular if its sales is: 25% x 70% = 17.5% of total sales

78

Menu Engineering Worksheet
M enu Engineering W orksheet Restaurant: ____________________________
(A) M enu Item Name Chicken Dinner NY Strip Steak Lobster Tail
Tenderloin Tips

Date: _________________ 6/10/00 M eal Period: Dinner
(F) Item CM (E - D) (G) M enu Costs (D x B) (H) M enu Revenues (E x B) (S) Menu CM M M% Item Category Category Classification Plow$2079.00 $1150.80 Low High horse High High Low High Low Low Star Puzzle Dog (L) M enu CM (H - G) (P) (R)

(B) Number Sold (M M )

(C) M enu M ix %

(D) Item Food Cost

(E) Item Selling Price

420 360 150 70

42% 36% 15% 7%

$2.21 4.50 4.95 4.00

$4.95 8.50 9.50 6.45

$2.74 4.00 4.55 2.45

$928.20

1,620.00 3,060.00 1,440.00 742.50 280.00 1,425.00 451.50 682.50 171.50

Column Totals

N 1,000

Additional Computations: (Box K = Food Cost %; Box O = Average Contribution M argin)

l J M $3570.70 $7015.50 $3444.80 K=l/J O=M/N 50.9% $3.44

Q = (100%/items) (70%)

17.5%

79

Improving The Menu Managing Plowhorses
Items low in contribution margin, but high in popularity  Increase prices carefully  Test for demand  Relocate the item to a lower profile on the menu  Shift demand to more desirable items  Combine with lower cost products  Assess the direct labor factor  Consider portion reduction
80

Improving The Menu Managing Puzzles
Items high in contribution margin but low in popular  Shift demand to these items  Consider a price decrease  Add value to the item

81

Improving The Menu Managing Stars
Items high in contribution margin and high in popularity Maintain rigid specifications Place in a highly visible location on the menu Test for selling price inelasticity Use suggestive selling techniques

   

82

Improving The Menu Managing Dogs
Items that are low in contribution margin and low in popularity: Candidates for removal from the menu

83

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