POLITECNICO DI MILANO

Scoula di Ingegneria dei Sistemi

POLO TERRITORIALE DI COMO

Master of Science in
Management, Economics and Industrial Engineering

MENU RE-ENGINEERING

Supervisor : Prof. Alessandro Brun

Master Graduation Thesis by:

YOGESH GOEL
Student Id. number: 767939

AHMAD SHERAZ CHEEMA

Student Id. number: 785127

Academic Year 2011/12

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Acknowledgements

Every dissertation demands a lot of hard work, time, patience and concentration. While
working on this dissertation, apart from these aspects, I have also developed the necessary
skills and attitude, which are always required in a professional field. I am thankful to all
those who helped me in completing this dissertation.

I would like to thank Proff. Alessandro Brun for giving me the opportunity to work on
this project and I express my deep sense of gratitude & indebtedness towards him, without
the guidance of whom I would have found it really difficult to undertake this dissertation. I
would like to thank him for his ever available, unconditional help & guidance that he made
available throughout the dissertation.

I would like to thank the co-author Mr. Ahmad Sheraz Cheema for his valuable support
and pratical ideas which encouraged me to work harder and give my best during the
progress of the dissertation.

I would also like to acknowledge the encouraging attitude of my friends & other staff
members of Politecnico Di Milano who helped me to complete the dissertation.

Finally, I would like to thank my family for their love and support. My parents have made
countless sacrifices for me, and have provided me with steady guidance and
encouragement. This dissertation is dedicated to them.

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 TABLE OF CONTENTS

1 INTRODUCTION 9
1.1 Menu Engineering 9

2 LITERATURE REVIEW 14

2.1 CONCEPT 14

2.2 MENU ENGINEERING: Quantitative Method for Menu Analysis 15

2.3 METHODS PROPOSED BY SCHOLARS 17

2.3.1 Miller Method 17

2.3.2 Kasavana & Smith Model 19

2.3.3 Uman Method 22

2.3.4 Merricks & John Method 24

2.3.5 Pavesic Model 25

2.3.6 Hayes & Huffman Method: Profit & Loss 28

2.3.7 Hayes & Huffman Method: Goal Value Analysis 31

2.3.8 LeBruto Method 33

2.4 Comparison between the work of previous scholars 37

2.5 Key Problems in earlier scholars’ method proposals 40

2.5.1 Problem with Miller Method 40

2.5.2 Problem with Kasavana & Smith Method 40

2.5.3 Problem with Uman Method 41

2.6 Pareto Analysis 42

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 2.6.1 Pareto Diagram 44

2.6.2 The essence of Pareto Analysis or ABC Analysis 46

2.7 BCG Matrix 47

3 GENERAL CONSIDERATIONS 53

3.1 The Strategic analysis of Menu Engineering 54

3.2 The process of Menu Re-engineering or the benefits of Menu Analysis 56

4 MODEL PROPOSAL 58

4.1 Objective of the Model 58

4.2 Scope of the Model 58

4.3 Algorithm employed in realizing the proposed model 58

4.4 Description of the methodology employed and the corresponding use 60

4.4.1 Recipe Costing 61

4.4.2 Ingredients Costing 64

4.5 Flow Diagram of Proposed Model 75

4.6 Comparison of proposed model with previous scholars’ work 76

5 RESULTS AND DISCUSSIONS 78

6 CONCLUSIONS 84

7 BIBILOGRAPHY 87

8 APPENDIX 95

8.1 Appendix 1: Recipe List 95

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8.2 Appendix 2: Ingredients List 106

8.3 Appendix 3: Unit Conversion Table 109

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 LIST OF FIGURES

Figure Page Number

1 Relationship between Profitability and Popularity 11

through BCG matrix
2 Miller Matrix 18

3 Example: Miller’s Model 19

4 The classification of a menu’s products according to 21

Kasavana&Smith model

5 Uman Matrix 24

6 Merrincks and Jones matrix 25

7 Pavesic Matrix, Cost/Margin model. 26

8 Example of Profit factor and contribution margin 27

worksheet.
9 LeBruto Matrix 35

10 Comparison between models of earlier scholars 37

11 Comparison results of works of scholars 40

12 Pareto Chart 46

13 BCG Matrix 49

14 BCG Matrix, showing dimensions Popularity index 71

and Profitability index
15 Flow diagram of proposed model 75

16 BCG Matrix Results of Model Proposal 81

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 LIST OF TABLES

Table Page Number

1 Uman Method: Example 23

2 Individual profit & loss statements for ten 29
hypothetical menu items. Hayes and Huffman (1985)

3 Net euro contributions of ten hypothetical items. 30

Hayes and Huffman (1985)
4 Examples of the hypothetical food service unit 32

5 Menu Engineering labour rankings and labour label 36

worksheet
6 Results of Menu Engineering labour rankings and 36
labour label worksheet
7 Example illustrating the comparison of work of 38
earlier scholars
8 Comparison results of works of scholars 39
9 P&L Analysis 41
10 Results of P & L analysis 42

11 Example1: Proposed Model Description 68

12 Example2: Proposed Model Description 73

13 Comparison of proposed model with earlier scholars’ 76
work
14 Result of comparison of proposed model with earlier 77
scholars’ work

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ABSTRACT

In this global environment, the hospitality business is growing with such a rapid pace that the food
service units’ competitors in the same level have the large numbers in the same time. Every food
service units try to contribute the profit margins and maximize the revenues in every areas. The
present thesis focuses on food dish items and uses Menu Re-engineering approach to maximize
the profits of food service units. The procedure of menu re-engineering aims to provide analytical
results of menu to figure out which food dish items are popular and which are generating high
profits and which food dish items with low profits or low popularity need a great concern and
attention from managers and executives of food service units.

This Thesis examines and analyzes the concept of Menu Re-engineering and studies its principles
to design a model for enhancement of profitability’s of food service food service units. Many
Menu items offered by food service units are classified as unprofitable and/or unpopular and are
not supposed to be good for profitable business. Despite this, many menu items are still present in
menu card to add variety to menus with the same performances and many food service managers
are unwilling to remove them or change their strategies as they believe that these items are good
for business. Several research projects spreading the knowledge and awareness about the
application of menu re-engineering and its design and models is considered to be an effective way
to advance food service units managers’ commitment to these systems. To create profitability and
value for a business unit from the perspective of menu engineering, and how to develop
corresponding strategies to achieve the objectives are main points of concerns of this analysis.

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Chapter 1

INTRODUCTION

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INTRODUCTION

1.1 MENU RE-ENGINEERING

The goals of menu re-engineering is to maximize profits by subconsciously encouraging the
customers to order food dish items that make more profits and steering them away from less
profitable food dish items.

It is basically a step-by-step process; through it managers can figure out present and all upcoming
needs and important decisions which will add value to the restaurant. There are some important
points of concern which needs to be focus more.

1. Customer Concern: what is more appealing for them as they are served
2. Menu Mix (MM): As according to the customer demand, what he demanded more from the
available items.
3. Value adding: How the product contributed in adding value in terms of profit(Contribution
Margin).

This concept of menu engineering needs management in order to evolve itself in right direction of
generating value. This value generation will lead to a potential profit contribution margin ratio,
which is the main element of menu engineering and a basic motto of management. Customer
concern (demand) mixing with the value adding will be quite reasonable tool to enhance the
morale of the menu.

It provides key points in order to make the business more profitable and popular. It also helps in
evolving according to need of the hour the “strategy” for making it more effective in the market. It
makes an option of availing opportunities and gave new trend and innovative moves to attract and
satisfy the needs of the customer according to the taste and personal satisfaction. It categorizes the
meals according to the culture, taste and geographical tastes of the persons, which provides new
definition and adorns new paths of success.

It is basically considered as simply a printed advertisement for the food service unit that helps the
managers of the public alimentation units to promote their services and products, able to facilitate
the economic income and succeed in an increasingly competitive atmosphere. A well designed
and thoroughly prepared menu design helps to understand the after sales critical points for the
success of food service unit, by employing periodic analysis and review analysis various issues

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and uncertain problems can be well interpreted and carefully managed during the whole life cycle
of food service unit.

A food service unit’s menu is its operator’s fundamental strategic vehicle. The menu ultimately
influences how customers perceive the operation, communicating the offerings, indicating the
types of services expected, and reflects the quality that conjoin to become the customer’s dining
experience.

Being an owner of a food service unit, the food service unit owner would like to increase the sales
of profitable period and to sell the same menu items for a long period. However, with time the
customer needs get changed, the preferences, priorities change; so it is not a good idea for a food
service unit owner to sell the same menu item for a long time consistently even if it is losing its
popularity. Consequently, food service unit owners need to depend on strategy building in
deciding up the menu and thus following menu analysis over a time using various methods so as
to solve the problems and proliferate the business. Most menu items go through the process of
introduction into the market, growth, maturity, decline and final withdrawal from the market.
Menu analysis and engineering helps the food service unit owners to decide how to make up the
menus in a more reasonable, scientific and effective way.

In today’s world of globalization, all restaurants, their management and all other hospitality
businesses tries to groom and make value in almost every corner of the system. Menu engineering
is the hard core for this value generation; it not only makes profit but also makes popularity by
increasing the sale volume. The relationship of profitability and popularity is clear from the
following matrix:

Figure 1: Relationship between Profitability and Popularity through BCG matrix

This matrix helps us in figuring out the relationship between profitability and popularity. It
explores the opportunity window and drives more effective and efficient strategy for goal seeking,
which is to generate profit and to enhance the sale.

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In menu management process become a crucial tool the menu engineering that offer a clear view
on the different dishes, which of those contribute more to the success of the food service unit,
clarifying also which of them are completely useless or damaging for the restaurateur, in this way
the menu become characterized and reduced to a series of numbers that acquire the same
importance and meaning as the design and the graphic of the menu.

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Chapter 2

LITERATURE REVIEW

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LITERATURE REVIEW
2.1: CONCEPT

Menu re-engineering and food costing are two hardcore elements in order to boost the revenue
stream. There is basically a direct contact between the food actual cost and the selling price. If
restaurant want to maintain the effective profit ratio, management should have to maintain this
correlation in proper balance. This menu re –engineering is a technique of monitoring the food
costing, quality of the ingredients added, interaction with the supplier and quantities purchased.

Menu re-engineering: A strategic restructuring and construction of the menus; can be applied to
hospitality industry providing services or products to customers. The main strategy is to make the
firm profitable by encouraging customers to buy or use products or services more often with
increasing level of satisfaction.

Menu reengineering involves:

 calculation of cost incurring in production of each product item

 taking into account the popularity and higher profit item
 taking into account which one is unpopular and generating higher profit
 Encouraging those to customers to increase the revenue of firms and discouraging the items
which either generate very low profit and/or are very less popular to customers.

The menu re engineering involves the understanding of customer perception and attention.
Normally, customer in any hospitality industry looks for the first few products (or services) and
last products. Hence, it is very much desirable to improve the menu to increase the sales by giving
those items more preference by positioning them on high list on menus.

Menu Reengineering is an approach for analyzing existing plans or to plan and develop new
menus for the purpose of improvement of existing menu. The analysis of menu includes following
questions which are needed to be answered:

 Are the prices of menu entrees reasonable?

 What are the factors to be included considered while evaluating food cost?
 What should be the break point sales volume to maximize the profit?
 Are there any menu items that require consideration in terms of price or popularity?

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  How can you evaluate about successful implementation of menu change?
 Which structure to follow while classifying the menu entrees?
 How should the layout of menu leaflet look?
 How do you design the menu leaflet?
 How do you know about customer preferences?

Thus Menu reengineering can be defined as the technique or approach that helps in decision
makers in solving the issues related to marketing and the management of menu.

From food service unit managers’ viewpoint, there are some items that are more attractive and
popular to customers and are good source of profits. These items need more assertive promotions
and some others which are not so popular and need to be improved or withdrawal from the menu
list. There is need of a method to distinguish menu items popularity and profitability in terms of
cost, sales and profits.

This study will be based on the research and work done by various scholars in the field of menu
engineering, including analysis and design of menu and other elements which can have impact on
menu analysis and its reengineering.

2.2: Menu engineering: a quantitative method for Menu analysis

Menu is one of the most important aspects for the success of any foodservice establishment; we
can consider the menu as the soul of the food service unit. A study argues that "menus are more
than the conventional function of a communications and selling tool but also a research and
experimentation device that can be studied to increase food service unit profit" (Seaberg, 1991).

Become crucial in this sector pay attention on the menu development during the life of the food
service unit, and actually the process becomes an endless cycle of research and analysis because
once a new menu is developed that menu is periodically reviewed for its effectiveness.

Exist many model and method developed since years ’80 to assess and control the importance and
the profitability of the dishes inserted in the menu and it is this periodical review known as menu
analysis that determines the success of the menu performance, actually menu analysis can be
defined as a range of techniques and procedures that enable more effective decision making both
with respect to marketing and operating the menu (Atkinson and Jones, 1994).

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One of the notable approach that has gained enormous momentum both from the hospitality
literature and educational curriculum is Boston's matrix technique (Morrison, 1996) also known as
the “portfolio analysis” or “menu engineering”, Jones (1994) defines this approach as the
"systematic evaluation of a menu's cost and/or sales data for the purpose of identifying
opportunities for improved performance".

One of the specific Boston's matrix techniques known as menu engineering is made popular by
Kasavana and Smith (1982) also with the introduction of the computer software packages
(Dougan, 1994; Kasavana, 1996, 1997 and 1998), but is also to take into account that these
approaches were criticized by many scholars and menu planners, actually they pointed out many
imperfections of these matrix approaches including the Kasavana and Smith's menu engineering
model, that is however today the most accepted and used in the foodservice sector.

Subsequently to these criticisms more tactical solutions to menu analysis have emerged. The issue
of non-material variable costs, which is claimed being ignored in the previous menu analysis
approaches, becomes prevalent of its important in the works of Hayes and Huffman (1995), Bayou
and Bennett (1992) and LeBruto et. al. (1995 and 1997) respectively. Other approaches such as
the micro-marketing mix (Atkinson and Jones, 1994) and economic approach (Beran, 1995) have
each advocated their own method of tactical solutions to menu analysis.

Although all these menu analysis approaches advocate different tactical solutions for analysing the
menu items' performance, they all share the same objective, which to improve (or to provide a
solution for) the current menu items performance. However, the question that poses a great
dilemma for the foodservice operators is which approaches or methods are suitable for practical
applications?

In current years, maybe the most complete method from the precise recognition of indirect costs is
the Activity Based Costing associated to the Kasavana and Smith (1982) method proposed by
Raab and Mayer (2007), that actually adapted a menu engineering model including activity-based
costing methodologies tracing all costs to individual menu items, but Reynolds and Taylor (2011)
pointed out that this approach is difficult to apply since items must be reassessed as costs change
and data collection can be laborious.

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2.3: METHODS PROPOSED BY SCHOLARS

2.3.1: MILLER METHOD

The Miller method (1980) classified all menu items sold over certain period of time into four
categories by calculating the percentage that each menu item has in total cost and sales volume.

The categories used are:

 Marginals I: Menu items with high sales volume with high involvement of cost

 Marginals II: Menu items with low sales volume and low cost percentage

 Winners: Menu items with high sales volume with low cost involvement

 Losers: Menu items with low sales volume but with high cost percentage.

According to Miller (1980), “Winners” are the best menu items as they are most popular and
profitable in the menu list. The popularity of menu items can be determined by using average
sales.

Morrison (1996) states that the original matrix approach of Miller sought to identify menu items
by their cost percentage and their proportion of total sales. Items with high popularity and a low
cost percentage were classified as “winners” and those with low popularity coupled with a high
cost percentage were called “losers”.

The dishes which fitted the other permutations of popularity to cost percentage were called
“marginals”. The profitability strategy that was advocated to menu planners was to improve the
ratio of winners on the menu through a range of operational tactics concerning selling price, cost
price and promotions.

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 Figure 2: Miller Matrix (source: Morrison 1996)

The problem in Miller method is that the menu item with low food cost percentage could be
classified as an unprofitable item with low margin because of its low price, and thus results in its
unpopularity if the price of the item is raised in order to make it profitable item.

Morrison (1996) proposes an example that underlines the weaknesses of the Miller model; if
lasagne was a popular menu item and sold for $7.50 with a food cost of $1.50, the food cost
percentage of 18.75 per cent, coupled with high popularity would classify it as a winner. A
moderately popular stir fry combination selling for $11, with a food cost of $3.50 would have a
food cost percentage of 31.81 per cent and would be classified as a marginal. If lasagne competed
directly with stir fry, Miller’s model indicated that sales of lasagne should be encouraged in
preference to stir fry. i.e. winners should be promoted in preference to marginals. The weakness in
the model is that the dollar gross profit of stir fry is $1.50 greater than the gross profit of lasagne,
and, if all variables in the model remain static, (i.e. the sale of one item does not influence sales in
other menu categories such as beverages or sweets), promoting the sale of lasagne would reduce
total profitability because of a lower margin of profit as illustrated in Fig. 1.

It can be said that the method introduced by Miller is a good idea that introduced for the first time
the use of Boston Consulting Matrix in the food service unit industry to have a clear view on the

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 different potential provided by the dishes but using as parameter the food cost percentage, that is
not actually right to assess the real importance of the dish, the result that come out using this
method become not so representative for the food service unit leading often to erroneous results as
shown in the previous example.

Figure 3: Example: Miller’s Model (source: Morrison 1996)

2.3.2: KASAVANA AND SMITH MODEL

Dr. Michael Kasavana and Donald Smith (Michigan State School of Hospitality Professors), in the
early 1980s, developed the concept of menu engineering that has been used and discussed widely
in the food service unit industry since that time. Based on Boston Consulting Group's (BCG)
matrix conceptualization model, Kasavana and Smith (1982) extended and specialized the BCG
concept for the foodservice industry.

To understand well the menu engineering model implemented by Kasavana and Smith and
especially the reasons that lead them to the choice of these two variables in the axis, it is first
necessary to understand some of the issues that they analyzed.

First and foremost, menu engineering ignores food cost percentages and focuses strictly on
money. Since banks don't accept percentages on deposit slips, this approach to menu analysis is all
about the actual money made on each menu item, also known as the item's gross margin. For
example, using the traditional mindset, a steak dinner with a 40% food cost might be considered
less profitable than the pasta dish with a 20% food cost. However, since percentages can't be
banked, consider the dollars. If the steak dinner sells for $25 and has a cost of $10 (40%), its gross
margin is $15. On the other hand, if the pasta dish sells for $15 and has a cost of $3 (20%), the
margin is $12. Using this view, the deposit slip is larger with the steak sale than the pasta sale,
even though the pasta has a much lower food cost percentage.

Second, in order to make sense of the importance of a menu item, it is also necessary to consider
its popularity, making the other key factor in the analysis the number sold of the item for the study
period. These two factors must be considered together in order to properly rank items on the

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menu. For example, compare the overall profitability of coffee to overall profitability of the steak
dinner. Coffee sells for $1.50 per cup in the food service unit, and has a cost of $.10 per cup
(ignoring refills and sweeteners for now), giving the coffee a gross margin of $1.40. Even though
coffee is far less profitable than the steak dinner in terms of raw dollars, when we multiply the
number sold by the gross margin for coffee and for steak dinners, we can compare the two equally
as to their impact on profits. If we sold 3,000 coffees and 100 steak dinners, the profit from coffee
would be $3,300, while the profit for steak dinners would be $1,500. Obviously we make more
money on coffee than steak, even though 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 total customer counts; the menu engineering model places each menu item
into one of four categories. The categories are as follows:

Stars - high popularity and high margin

Plow horses - high popularity and low margin

Puzzles - low popularity and high margin

Dogs - low popularity and low margin

Obviously everyone wants stars and nobody wants dogs. Therefore, the common actions
associated with these classifications are to maintain the status quo for stars (no changes), and to
replace the dogs with something that will be more popular, more profitable or hopefully both.
Plow horses are items that sell well, but don't make enough money. These items should typically
be retained on the menu, but to make them more profitable it might be necessary to raise their
price or reduce their cost by changing the portion sizes. Puzzles have good margins but aren't very
popular, so they need to be repositioned on the menu to gain higher visibility, their name needs to
be changed to make them more appealing, or they need to be replaced if these things don't work.

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Figure 4: The classification of a menu’s products according to Kasavana&Smith model.( Source:
Negoita (2010, p. 1474))

If for the calculation of the average profitability there will not be particular difficulties, for the
average popularity it would be a bit more complex. The first index is calculated dividing the total
contribution margin by the total number of items sold. For the second, instead, it is applied the
Pareto principle for that the 80 % of the effects is caused by the 20 % of the causes. In order to
this issue, the average popularity is simply calculated in percentage dividing 100 % by the
number of items that are inside the menu and this value will be multiplied by this 80% that in the
future it was modified in 70 %. Then, the final step consists of compare the value of profitability
and popularity of each item with the average ones that we have just explained.

AVERAGE PROFITABILITY (€) = TOTAL CONTRIBUTION MARGIN / NUMBER OF

ITEMS SOLD

AVERAGE POPULARITY (%) = 100 % / NUMBER OF ITEMS *0.8

The Kasavana & Smith method has the same weakness as the Miller Method (1980) in that the
contribution margin can appear positive even when sales volume is actually below a certain level
and when a menu item can’t cover the total cost. If the price of menu item is set high, the
contribution margin can be raised with high possibilities to decrease the demand and the

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 profitability (Kim Woogon, 2000). It has also the risk of decreasing both the demand and
profitability by preferring a high-priced menu item and increasing the contribution margin (Bayon
and Bennett, 1992).

Another deficiency, that regards also the Miller model, is the assumption that the menu item’s
variable costs include only food costs; other non-material expenses (for example labor, energy and
the like) associated with selling the item, are considered fixed costs. This is because the latter
variable are assumed “equally related to all menu items” and thus can be ignored (Kasavana and
Smith,1990, p.126)

In spite of these problems, it is important to say that Kasavana and Smith’s (1982) technique
remains the most extensively discussed menu analysis methodology in hospitality journals and has
been widely embraced in the foodservice industry. The later introduction of the menu engineering
computer software spreadsheet program has helped facilitate the application of the system and
further enhanced its popularity (Kasavana, 1996, 1998). Moreover, another reason is that the result
can be easily obtained by simply entering a few variables (Yang and Lee, 1998).

2.3.3: UMAN METHOD

During 1983 Uman introduced a method using the same dispositions of the previous matrix
models implemented by Kasavana and Smith (1982) and Miller (1980).

Uman (1983) identifies four kinds of menu items namely: “Signature”, “Lead item”, “Hard to
Sell”, and “Losers” by using total cash contribution and the unit contribution margin. This is a
concept that takes the two factors of popularity and profitability into consideration when menu
items are analysed with the criteria of sales volume and contribution margin or sales volume and
food cost (Lee & Yang, 2005).

The two axes in the Uman matrix are unit contribution margin (UCM) per menu item and total
cash contribution (TCC), and respectively the two mean of the two parameters are used as
standard to divide the space of the graph in four different areas as shown in figure 5 cited before
where the menu items are going to be located. “Signature” is the menu item that had both UCM
and TCC higher than the standard, the menu item with higher UCM but lower TCC is classified as
“Hard to Sell”, the one with lower UCM and higher TCC is categorized as the “Lead Item”, and in
conclusion the category of “Looser” is applied to the menu item with both UCM and TCC below
the standard as shown in Table 1. In the Table 1 are highlighted in red the mean value that we

22
have to take into account as standard values of total cash contribution and the unit contribution
margin.

Item Item Total CM

Menu No. Food Selling Item per Menu
Item Sold Cost Price C.M. Item

A 58 6377 16000 9623 558134

B 456 6588 23000 16412 7483872

C 369 3788 12000 8212 3030228

D 53 6264 22000 15736 834008

E 227 3485 18000 14515 3294905

F 148 3410 18500 15090 2233320

G 122 3121 18500 15379 1876238

H 99 2454 16000 13546 1341054

I 158 2187 16000 13813 2182454

J 197 2907 16000 13093 2579321

K 433 3044 21000 17956 7774948

L 85 3134 17500 14366 1221110

Total 2405 46759 214500 167741 34409592

Average 200,4 3896,6 17875,0 13978,4 2867466,0

(Table 1: Uman Method Example)

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Figure 5: Uman Matrix

However, this method has problem in that the high Total cash contribution cannot be explained by
sales volume, unit contribution margin or both (Atkinson & John, 1994).

Lee & Yang (2005) argue that another method developed by Merriks & Jones tried to overcome
the weaknesses of the Uman method adding the Cash contribution instead the Total cash
contribution, in relation with the number sold.

2.3.4: MERRICKS & JONES METHOD

Similar to Uman’s menu analysis (1983), the menu analysis of Merriks & Jones (1988) uses
simple cash contribution instead of total cash contribution for each menu item. However, the do
not give a name to each category (Lee & Yang 2005).

Cash contribution of a menu item and the number of items sold were taken as the two axes as
shown in figure 6, and the mean for both the variables as the standard for the menu analysis.

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 Figure 6: Merrincks and Jones matrix

This method was originally developed to make up for the weaknesses listed in the previous
chapter about the Uman method, but results very similar to the Kasavana & Smith method that
everyone consider better since uses the menu mix percentage (popularity), instead of simple
volume of sales, and also take into account the Pareto empirical low of the 80%-20% that in this
case is a better choice than a simple mean of the sales volume.

2.3.5: PAVESIC MODEL

Both of the previous models were amended by Pavesic (1983). He reasoned that promoting the
sale of a menu item which contributed to a large proportion of sales and had a low cost
percentage, would be counter-productive if the item had a low selling price relative to substitute
products on the menu.

Pavesic (1983) factors two additional variables into his menu analysis model. He argues that if
contribution margin is the key to profitable menu items as advocated by Kasavana and Smith,
dishes which demonstrate high contribution margins generally have higher selling prices, which
has negative repercussions in a price sensitive market. The contribution margin model would
direct the best strategy only when the market was growing and would tolerate high prices. If the
market was flat owing to excess supply, or declining owing to reduced demand, high priced/high

25
contribution margin dishes would appear less attractive to the customer. He contends that the food
cost percentage and the contribution margin should be weighted by popularity, and that the most
desirable menu items are those which have a high weighted contribution margin and low food cost
percentage (Primes). The other categories are Standards that are items with high profit but high
food cost percentage, Sleepers that are characterized by low food cost percentage but low profit
and finally Problems with high food cost percentage and low weighted contribution margin.

Figure 7: Pavesic Matrix, Cost/Margin model.

WEIGHTED AVERAGE CONTRIBUTION MARGIN 1 = TOTAL CONTRIBUTION MARGIN

/ NUMBER OF ITEMS

AVERAGE FOOD COST PERCENTAGE = TOTAL ITEMS FOOD COST / TOTAL ITEMS
PRICE

The food cost percentage per item will be compared with the average food cost percentage that is
given by the division between total menu items cost by the total menu items price. About the
second variable, in this case it’s the total contribution margin per item (and not per single unit)
that must be compared with the weighted contribution margin per item (obviously also this
average value is not calculated per single unit but per total units sold per item). In few of words,

26
the comparison is not made per single unit but per item. It’s important to highlight this aspect
because after we have the calculation of this index in a different way.

In fact, Pavesic (1985) introduced the use of a profit factor, which is the individual menu item’s
contribution margin expressed as a percentage of the weighted average contribution margin of the
menu. The weighted average contribution margin is not calculated as before but corresponds to the
division of total contribution margin by the number of items sold. So, in this case the evaluation is
made at unit level, dividing the item contribution margin (per unit) by the weighted average
contribution margin evaluating the percentage ratio between these two factors, the profit factor.
An item with a profit factor of 100 per cent or higher would represent the menu items that the
operator would probably want to sell and, correspondingly, these menu items carry a contribution
margin label of “high”. The benefit of computing the profit factor is that it allows for another
dimension of analysis, rather than relying on only “high” or “low” profitability labels. It informs
the operation of how much the contribution margin exceeds or falls short of the weighted average
contribution margin as a percentage. The following table shows the computation of each of the
menu item’s profit factor, and its label as either high or low for contribution margin.

Figure 8: Example of Profit factor and contribution margin worksheet. (Source: LeBruto et al. (1995, p.
163))

WEIGHTED AVERAGE CONTRIBUTION MARGIN 2= TOTAL CONTRIBUTION MARGIN

/ NUMBER OF ITEMS SOLD

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 PROFIT FACTOR (%) = ITEM CONTRIBUTION MARGIN / WEIGHTED AVERAGE
CONTRIBUTION MARGIN

Pavesic concludes that menu engineering could be used effectively for the management of both
individual dish and menu categories as well as all beverage items, but qualifies his endorsement of
menu engineering by saying that it should only be used in combination with the many non-
quantifiable items considered by menu planners. For example the foodservice operators can
continue to include less-desirable dishes on the menu based on other criteria. For example, plow
horses, although they generate only a moderate profit per unit sale, their high popularity allows a
healthy contribution to the food service unit’s gross profit margin; puzzles which are expensive
items may add to the appeal of the establishment; and dogs can be children’s items deliberately
priced low to attract family sales (Miller and Pavesic, 1996). Here, industry experience,
management expertise and professional judgment are required.

In addition, customer trends, changing preferences, expectations of guests, competition posed by

present and potential entries to the market and the like, will shift demand for a product. Therefore,
the process of menu engineering evaluation should be ongoing; twice a year is recommended
(Miller and Pavesic, 1996).

2.3.6: HAYES AND HUFFMAN METHOD: PROFIT & LOSS

Hayes and Huffman (1985) have drawn attention to the somewhat conflicting management
strategies indicated by the early menu engineering matrix models. They have demonstrated that,
given identical menus, costs and sales, some dishes could migrate between two or even three
quadrants depending on the model used. In addition, the practice of positioning the axes on the
matrix as averages of the food cost percentage, contribution margin or popularity, means that all
dishes are positioned relative to one another so some dishes must always appear in the less
favorable categories. If a dish eases from a less to a more favorable category, by definition other
dishes slide from a more to a less favorable position on the matrix.

Hayes & Huffman (1985) avoid a matrix approach with its inherent problem of comparing
averages and they proposed a table of Profit and Loss (P&L) for individual menu items in order to
solve the problem shown in the previous models that consider some menu items as below average
and, therefore, categorized as hopeless items. The P&L analysis requires an additional variable
that is not included in the previous three methods. The variable is the percentage of fixed costs
and variable costs borne by each food item. The result of profit and loss analysis for each menu

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 item is different from the results of matrix analysis. In order to implement profit and loss analysis
there are some assumptions that are necessary to be made:

 Fixed costs including rent, fixed labor costs, insurance and debt service are assumed per day
and then divided by the number of menu items: for example such as in the case in the
following table, fixed costs are assumed 400 € and then divided per 10, the number of items
presented in the menu. Then we calculate also the percentage of fixed costs on total sales.

 Variable costs including labor costs and costs other than food that vary with sales volume: it
is assigned a “fair share” of how much food cost bears on the price and the same operation
for the other variable costs that is equal for all menu items. In the following example
describe in the table, it has been assumed for the first dish that is half chicken we assumed a
food cost that bears on the price of 25%. Instead at the other variable costs excluding the
food cost it is assumed that are 35% for each menu item. Given the percentage we calculated
easily these costs.

Then, using all the necessary data to calculate the total costs and total percentage of these costs on
the total sales. Finally, it remains to calculate for each menu item the net profit - loss (sales – total
costs) in € and in percentage.

Menu item Sales (€) Cost of in % Fixed cost in % Variable in % Total cost in % Net profit in %
food (€) (€) costs (€) (€) (-) loss (€)
Half chicken 166,80 41,70 25% 40,00 24% 58,38 35% 140,08 84% 26,72 16%
Steak 239,00 95,60 40% 40,00 17% 83,65 35% 219,25 92% 19,75 8%
Shrimp 136,00 50,32 37% 40,00 29% 47,60 35% 137,92 101% 1,92 -1%
Veal 62,65 21,30 34% 40,00 64% 21,93 35% 83,23 133% 20,58 -33%
Pasta 192,50 44,28 23% 40,00 21% 67,38 35% 151,65 79% 40,85 21%
Swordfish 98,55 41,39 42% 40,00 41% 34,49 35% 115,88 118% 17,33 -18%
Lobster 319,00 149,93 47% 40,00 13% 111,65 35% 301,58 95% 17,42 5%
Beef Burgundy 180,70 56,02 31% 40,00 22% 63,25 35% 159,26 88% 21,44 12%
Fried chicken 195,75 50,90 26% 40,00 20% 68,51 35% 159,41 81% 36,34 19%
Leg of lamb 107,40 39,74 37% 40,00 37% 37,59 35% 117,33 109% 9,93 -9%

Number of menu Fixed Costs

items
10 per day € 400,00

Table 2: Individual profit & loss statements for ten hypothetical menu items. Hayes and Huffman
(1985)

The last operation consists of the summing according to the net contribution of the ranking of the
items and the total contribution is shown.

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 Rank Item P&L Net contribution in €
1 Pasta + 40,85
2 Fried chicken + 36,34
3 Half chicken + 26,72
4 Beef Burgrandy + 21,44
5 Steak + 19,75
6 Lobster + 17,42
7 Shrimp - 1,92
8 Leg of lamb - 9,93
9 Swordfish - 17,33
10 Veal - 20,58
Total + 112,76

Table 3: Net euro contributions of ten hypothetical items. Hayes and Huffman (1985)

The aggregate profit percentage is the result of dividing the total contribution by total sales
(112,76 / 1698,35 = 6,5 %).

After that the analysis is completed, the issue is whether the menu should be revised. The
problem regards, first of all, the items that have a negative contribution. So, some of the menu
items are creating a loss should be replaced? The answer is not necessarily. If the operator’ s goal
is an average food cost of 35% and a 6,5 % net profit such as in our case, these menu items meet
these goals. While these may not be the goals for all (or any) operations, it is important to realize
that there are many routes to profitability. In fact, a weak item may contribute to the overall
success of an operation.

As individual contribution to profit is only one of many factors to consider when designing a
menu, Hayes and Huffman stress the need to monitor sales volume and consumers’ perceptions of
product quality. They emphasize that the objective of menu analysis should be to complement the
strategic goals of the total operation. The cost distribution represents the most difficult step due to
high possibilities in the sale mix for a variety of menus.

The Profit & Loss methods avoid the dependence on averages inherent in matrix analysis. This
type of analysis allows the operator to examine each menu item according to its contribution to the
operation, rather than comparing the item to an average based on food-cost percentage, popularity,
contribution margin, or any combination of these three measures.

Hayes and Huffman method is characterized by one main weakness that is the difficulty to
perceive the correlation of sales volume, food cost and total profit if one is only focusing on the
net contribution. None of the three previous techniques predicts the profitability levels of the item

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 as the Profit & Loss analysis. Pavesic’s method comes closest because it is based on more
variables.

2.3.7: HAYES & HUFFMAN: GOAL VALUE ANALYSIS

This method is useful for menu analysis as other model, but is developed with different
methodology without exploiting the graphical representation given by the other matrixes methods.

Goal Value (GV), as Dopson (2004) argues was introduced by Hayes and Huffman (1985) and
then ten years later, at the height of what was known as the "Value Pricing" debate (Hayes &
Huffman, 1995).

Morrison (1996) states that Hayes and Huffman favor the use of Goal Value (GV) analysis as a
convenient means of discriminating between those items which make a greater contribution to
profit and those that do not.

The goal value of the total menu can be established as a benchmark using the combined cost
percentages, the average check and total number of covers. The goal value of each dish can be
compared with that of the total menu and, if it falls below the benchmark, it then has to justify its
existence against other criteria. Goal value can also be used as a means of projecting alterations to
any of the variables in the formula to measure the effect of changes to menu prices, costs and
choice.

The operators can apply this type of method to rank item profitability so that menu design can be
used to achieve predetermined profitability goals. Net contribution should be an important factor
in the consideration of menu items, anyone can easily analyze goal achievement in the light of net
contribution. The authors propose the following formula as a means of analyzing menu and
pricing decision. Each item will be compared to a “Goal Value”, an index that includes food cost
percentage, contribution margin, volume and fixed and variable costs. The goal-value index is a
product of these factors, as described by the following equation:

A x B x ( C x D ) = Goal Value

In which A = (1- food cost percentage) that represents the gross profit of the item (Miller &
Pavesic, 1997). In other menu analysis methods, 1-food cost percentage represents the menu
item’s contribution margin. In GV analysis, item contribution margin is represented in the variable

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(D). B = number of covers sold that represents the popularity of the item. C = selling price, this
represents the market value of the item, and D= 1- (variable cost percentage + food cost
percentage) represents the contribution margin of the item (including non-food variable costs).
The goal-value carries no unit designation (e.g., dollars, percentage), because it is numerical target
score.

In the Table 4, it is shown the calculation of the goal-value for an hypothetical food service unit,
with the assumption that the operator is content with the ideal value of 33, 15 (goal-value),
coming from food-cost percentage = 35%, number of covers sold = 20 (the average of all ten
items, assuming total sales of 200 covers), selling price = $8, 50 and the combined variable-cost
and food-cost percentage = 70%.

The GV is based on specific goals identified for the foodservice operation. It is based on desired
food cost percentage, desired aver- age number of covers, desired check average, and desired
variable costs. Menu items that achieve GVs higher than that of the overall menu GV will
contribute greater than average profit percentages (Miller, Hayes, & Dopson, 2002).

According to this result and this formula, any menu item that meets or exceeds the goal value of
33,15 will contribute at least 6,5% of its sales to net profit (the target for the hypothetical food
service unit). Those items whose value falls below 33,15 will not meet the 6,5% criterion.

In the Table 4, the examples of the hypothetical food service unit shows that the first five items
meet the goal value, while the second five fall short of the goal.

Table 4: Examples of the hypothetical food service unit

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 The strengths of the method are linked to the number of variable take into account in the model, in
fact no item is penalized for having a low score in one variable since the item “redeems” itself by
being high in another. Items with low goal-value rankings generally have problems or deficiencies
in more than one area. In theory, however, all items can achieve the minimum goal value for a
menu to be profitable. This method is used as a managerial tool because the ideal value can be set
by management and is not a product of past performances. The method provides a framework for
managers’ assessment of an item before it is introduced on the menu. The following example
illustrates how the method can be used for analyzing menu items before introduction. If we know
all the variables A, C and D, respectively given by food cost percentage, selling price and variable
cost percentage, and the goal-value is set at 33, 15, we can also assess the sales volume (B) that
the food service unit has to achieve to make the item profitable according to the set standard. In
this particular example the result of the simple calculation with only B unknown is 18,4, this
means that B has to be at least 19 to reach the goal-value and be successful, if the food service unit
tests the item and it sells fewer than 19 times, you can chose to manipulate the selling price or the
food cost, or quickly drop it from the menu.

The weaknesses linked to this model are related to the graphical view of the results that is missed,
since is important to better understand the position of the items into the economic view of the
menu, this is also useful for the operator that has a picture highlights and compares the items from
a graphical point of view, but to answer to this weakness Goal Value analysis could be used in
parallel to other matrixes method. Other weaknesses in the model is related to the variable costs
including labor that are taken into account as a percentage equal for each item, instead calculate
the real percentage has to be associated to each item, of course this weakness persists in the
model, and should be assumed as a crucial limitation.

2.3.8: LEBRUTO METHOD

LeBruto et al. (1995) expanded the menu-engineering model introduced and developed by
Kasavana & Smith (1982) by adding a labor component. Kasavana and Smith (1990) classified
each menu item into one of four categories as determined by a two by two matrix of high and low
popularity and above or below average contribution margin, LeBruto et al. (1995) model changed
the matrix of Kasavana & Smith (1990) into a three by two matrix by adding the classification of
each menu item as high or low in labor effort, relative to the entire section of the menu being

33
engineered. This point touched by LeBruto become crucial since give an idea about the
complexity of items that maybe are popular, have high contribution margin, but have also high
labor label that decrease their effectiveness compares to others with low labor label.

As conclusion LeBruto et al. (1995) have persisted with the matrix concept developing a
refinement of the Kasavana and Smith model. Labor costs are included in their model by making a
value judgement as to whether dishes have a high or low labor component. Eight possible dish
classifications emerge as illustrated in Figure 9.

LeBruto et al. (1995) argue that a three-dimensional matrix incorporating labor costs offers a more
precise analysis and ultimately a better opportunity to achieve given financial objectives by
serving fewer customers, as the menu is driven by a contribution margin approach.

LeBruto et al. (1995) designated labor as either high or low in the menu engineering worksheet,
and incorporated this label into the existing model. Ranking the labor effort required for each
menu item relative to the other menu items in the grouping resulted in a label of “high” labor cost
for the menu items in the top one half of the rankings and a “low” labor cost label to each menu
item in the lower one half of the group. LeBruto et al. (1995) stated that rankings and labeling of a
high and a low labor classification should be a judgement call made by professional food
managers or through employing the technique of a jury of executive opinion, which is a method
commonly utilized in qualitative forecasting models.

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Figure 9: LeBruto Matrix

LeBruto et al. (1997) made an example using 16 items from a menu, producing two tables that
shown the results of his model, thus taking into account the labor as third component. Table 5 is a
summary of labor effort rankings and the appropriate label for 16 menu items, using a jury of
executive opinion. The top eight items were classified as high in labor and the bottom eight menu
items were classified as low in labor.

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Table 5: Menu Engineering labour rankings and labour label worksheet

The results of a menu engineering exercise will produce a three by two matrix with eight
possibilities (LeBruto et al., 1995), Table 6 summarizes this menu engineering work-sheet.

Table 6: Results of Menu Engineering labour rankings and labour label worksheet

This information could be used by food service units to make better menu management decisions
by including labor factors in setting up price and popularity matrix. As suggested by LeBruto, in
his theory, the labor level and popularity index could be used to produce a menu with items high

36
 in popularity, high in contribution margin, and low in labor items and of the 16 items analyzed
only two fit into this category.

2.4: COMPARISON BETWEEN THE WORK OF PREVIOUS SCHOLARS:

Considering the scope of the research work, amongst all scholars, the following 3 scholars have
been chosen for comparison to find out their main key points of research as well as to have
knowledge on the weak points of their proposed methodologies.

The scholars’ work chosen are; Kasavana & Smith methodology, Miller’s model, and, Pavesic
theory of Menu engineering. The commonalties amongst their work, the factors they have chosen
in proposing or suggesting their theories, relation of the variables between their chosen ones and
the highlighted variables in this model proposal on the basis of scope of work, have encouraged to
put forward the comparison in their work to have clear knowledge of what has been done and
what are the areas where some improvements is possible.

Figure 10: Comparison between models of earlier scholars

The matrices shown above describe the way the proposed theories of scholars work. The variables
considered here are food cost percentage, popularity and weighted contribution margin .In each
matrix there are four cells and menu items are arranged according to the allotment of high and low

37
score regarding the variables. Item that fulfill the condition of both variables are in the top classes
(Stars, Winners and Prime).The other one which are not fulfilling the conditions and are just
fulfilling it in the low level are placed in the (Dogs, Losers, Problems).The other categories are
intermediate and the other not presenting clear scenario. So either item can be placed in category
of intermediate level (Plow horses, Marginal and standards) or in the category from where they
can depict a new snapshot for the future

There is an example for the authentication and explanation of the matrices presented by the
scholars. Following table illustrates the comparison and all the points which makes feasible
understanding of the concept proposed by three scholars.

Table 7: Example illustrating the comparison of work of earlier scholars

All the menus described by the scholars have their own point of view about the data and figures in
the table. As shown that the contribution margin of the steak is more than that of the chicken
although they both are sold well.

According to Kasavana and Smith, Steak is in “star” and chicken is a “Plow horse”. Chicken is
placed in this category because of the less contribution neglecting this factor that it is sold more.

According to Miller the chicken is “winner” because the cost for making it is far less than that of
the steak, it makes “margin”. So, according to Miller it is more important that if it is marginal or
not.

38
 Pavesic on the other hand took contribution margin in accordance with the volume and compares
it to the food cost. Due to the high weighted contribution and low cost, this makes Chicken to be a
“prime” item, while steak is categorized into the “standard” part with a high food cost.

Table 8: Comparison results of works of scholars

Phrasing all the discussion together:

Miller matrix is more concerned with lower food-cost percentage, the matrix of Kavasana and
Smith is more focused on gross profit. Last but mot the least one, Pavesic method is basically the
combination of all this.

Main Issue of concern:

All these three methods are lacking in the same area. They are focusing at the average food-cost
percentage, contribution margin and are categorized into the low classes. The purpose of matrices
is just judging the items by the few elements and then adjusting them according to the above
mentioned classes.

We start excluding some items from the losers. It will avail other items, which will shift already
present into the low class. It once started may not ends in the replacement of the new and
adjusting the weak items. Following example to phrase the entire above mentioned scenario:

39
 Fig.1 Fig.2

Figure 11: Comparison results of works of scholars

In fig.1 it is clear that item D is basically low than the average.so it is removed from the list and
replaced by E as shown in fig.2.But then because of the replacement D by E, the item C fall below
the average. The process will continue and may be never ends.

2.5: KEY PROBLEMS IN EARLIER SCHOLARS’ PROPOSAL:

2.5.1: Problem with Miller’s method:

The problem in Miller method is that the menu item with low food cost percentage could be
classified as an unprofitable item with low margin because of its low price, and thus results in its
unpopularity if the price of the item is raised in order to make it profitable item.

2.5.2: Problem with Kasavana & Smith proposal:

As explained earlier in Kasavana & smith model with an example, using Kasavan & smith model
for average profitability holds some value in estimation of food sales profit per dish;but for the
average popularity it would be a bit more complex. The first index is calculated dividing the total
contribution margin by the total number of items sold. For the second, instead, it is applied the
Pareto principle for that the 80 % of the effects is caused by the 20 % of the causes. In order to
this issue, the average popularity is simply calculated in percentage dividing 100 % by the
number of items that are inside the menu and this value will be multiplied by this 80% that in the
future it was modified in 70 %.

40
 It has also the risk of decreasing both the demand and profitability by preferring a high-priced
menu item and increasing the contribution margin (Bayon and Bennett, 1992).

2.5.3: Problem with Uman Method of Menu Re-engineering:

This method has problem in that the high Total cash contribution cannot be explained by sales
volume, unit contribution margin or both (Atkinson & John, 1994).

INTRODUCING P&L BY HAYES AND HUFFMAN:

A new (profit and loss) statement introduced as an alternate of the above three mentioned
matrices. So there is need of a new variable for this analysis of P&L. The new variable concerning
P&L is the percentage of fixed costs and variable costs regarding each item.

The result of P & L analysis is different from the three matrices. Sp, it is required to consider fixed
costs and variable costs as shown in the following table:

Table 9: P&L Analysis

This analysis accredits each item share of both fixed and variable costs. We assign this share of
costs by simple approach of dividing fixed costs by the no. of menu items. The following figure
shows the net profit (-) loss:

41
 Table 10: Results of P & L analysis

This analysis gave a new idea of relating variable expanses to total sales for each item. The
purpose of this analysis was to consider variable or fixed cost without changing any operation of
the analysis.

All matrices mentioned above didn’t show any profit and loss levels. P& L analysis proposed by
Hayes and Huffman added more effectiveness by adding the variables and fixed costs.

2.6: PARETO ANALYSIS

Pareto analysis is a statistical technique in decision making to determine which tasks or factors in
an organization will have the most impact. It ranks the data/factors in the descending order from
the highest frequency of occurrences to the lowest frequency of occurrences. The total frequency
is summed to 100 percent. The “vital few” items occupy a substantial amount (80 percent) of
cumulative percentage of occurrences and the “trivial many” occupy only the remaining 20
percent of occurrences(Cervone, 2009).

The Pareto Analysis is a quality tool that helps to solve the most vital problems in the work
environment. It can be used in a human resources sense to try and find the biggest time-wasters in
any given work environment. It can be used in brainstorming sessions to find out what the biggest
obstacle to reaching a goal may be. In fact, the uses to this tool are almost limitless.

The Pareto Analysis is based on a principle put forth by Italian economist Vilifredo Pareto, who
was born in 1848 and began an academic career in 1893, which lasted until he died in 1923. The
concept at the base of this principle is to focus attention on the “vital few versus the trivial many”.
For Pareto, an economist, the idea was that 80% of the money was controlled by 20% of the

42
 people. Alan Lakelin (a time management specialist) and Joseph Juran adapted this concept to
quality management, using the idea that approximately 80% of the problems are created by
approximately 20% of the causes. Or conversely, the idea that 20% of what is done contains 80%
of the value. Therefore, by concentrating on the vital few, the 20% of the problems creating most
of the issues, the overall process is improved dramatically. There are basically four steps involved
in creating a Pareto Analysis. First, categories must be established for the data being analyzed.
The second step is to specify the time period when the data will be collected. This is not an
ongoing process. This is a process that takes a snapshot of data and assumes statistically that this
is a sample of the population that is being looked at. It also might involve a time period that is
seasonal and ask questions relating to that season. This might be particularly relevant to someone
in the retail industry. Third, a frequency table, or tally sheet is constructed. This should include a
column for category, date, and total. Tick marks are made in the appropriate column when the
specified category is observed. Finally, using the data collected with the tally sheet, a Pareto
diagram is created. The causes are ranked from most to least important and the cumulative
percentage is kept track of (first percentage plus second and so on). A horizontal axis is drawn
representing the categories and a vertical axis is drawn representing percentages. A bar graph is
created using the individual percentages of each category and a line graph is superimposed over
the top representing the cumulative percentages. A line is then drawn from the 80% mark on the
Y-axis horizontally until it meets with the cumulative percent mark. A line is then drawn
vertically down. Those categories to the left of the vertical line are the categories that should be
dealt with first. These will take care of 80% of the problems.

Key Points:

 Pareto Analysis is a simple technique for prioritizing problem-solving work so that the first
piece of work you do resolved the greatest number of problems. It's based on the Pareto
Principle (also known as the 80/20 Rule) – the idea that 80% of problems may be caused by
as few as 20% of causes.

 To use Pareto Analysis, identify and list problems and their causes. Then score each problem
and group them together by their cause. Then add up the score for each group. Finally, work
on finding a solution to the cause of the problems in group with the highest score.

 Pareto Analysis not only shows you the most important problem to solve, it also gives you a
score showing how severe the problem is.

 Pareto Charts help finding which issues are causing most problems

43
  Pareto Charts are used in root cause analysis
 Pareto Charts are a decision making tool and do not contain data such as detail data analysis
and costs of failure.
 Pareto analysis results in finding the efforts where it will have the most impact.
 Pareto Charts decide the order in which the issues will be addressed.

2.6.1: THE PARETO DIAGRAM

Pareto Analysis is a relatively simple methodology that is employed for the selection of a limited
number of tasks that produce significant overall effect. It uses the Pareto Principle (also known as
the 80/20 rule) the idea that by doing 20% of the work you can generate 80% of the benefit of
doing the whole job.

Here a selection of the many occasion in which Pareto’s 80/20-law is reported:

• 20 % of customers generate 80% of turnover

• 20% of products make 80% of turnover

• 20% of possibilities to make faults in production are responsible for 80% of product defects

• 80% of the decisions are made in 20% of the time in a meeting

• 20 % of products make 80% of profit

• 20 % of employees account for 80% of the time absent

• 80 % of results are achievable in 20% of working time if strategic time planning is used

• the best 80% of sellers are responsible for 80% of the profit of a firm

• 20% of the goods in a stock sum up to 80% of the stock worth

• 80% of the requests for stocked articles are on only 20% of the goods

• 80 % of the costs or losses of a business are caused by 20% of the problems.

The Pareto diagram is a bar graph depicting the order of comparison of factors relating to a
problem. This comparison makes it possible to identify a few key factors that contribute
significantly to the problem, in order to separate them from many other factors that contribute

44
very little to the problem. This graph is useful as it identifies key factors requiring attention at a
glance, and therefore enables the necessary resources to be focused on corrective actions without
wasting effort.

The value of the Pareto Principle for a manager is that it reminds the manager to focus on the 20
percent that matters. Of the things being performed during a day, only 20 percent really matter.
Those 20 percent produce 80 percent of overall results. Identify and focus on those things.

Seven steps to identifying the important causes using Pareto Analysis:

1. Form a table listing the causes and their frequency as a percentage.

2. Arrange the rows in the decreasing order of importance of the causes, i.e. the most important
cause first.

3. Add a cumulative percentage column to the table.

4. Plot with causes on x-axis and cumulative percentage on y-axis.

5. Join the above points to form a curve.

6. Plot (on the same graph) a bar graph with causes on x-axis and percent frequency on y-axis.

7. Draw a line at 80% on y-axis parallel to x-axis. Then drop the line at the point of intersection
with the curve on x-axis. This point on the x-axis separates the important causes on the left
and less important causes on the right.

Following is an example that might be taken from a fast food restaurant trying to improve its
product. For example, burgers being returned at McDonalds might fall into the following
categories: undercooked, missing ingredients, overcooked, or wrong order altogether. It can be
seen from the example that “Ingredient Missing” and “Wrong Order” would be the two problems
that this particular restaurant would want to focus on first in order to improve overall customer
satisfaction. Working on over or undercooking or tasting bad would still leave the majority of the
problem in place. An example of where one might use a Pareto Analysis might be if you were
running a restaurant. Approximately 20% of the menu items would account for 80% of the profit
taken in by the restaurant. By using a Pareto Analysis, the restaurateur would know which menu
items to focus his business around.

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 Figure 12:Pareto Chart (Source:http://quality.usaeroteam.com/Training/ParetoAnalysisMiniTutorial.pdf)

2.6.2: THE ESSENCE OF PARETO ANALYSIS OR ABC ANALYSIS

When business processes are optimized the so called ABC-analysis is often applied (Gourdin
2001). This analysis is partly based on Pareto’s 80/20-law and therefore often called Pareto-
analysis (Juran (Ed.) 1998).

Basically, it is a method of classifying items, events, or activities according to their relative

importance and deciding on the extent of emphasis, attention and control one should put on such
classifications.

It is a creative way of looking at causes of problems because it helps stimulate thinking and
organize thoughts. Subsequently the technique helps to identify the top few (up to 20% or so) of
causes that need to be addressed to resolve the majority (up to 80% or so) of the problems. It is
based on the premise that every situation entails numerous trivial aspects and these need least
attention and on the other hand, the vital aspects are few and these need maximum attention
yielding maximum benefits. That’s why we also call this technique as “vital few, trivial many”.

Pareto analysis (also called ABC analysis) of products to rank products in terms of contribution to
revenue, profit, or units sold is common practice for manufacturers. Utilizing the mapping
between products and resources provided by structural analysis, it is possible to extend standard
Pareto analysis to find the resources or activities associated with products of the highest rank in
revenue or profit.

46
 These resources are critical to the enterprise. They represent the highest priority for improvement
or investment considerations. It might also be worthwhile to have contingency plans in case of
unforeseen changes or emergencies, such as business recovery plans or alternative vendor
arrangements. Alternatively, we can rank resources in terms of their usage by the number of
products or number of customers. Even though they may not contribute to the highest fraction of
revenue or profit, the resources contributing to the largest number of products or customers may
still be very important to the enterprise. They enable the enterprise to have a broad set of offerings
that help secure for the enterprise a place in the market.

ABC-analysis means to classify subprojects into three classes A, B, and C. Subprojects are
ordered in decreasing order of yield. Class A should contain projects of high yield, class B
projects of medium yield and C projects of low yield as follows:

Class A: subprojects with relative low costs returning an over proportional yield, i.e. the relatively
few subprojects in this class should return a very high yield with low expense

Class B: subprojects with at least average ratio of yield to cost. Yields of projects in this class
should be at least direct proportional to costs.

Class C: the rest of the subprojects, i.e. these subprojects generate low profit on high costs

2.7: BCG (Boston Consulting Group) Matrix:

Boston Consulting Matrix is popularly recognized as a Product Portfolio framework, a graph

proposed by Bruce Henderson for the Boston Consulting group in 1970.It plays a vital and an
effective role in Brand Marketing, Product Management and Portfolio Analysis .The main idea
behind the proposal was that cash generated from one range of products can support one another.
In the business with diverse portfolios, there might be businesses which are cash deficient, growth
deficient and needed to be supported by other business which are generating high amount of cash
and with good pace of growth. The matrix suggests that the resource priority should be given to
the businesses accordingly to their respective needs. The model of BCG matrix was based on
Boston Consulting Group’s knowledge and work in the area of experience curves and of product
life cycle and how they relate to cash generation and cash requirements.

The BCG matrix assumes two dimensions as a function of cash flow, the cash quadrant approach
to BCG that both market growth rate and market share as two dimensions can be interpreted into

47
cash generation and cash requirements respectively. Market growth rate serves as industry
attractiveness and relative market share serves as a competitive advantage.

 Relative Market Share:

It represents the part of the market occupied comparing the colossal competitor. It basically
shows the revenue generation of the company, as much as revenue is generated the market
share will respond according to it. It can be high and low depending upon the revenue
generated.

According to the fact of “economies of scale”, it is predicted that as much revenue will go
up it will enhance the share. The precise note is, all about considering the competitor stature
(brand positioning of the colossal).
The most important fact of taking it into account is, it not only provides information about
the cash flows but a detailed overview of the company position comparing its competitors in
the market. It gives an overall view of the market ups and downs and also argues about the
upcoming transitions.

 Market Growth Rate:

There is a direct co relation between the growth and investments. This matrix emphasis over
the fact that the company should have group of products, one with high growth products in
accordance with input need of cash and one with low growth but generates high amount of
cash. The growth of the whole entity is evaluated, from which it is eventually then figured
out for the particular product. After doing it for the concerned products it is marked on the
graph.

The BCG matrix has two main dimensions on X axis and Y axis, depicting the real and precise
picture of the industry. By calculating these two main critics it makes the scenario more
reasonable .The measure of market growth rate instead of depicting only the status of industry,
infect projects he real stature of product/business unit too in relation with the overall growth of
industry. The market share as briefed earlier depicts the brand position in the market. The
combination of both these vital factors gives us basically an overall idea about the industry stature,
competition and future trends.

The growth-share matrix thus maps the business unit positions within two important determinants
of profitability. These two dimensions helps the firm to classifies its product range into four
different categories comprises of: 1) High market share and High market growth products, 2) High

48
market share and Low market growth products, 3) Low market share and High market growth
products, and, 4) Low market share and Low market growth products.

The BCG matrix is a simple, effective and efficient mean for racking company’s place in the
market. It works in accordance to the scenario of company’s product range or business units;
works on the behalf of their relative market share and growth rates. By following the window of
the range of products, it simply evaluates the company’s position and enhances companies
confidence in evaluating the adequate products and excluding the useless products, which are not
making a worth sense for the company. The benefit of BCG matrix includes making a firm to
invest more in the products, which are generating a reasonable revenue stream for the company.
The need which basically adorns this method to be the part of the organization stature is
monitoring the cash flows. It was evaluated that the main critics needed to encounter are, market
share and market growth rate. These all are interlinked and moves in parallel. These points of
concern categorize the products/business units in chart as shown in the following fig:

Figure 13: BCG Matrix

This chart as shown in figure above represents the four categories differentiated by market growth
rate and relative market share. Products/business units are categorized according to the graph and
they are placed in the categories according to their status of revenue streaming /their position in
the market, etc.

The Brief description of all the categories can be described on the basis of how they work, how
they make sense for the business. They made the company to put heed to the area where it is

49
needed. It creates an opportunity window for the company in the area which would be more
beneficial.

 Stars:
They achieve large outputs in cash because of their cogent relative market share but they
also absorb a huge amount of inputs in accordance with their cogent growth rate
perspective. A star can jump up and can become a cash CASH COW when the market
growth rate lessens.
 Cash CASH COWs:
These are the leaders in the quite grown up and pretty static markets, they generate a higher
return at what is invested. In a generic and simple statement they produce more than what
they consumed. They just not only work for their own, in-fact they jell up other portions of
the business too with quite reasonable amount of profits. E.g. they compensate in
investments that help question marks to be a trend maker in the market.
 Question Marks:
These are the products/units which alters all the sudden along with the scenario and grows
in an agile and promptly manner. In reference with the changes they also deplete up large
amount of capital. But in fact they have low market share so they don’t come up with good
contingent revenue stream. We also can’t deny this fact that they have this potency of
gaining the market fragment and to be a star, and in the course of time (ultimately) a cash
CASH COW when the market hinders (slows).In the same perspective if it didn’t become a
star but it will become a dog instead as the market goes down. So, the serious and quite
reasonable moves have to be made concerning this category. They can bother the business if
the worthy steps are not taken.

 Dogs:
They are basically the part of the business with small market concentration and even with
lessen growth rate. They neither occupied more inputs nor generated acute output of cash.
They never anticipated in generating an effective value so they might have been considered
as the trash part.

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Limitations of BCG Matrix:

 BCG matrix model as proposed considers business only on the basis of high and low. In
reality businesses can be medium too
 Lacks in defining the generic and real meaning of the business
 It lacks in projecting/enlightening real meaning of the market
 It predicts about graph areas in so simple way but it sometimes is not that simple
 Its description about the divisions of the business may not be always true.

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Chapter 3

GENERAL
CONSIDERATIONS

52
GENERAL CONSIDERATIONS
The menu represents a support to marketing managers to help them to promote the services and
products being offered by the food service unit. In order to measure the efficiency and efficacy of
the menus, there are many methods and procedures; to create a new menu with necessary
adjustments due to the improvements of the marketing mix so as to improve the profitability of the
food service unit.

The elements taken into consideration for the menu analysis for estimation of real cost of food
items are: the quantity of raw ingredients bought, the cost price of ingredients, and the average
number of food dishes sold.

In this analysis, a quantitative approach was undertaken to ascertain food service unit attitude in
the menu analysis decision-making. This approach is largely based on measurable variables and
provable propositions, thus using positive attitude has helped to understand how menu analysis is
conducted. The analysis has been done to assess the menu mix sales popularity and gross profit
profitability. Every menu item costs and sales figures are analyzed and the outcomes of what
actions should be done for the menu items are decided in several ways. This analysis involved a
case study approach, where a food service unit business was in-depth explored and inspected for a
period of time. With a belief to enhance the body of knowledge in understanding the objectives,
the personal interviews were deployed with the use of structured questionnaire to explore the
phenomenon of interest; the questions were based on the secondary analysis and piloted in
predetermined settings.

However, this quantitative data analysis is not the sole determinant to come up with some
decisions and to suggest some possible actions to the menu items. As correctly argued by Jones
(1994), “menu changes are based on strategic decisions rather than simply on analyses of
operation performance and the addition and removal of a new menu item is often based on
competitive and market analysis”. For alternative approaches, other criteria such as qualitative
analysis, company’s financial policy and experience can be taken into consideration.

The menu engineering analysis to evaluate the menu for profitability analysis should be carried
out at least once a month after the opening of a food service unit and/or at least once in a quarter
after the first year of activity. Change of menu after every quarter could be tiresome for the food
service unit owners and managers, so many food service unit managers, at present, develop a
‘fixed menu’ that might cause less favorable consequences and the chance of less visits from the

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 loyal customers. In a hospitality industry like the food service units which provide food services,
the concept of menu must be coherent, so that the personnel will be in harmony with the ‘house’
image, the dishes must be based on a specialty like, a type of product(grilled, baked, boiled, etc.)
or a regional thematic product. The layout and the whole framework should also be in harmony
with the concept, as well as the serving manner.

A pattern of strategic analysis of the articles included in the menus of the food service industry
was established by Proff. Michael Kasavana and Donald Smith, who were famous counselors in
this domain; they classified the menu articles in four categories resulted in a matrix following two
dimensions: the products’ popularity index and the profitability degree.

The strategy employed by most of the food service unit owners consists in placing the most
profitable product items in the superior side of the menus and less profitable product items in the
inferior side. Instead, the food service unit owners must place the product items with high
profitability in the first pages and the less profitable items but with high popularity in the center
sections of last pages of menu. The customers who wants the particular variety of dish will find
them from any section of menu and the customers who are not sure and are undecided will order
the less profitable product items; thereby, increasing the sales of less profitable items with high
profit and popular product items.

3.1: THE STRATEGIC ANALYSIS OF MENUS:

The menu being considered as “the soul” of the food service unit; tells the customers what food
and drink is in offer and what are their respective prices. Menu analysis helps the food service unit
managers to have facilitated communication with the customers in decision making of what to
buy. It is the obligatory duty of food service managers to periodically analyze their menu to keep
themselves in coherence with the tastes of their customers. It is a valuable skill that can make the
difference between staying a relevant eating establishment and going out of business.

To develop a model based on the analysis of menu in food service units, the following are the
outcomes which could be considered as important points in developing a menu and thereby
model:

 The popularity of a food item in a menu is directly influenced by its position and the way it
has been described on the menu. As general case, the customers’ eyes tend to gravitate first
towards the upper-left section of the menu page, so items in this section will be quite popular.

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  It has been found that marketing research on the food items, particularly market trends,
customer tastes, varieties to offer, location of operations, and competitions in the location, to
have clear idea of what to offer to customers, and thus; what to include on the menu.

 It is necessary to calculate the food cost in terms of ingredients cost, preparation cost, labor
cost and other overhead costs. It helps to include the food items on the menu which follows
the strategic plans and objectives of food service unit.

 Set the prices of food items in accordance of expected business growth considering quality
level and the popularities of food items. It is also suggested to compare the prices with the
menu items to see if they correspond. This is important to check and verify, are the prices
charged in keeping with the food items being sold, or are customers being over-or
undercharged for items.

 To analyze the menu prices and sales information, the analysis concluded with the proposal
of using Boston’s matrix technique, also known as “portfolio analysis”, to improve the
performance of the food service unit. This matrix helps the food service units’ managers to
determine which food items are generating value and will lead to the growth of the business
operations.

 Menu design also plays important role in attracting customers towards food items. The food
service units’ managers should give proper attention to the menu design, such as easiness in
reading the food items on the menu, clarity of options, the overall attractiveness of menu.

The food service unit should employ standards when purchasing food and beverages, preparing
dishes, setting up recipes, handling inventory, determining portions. When there is no set standard,
there will be inconsistency in the quality of services, such as food quality, food dish costs, price to
be charged to customers, amount of ingredients to be purchased and stored in inventory; and thus,
leads to mismanagement.

The most common strategy that is being in used by food service units is to maintain a standard
recipe, with a written formula used to produce food dishes that uses same quantity and quality
with the same method of preparation each time the dish is prepared. Having standard recipes help
in preventing inconsistency and allow the food service unit managers to have better estimation of
costs, amount and varieties of food ingredients and other related figures. The food recipes should
be written in edible portion form so as it is easier to measure the weights of ingredients used in
preparation of food products.

55
 The act of assigning and setting a cost to recipe using food ingredients, production process and
edible portion as bases to calculate food cost has been an integral part of every food service unit
from the beginning. Till present, there are many methodologies have been suggested by scholars,
but lacking accuracy in some areas. Hence, it is important to understand the concept to become
familiar with the steps that should be followed to increase the accuracy level of food recipe
costing.

3.2: The Process of Menu Re-Engineering or Benefits of Menu Analysis:

 Evaluated costs of food dishes helps in calculation of actual profits a food service unit is
gaining from the selling of food dishes
 Using sales and profit figures, illustrates the relative profitability and popularity of single
food dish being offered
 Assist in menu planning, design and menu item pricing strategies
 Recognize the food dishes that are good to sell for successful operations of business and
eliminate those who come under bottom line
 Allow for refined menu planning in the case of food dishes which contribute less profits
but are highly popular among customers of food service unit
 Identify the food dishes which require modification in their respective prices.

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 Chapter 4

MODEL PROPOSAL

57
MODEL PROPOSAL:

4.1: OBJECTIVE OF THE MODEL:

To categorize the food dish items on the basis of their respective popularity and profitability and
generate a BCG matrix for analysis and decision making purposes.

To concentrate on effective cost control in food dishes serving operations by acknowledging the
actual cost of single food dish being offered in a food service unit.

To help in spreading the awareness about waste reduction and employing effective cost control
methodologies to the food service units’ executives and the entrepreneurs.

4.2: SCOPE OF THE MODEL:

The scope of model being proposed has been limited to evaluation of costs of food dishes being
offered using only food ingredients as the base for estimation. The calculation of costs of wastes also
has been done in terms of food ingredients such as extra purchase or limited usage in preparation of
single food dish.

The estimation of the single food dish cost does not involve other factors such as labor costs,
preparation & cooking costs, extra overhead costs and any other related costs.

The generation of BCG matrix involves consideration of only profitability and popularity factors for
evaluation purposes.

4.3: ALGORITHM EMPLOYED IN REALIZING THE PROPOSED MODEL:

After carrying out the research on proposed methodologies and their principle, it was required to
put forward an improvement in the earlier proposals by designing a model proposal which should
not only be easier to comprehend, easy to work upon, but also, should be able to cover the weak
spots in the previous method proposal respecting the scope of the present research subject.
The model has been developed using the simple format of Microsoft Excel worksheets to make it
simplified, user-friendly and easy to work upon with getting reliable results in less time.

58
The model has made use of three MS-Excel worksheets, and names them “Recipe Costing”,
“Ingredient Costing”, and, “Units Conversion” to give desirable results after supplying them
adequate input data.

Below is the description of steps of algorithm that has been followed during the development of
the model being proposed:

1. Insert the ingredients (name, unitary price, and total quantity purchased) necessary for the
preparation of all food dish items that will be served by the food service unit.
2. Insert the name of the food dish and corresponding recipe ingredients’ name required for the
preparation of each and every food dish item.
3. Insert the quantity of each particular ingredient required in preparation of single food dish with
their respective units.
4. Insert the number of food dishes for each and every recipe that will be prepared over a reference
period of time in the food service unit.
5. Calculate the normal cost of preparation of food dish ignoring any kind of waste of ingredients.
6. Calculate the waste quantities of each and all ingredients by verifying the total quantity
purchased and the total amount been used over a reference period of time.
7. By taking wastes into consideration, calculate the actual cost of preparation of single food dish.
8. Following the actual food dish cost and waste quantity, evaluate the waste quantity percentage of
each ingredient in order to notify the food service unit manager to maintain and control the
inventory.
9. Find out the percentage contribution of each ingredient in terms of cost in preparation of single
food dish.
10. Using sampling technique, considering ‘n’ food dishes and their respective percentage
contribution on food dish cost, divide the ingredients into 3 categories on the basis of their
respective impact in single food dish cost. These 3 categories are:
a. ‘A’ Category: Always has high impact on food dish cost
b. ‘B’ Category: Sometimes makes impact and sometimes fails to make impact on overall
single food dish cost
c. ‘C’ Category: Fails to make enough impact on the total cost of single food dish.
11. Evaluate the food cost of single dish, using Pareto principle, by considering only those
ingredients’ cost which contribute at least X% (in our case, 5%) in actual food cost of single
dish.

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 12. Add the cost of ‘C’ category ingredients to the food cost of single dish by considering their
relative proportional contribution in food cost, that will be termed as real food dish cost.
13. For each food dish item, find out the popularity index value (HIGH or LOW) by comparing the
popularity of particular food dish item with popularity factor of menu.
14. Determine the selling price of single plate of food dish for each and every food dish item, and
then evaluate the profit figures on selling each plate of food dish item.
15. Compare the profit from selling each plate of food dish item with average profit generated by
operating the business. If the profit from selling single plate of food dish item is higher than
average profit, mark HIGH in profitability index otherwise mark LOW in profitability index.
16. Determine the 4 categories of BCG matrix by comparing different values of popularity indexes
and profitability indexes.

4.4: DESCRIPTION OF THE METHODOLOGY EMPLOYED AND

CORRESPONDING USE:

The proposed model of RECIPE COSTING using Ingredient costing as a supporting tool helps
to determine how much the prepared food dish actually cost the food service unit to purchase and
to serve on a plate to the customer. Using application of Recipe Costing, it becomes easier for
food service unit managers to determine the numbers of portions of food dishes that can be serve
to customers from the single unit of food ingredient and the amount of wastage happens during the
preparation of food dishes. Thus, model helps in calculating food dishes cost to the business, food
cost to the customers, amount of waste in preparation, yield level, inventory level, and serve as a
guide to set up the price of food product.

The menu management carried out with Recipe Costing application purposes an analysis of
cost of product items being offered by food service units in addition with analysis of waste in
production of those product items. The menu engineering model postulates the calculation based
on the data stocked of each product item in the menu for the certain period of time.

This application allows the implementation of two analyses specific to food service domain:

1. The menu analysis, which refers to the effect of the changes in the menu which could be
carried out by the food service unit manager.

2. The menus’ management, which consists in the determination of the real cost of product item
that is being incurred to food service unit owners as extra overhead cost due to negligence.

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 This application also involves the evaluation of waste and their effects on the efficiency of
operation of food service unit business.

The main benefits of Recipe Costing Application proposed during the study are:

 Generates rapports in which all the ingredient costs occurred in preparation of product items
are presented.

 Generates rapports about the wastes that occurred during the make-ready of product items.

 Identifies the most economical and less economical product items in the menu which require
special attention from the food service unit managers.

 Offers replacement opportunities of less profitable, less economical product items with high
profitable, more economical product items in the menu.

 Provides up-to-date information, necessary for analysis and deciding the strategy for the
product items in the menu.

The Recipe costing application offers the food service unit managers to possibly introduce all
recipes of the menu and group them according to categories. It also offers the managers to
maintain the inventory for the ingredients buy over a period of time with the provision of
estimation of wastes; allowing them to act on lean management system, thus helping them to build
a portfolio of products on the basis of analysis.

There are two spreadsheets built for this application using MS Excel, named, Ingredient Costing
and Recipe Costing. The main functions of Ingredient costing are illustrating the warehouse
management perspective of the operation. This sheet allows the managers to introduce all the
ingredients with their respective costs as well the quantities purchased for a period of time. Using
the information from second spreadsheet, Recipe costing, this sheet, Ingredient costing, lists out
the quantity which left out as waste and the percentage of waste over quantity purchased for each
and every ingredient that are contained in the list.

4.4.1: RECIPE COSTING:

To carry out the strategic analysis of the product items in a menu, Recipe costing spreadsheet has
been put in use. In this sheet, all dishes in a menu are first set into categories in order to increase
the efficacy of the analysis. This is followed by description of names and amount of ingredients
required in preparation of the particular dish. This sheet also require the estimation of number of

61
 dishes served in a certain period of time which can be evaluated from the past history of food
service unit business or the future predictions of selling of dishes in case of new opened food
service unit. This sheet make use of spreadsheet Ingredient Costing sheet to get the estimation of
cost per unit for each ingredient after taking into consideration the changes if required in units of
measurement in single dish recipe with the units of whole quantity bought as the respective units
of ingredients may be different and then to calculate the amount of ingredients required for a
certain period of time, which then will be used by Ingredient costing spreadsheet to calculate the
amount of waste in quantities for a same period of time and thus to re-evaluate the real cost of
each ingredient, which will later sum up to give the food service unit owner or manager with
figures of actual cost of the dish in a menu.

Normal Food Dish Cost= Sum of (Normal Cost per unit of food ingredient* Quantity of food
ingredient required in a single food dish* Unit
Conversion factor)

Waste Quantity of food ingredient=Total food ingredient bought-Sum of (Quantity of food

ingredient used in single food dish recipe* total
number of respective food dish prepared over a period
of time)

Actual Quantity of food ingredient used=Total food ingredient bought-Waste quantity of

food ingredient

Actual cost per unit of food ingredient= Total cost of food ingredient/Actual Quantity of food
ingredient used

Actual Food Dish Cost= Sum of (Actual Cost per unit of food ingredient* Quantity of food
ingredient required in a single food dish* Unit
Conversion factor)

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 The Recipe Costing methodology incorporates the application of Pareto Principle, also known as
ABC analysis. Here, in this methodology being proposed, the same application has been used but
with little modifications. The proposed methodology, first make use of sampling technique of food
dishes to know a little more about the role of ingredients’ cost in their respective food dish
recipes. In the proposed model, 3 food dishes have been selected out of total 10 food dishes being
served by the restaurants which represent the food dishes with medium to high number of
common ingredients in the menu being served by the restaurant. The size of sample to be chosen
in a menu can vary according to the number of food dishes being served in menu. The proposed
methodology, using Pareto analysis or ABC analysis as a principle support, make the ingredients
in a single dish recipe to fall into 3 categories; these categories are:

A category: Ingredients which always shows high impact in total cost of single food dish
evaluated in terms of percentage of contribution in total food dish cost in the
sampled food dishes.

B category: Ingredients which sometimes fall into high percentage contribution in terms of
cost list and sometimes low percentage contribution in terms of list being
evaluated in all chosen sampled food dishes.

C category: Ingredients which always fails in making any significant impact in all chosen
sampled food dishes. These ingredients contribute almost negligible
contribution in cost in the preparation of single food dish. In the proposed
model, the food ingredients have been put into C categories if their percentage
contribution in actual cost of single food dish falls below than 5 %.

The proposed model focused mainly on C category food dish ingredients in order to evaluate the
real cost of single food dish by employing the concept of relative proportion principle in the cost
evaluation method. The actual food cost which has been evaluated after considering wastes in
purchasing quantities of ingredients and Pareto principle has been added to the cost of the costs of
C category ingredients used in respective single food dish.

Actual Food Dish Cost using Pareto principle=Sum of Actual cost of food dish ingredients,
which has atleast 5% contribution in Actual
Food Dish Cost.

Relative proportional costs of C category food ingredient= (Total Cost of food ingredient*
Percentage contribution in respective
Actual cost of food dish recipe)/Sum

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 of percentage contribution of the
same ingredient in all food dish
recipes.

Real Food Dish Cost=Actual Food Dish Cost calculated using Pareto principle + Relative
proportional costs of C category food ingredients.

The main benefit of this analysis lies in the fact that it helps the food service unit owners to
compare the normal cost of dishes or product items with high efficiency or zero wastage in
production with the real cost of product items which got burdened on the food service unit
operations and thus lowering down their profitability. This analysis also helps the food service
unit owners to understand the effect of wasting in preparation to the cost of dish items, which
could have negative impact on the popularity as well as on profitability of operations. Using this
analysis, it will also be easy for food service unit owners to predict the sales and can accordingly
manage the inventories.

4.4.2: INGREDIENT COSTING:

The model presented in MS-Excel format for calculating costs of ingredients purchased helps the
food service unit managers to evaluate the amount of each ingredient being purchased over a
period of time, cost of each ingredient that is being used in making the final food product to be
served, the amount of waste quantities purchased and finally helps the managers to forecast the
future quantities to be ordered from logistic supplies; eventually helps in maintaining the
inventories. The information generated by these spreadsheets will not only allows managers to
produce accurate monthly reports, but also support their efforts to proactively manage the food
service unit on a daily basis.

The worksheet comprises of columns and rows to put up the name of food ingredients, unit price
of food ingredients and the total quantity bought over a period of time with their corresponding
units of purchase. After calculating the total cost of whole quantity of food ingredient purchased,
it helps to acknowledge the food service unit manager about the total cost that the business is
bearing in preparation of dishes in terms of food ingredients. Using the Recipe costing worksheet
data, Ingredient costing worksheet calculates the wastes in purchase of food ingredients in terms
of excessive purchase quantity.

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Waste quantity purchased of a food ingredient = Total Quantity purchased of the food ingredient-
Sum of (Product of (Food ingredient used in single
food dish preparation and total food dishes prepared
over a period using that food ingredient)) all food
dishes where that particular food ingredient has
been used

From the data calculated above about waste in quantity purchases of food ingredients, it could be
easier for food service unit managers to have better knowledge on the purchase quantity that is
actually been put in use and the quantity which is getting wasted because of excessive purchase or
some other miscellaneous reasons. This calculation also helps the food service units’ managers to
monitor the waste percentage over the period of time in order to check and verify the planning and
forecasting accuracy of purchase of food ingredients, higher the percentage of waste out of total
quantity bought lower is the accuracy rate in predictions of demand forecasting. Wastes in
purchase of food ingredients quantity does not just contribute to need of better forecasting and
analysis of demand and supply of food ingredients but it also shows the affect on the sales and
popularity of food dishes prepared from those ingredients in an indirect manner.

Analyzing the wasted quantities and the related cost, the cost per unit of food ingredients
purchased will be changed adding the cost of waste quantities in the normal cost per unit of food
ingredients; resulting into a adjusted cost per unit of food ingredients with normally higher value
than the normal cost per unit of food ingredients.

Adjusted cost per unit of food ingredient = Total cost of food ingredient/ sum of (quantity of
respective food ingredient*Total number of dishes
prepared using the ingredient) all dishes where the
particular food ingredient has been used

The recalculated cost of food ingredient per unit also termed adjusted cost per unit of food
ingredients will be used in Recipe Costing worksheet to calculate the adjusted cost of single food
dishes from adjusted cost of food ingredients and later to calculate the real cost of single food
dishes.

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The Ms-excel sheet, named, Ingredient Costing, act as a supporting tool to track the food cost
over a time period. This spreadsheet named Ingredient Costing allows the food service units’
managers to analyze their sales mix to determine the impact of each menu item on the overall
costs, sales mix and eventually profit figures.

This spreadsheet may act as a powerful tool to acknowledge the waste in ingredients required to
prepare food dishes so as to forecast the demand and supply of food ingredients with more
accurate quantities; of course, this can be done by analyzing statistical data of past history to be
sure enough of wastes that are occurring in business, seasonal demand and supplies of food dishes
and their corresponding food ingredients, climate and geographical preferences and tastes of
people. This tool also effectively helps in comparison of the items on menu by category, their
effects on profit ratios and the popularities of food items listed on the menu.

66
 p r in c ip le )

P r o f it a b il
c o n v e r s io

p r o p o r t io
Q u a n t it ie

c o n t r ib u t

P o p u la r it

P o p u la r it
D is h c o s t
A d ju s t e d

ca te g o ry
it y in d e x
r e q u ir e d

y F a cto r
R e la t iv e
n fa cto r

n a l co st
N o rm a l

y in d e x
No.Of
D is h e s

S e llin g
S in g le

P r o f it
% age

Food
p r ic e
(9 5 %
Co st
U n it

D is h
co st

io n
Recipe s Unit
DISH - PIZZA
MARGHERITA

100 11,63% 6 4,50 HIGH LOW PUZZLE

Pizza Crust 0,295 24,369
1,00 Piece 1,0000 0,5900 0 % 0

Table 0,025 0,056308

Extra virgin olive oil 0,33 Spoon 0,0150 0,0264 2 2,083% 92

Garlic Clove 0,014 0,027464

0,66 s 0,0050 0,0139 2 1,173% 303

0,333 27,527
Chopped basil 0,50 Cup 0,2000 0,3000 2 % 0

Tomatoes Gram 0,015 0,173936

65,00 s 0,0010 0,0215 3 1,266% 834

Mozzarella cheese Ounc 0,161 13,324

1,33 e 0,0284 0,2228 3 % 0

Grated Parmesan Table 0,305 25,240

cheese 0,66 Spoon 0,0330 0,3376 5 % 0

Salt to taste Table 0,000 0,001477

0,33 Spoon 0,0150 0,0004 4 0,037% 309

Black pepper to taste 0,33 0,0150 0,0602 4,981%

Table 0,060 0,147588
67
 Spoon 3 555

TOTAL 1,57 1,21 1,10 1,50

Table 11: Example1: Proposed Model Description

68
As shown in the table above, the cost estimation of a single food dish plate has been done using the
Pareto principle and then using the popularity index and profit figures from known selling price of
single plate food dish, the food dish has been categorized into one of the value of BCG matrix.

The cost estimation begins with writing down all the food dish ingredients required to prepare the
food dish with their corresponding units. The first step of estimation is to know the normal cost per
unit of food ingredient considering the units conversion factor, as the units of purchase of food dish
ingredients may vary with their corresponding units of usage in preparation of food dish. The model
of estimation of cost of food dish involves the use of Ingredient Costing application which has been
explained below. From the inventory stock, it can be calculated that the quantity of food dish
ingredients purchased over a month and their corresponding quantities used in food dishes
preparation in the same period of time may vary, thus the normal cost of purchase of food dish
ingredients may vary according to the waste percentage in their purchase. Hence, it was required to
calculate the adjusted cost per unit of food dish ingredient considering and covering the cost of
waste quantities being purchased of food dish ingredients. After calculating the adjusted costs of
each food ingredients required in a particular food dish preparation considering the waste quantities
costs, the costs have been summed up to get the adjusted cost of single food dish plate. In order to
know the impact of each food dish ingredient in total adjusted food dish cost, the percentage
contribution of each food dish ingredient has been calculated, to know which food dish ingredient is
important for analyzing and evaluating the food dish cost.

As stated in Pareto principle or ABC analysis, out of the total impact on some output results, there
are only few (20%) inputs which make most(80%) of impact on the total output result and there are
many inputs with less overall impact on total output result. Thus, using the Pareto principle, it has
been found that which food dish ingredients are responsible for getting effective food cost in actual
food dish cost results and which food dish ingredients are less effective in generating overall total
actual food cost. In the proposed model, first of all, the food dish ingredients having percentage
contribution more than 5% in total actual food dish cost has been considered as effective food dish
ingredient, and being summed to get an updated food dish cost. This model has also put food dish
ingredients with the percentage contribution less than 5% into consideration. The steps followed in
estimation of those food dish ingredients in single plate food dish has been done by using the
application of relative proportion. The steps taken in the estimation was to select the number of
dishes which can be used for sampling having lot of food dish ingredients in common. From these
sampled dishes, it has been verified for each and every food dish ingredient that if the particular
food ingredient in each sample food dish has come out in a category with percentage contribution

69
less than 5%. If the result of verification comes out to be true, then for each such food dish
ingredient, the application of relative proportion has been applied to get to know their costs in food
dish preparation. To apply relative proportion application for such food dish ingredients, their
corresponding percentage contribution in particular food dish has been first multiplied to total cost
of purchase of such food dish ingredient and then later divided the result by sum of all percentage
contributions of that food dish ingredient in all food dishes in the menu of food service unit. This
calculated cost for all such food dish ingredients has been then added to the updated food dish cost
which has considered only food dish ingredients with percentage contribution more than 5%. This
total cost of food dish ingredients gives out the real Food dish cost with all costs of ingredients has
been considered effectively.

The next step to perform after evaluating the real cost of single food dish plate from calcualtion of
food ingredients is to determine the categories of BCG matrix to know where the different food dish
items lie in the business portfolio. The dimensions chosen for modelling of BCG matrix and
creating four categories correspondingly were Profitability index and Popularity index. To gain
knowledge on this aspect, first it has been required to know the selling price of single food dish
plate, popularity index and profitability index. The selling price of each single plate of food dish can
be gathered from menu dish price list of food service unit. The first step is to calculate profits that
are being generated from selling of these food dishes in a food service unit. The selling price of
single food dish item determined before has been subtracted by the real cost value of single food
dish item to get the profit generated from single food dish plate. Then, total profit by selling all food
dishes in a menu can be calculated accordingly and summed up. From the total profit value, by
dividing it with total number of food dishes served in a period of time, the average profit from a
single food dish has been calculated. This profit generated by selling of single plate of food dish
item has been compared with average profit genrated for each and every food dish item. If the result
of comparison comes out high, it has been marked as HIGH in profitability index otherwise marked
as LOW in profitability index. The second factor to evaluate was Popularity index, for this, first the
popularity factor has been evaluated on the basis of number of food dish items that has been sold by
food servie unit in a certain period of time. The popularity of each food dish item has been
calculated by calculating the percentage contribution of the particular food dish offered in a period
of time over total number of food dishes prepared by the food service unit; this is called as
popularity of food dish in the food service unit menu. The poularity factor for each single food dish
item was then compared with popularity factor of all food dish items. If the result of comparison
comes out high, it has been marked as HIGH in popularity index otherwise marked as LOW in

70
popularity index. Finally, the four categories of BCG matrix, termed as, CASH COW, DOG,
STAR, and, PUZZLE, has been determined following:

 Dishes with low popularity index and high profitability index are placed in “CASH COW”
category.
 Dishes with low popularity index and low profitability index are placed in “DOG”
category.
 Dishes with high popularity index and high profitability index are placed in “STARS”
category.
 Dishes with high popularity index and low profitability index are placed in
“PUZZLE”category.

Figure 14: BCG Matrix, showing dimensions Popularity index and Profitability index

71
 Adjusted cost per
Total Quantity unit Waste percentage
Ingrdient List bought for 1 month Unit Total Cost Cost per Unit Bought Waste Quantity
1,4700 28,57%
Fettuccine 140,00 lb 147,00 1,05 40,00
5,0939 -4,83%
Extra virgin olive oil 6,00 litre 32,04 5,34 -0,29
7,2000 16,67%
Button mushrooms 60,00 lb 360,00 6,00 10,00
4,3044 2,43%
Garlic 4,00 kilogram 16,80 4,20 0,10
0,2595 3,66%
Onions 90,00 kilogram 22,50 0,25 3,29
0,7000 14,29%
Green peas 35,00 kilogram 21,00 0,60 5,00
0,0907 0,73%
Salt to taste 5,00 kilogram 0,45 0,09 0,04
12,1813 0,18%
Black pepper to taste 3,00 kilogram 36,48 12,16 0,01
Grated Parmesan 18,7047 17,13%
cheese 120,00 lb 1.860,00 15,50 20,56
2,4400 0,00%
Lemon juice 3,00 litre 7,32 2,44 0,00
0,3301 0,03%
Tomatoes 280,00 kilogram 92,40 0,33 0,09
3,3323 9,97%
Chopped basil 37,00 kilogram 111,00 3,00 3,69
0,7080 16,67%
Pizza Crust 120,00 Piece 70,80 0,59 20,00
7,1295 17,10%
Mozzarella Cheese 5,00 kilogram 29,55 5,91 0,86
5,2594 4,93%
Ground beef 50,00 kilogram 250,00 5,00 2,47
3,5000 0,00%
Cream 1,00 litre 3,50 3,50 0,00

72
 0,9850 13,70%
Tomato pure 30,00 kilogram 25,50 0,85 4,11
0,6349 5,50%
Milk 6,00 litre 3,60 0,60 0,33
Table 12: Example2: Proposed Model Description

73
As shown in the table above, the particular application has been modeled to help the food service
units’ managers and executives to have good idea on inventory stock and the waste in purchased
quantities during the operation of food service business. This model helps the executives and
managers of food service unit to analyze and put control on the purchase of extra food dish
ingredients and thus controlling the costs of food dishes being offered.

The main purpose of this application is to act as support tool to Recipe Costing application to
evaluate the real costs of food dishes. The application of ingredient costing begins with writing
down all the possible food dish ingredients being purchased by food service units in order to realize
the food dishes from them. It is also required to write down the total quantity of food ingredient
bought with their corresponding units and cost of each unit of food ingredient. The application will
calculate the total cost spent in purchase of the food dish ingredients by summing up the costs of
purchase of all food dish ingredients. This application makes use of recipe costing application
explained above to know the total quantity of ingredients have been put in use by food service unit
business operations. From the total quantity of particular food dish ingredient used and the total
quantity being purchased, it calculated the quantity of that food dish ingredient that have been extra
purchased or wasted. This application then calculates the waste percentage in quantity of each food
dish ingredient to help the food service units’ managers or executives to analyze and put some kind
of control to reduce the waste in quantities. This application of Ingredient costing also calculates the
adjusted cost per unit of each food ingredient by considering the waste quantities cost and the price
spent in purchase of those food dish ingredients. The adjusted cost has been realized by dividing the
total cost spent in purchase of particular food dish ingredient with the actual quantity of that food
dish ingredient have been put in use in preparation of food dishes.

74
 4.5: FLOW DIAGRAM OF PROPOSED MODEL:

Ingredient Ingredient Waste

Quantity purchasing Quantities

Unit Food Unit Food Dish

Dish Cost Price

Numbers of Food Unit Food Dish

Dishes sold Profit Margin

No of Dishes Total no of Total no of Total no of

Dishes Dishes Dishes

One dish Average Profit from Average

Popularity factor Popularity factor single plate Profit

Popularity Index Profitability Index

BCG MATRIX

Figure 15: Flow diagram of proposed model

75
4.6: COMPARISONS BETWEEN MODELS:

Volume Food Cost Profitability

Number of Food dish Selling percentage percentage index
Food dish item Dishes item real cost price

HIGH HIGH LOW

Pasta Primavera 100 11,50 11,00
HIGH LOW LOW
Pizza Margherita 100 2,08 6,00
LOW HIGH HIGH
Heart meat lasagna 40 5,47 13,00
LOW LOW LOW
Moussaka 50 1,71 4,50
HIGH LOW HIGH
Beer Braised meatballs 100 3,28 10,75
Toretellini Tomato HIGH LOW HIGH
Spinace Soup 200 4,07 10,50
LOW LOW HIGH
Potato Kielbasa Skillet 80 2,46 9,50
Vietnamese Chicken LOW LOW HIGH
Soup 70 0,65 8,00
LOW LOW LOW
Light Crock pot Chili 50 1,20 4,00
LOW LOW HIGH
Chicken Curry 70 2,00 9,00

TOTAL 860
Table 13: Comparison of proposed model with earlier scholars’ work

Above table is an example for the authentication and explanation of the matrices presented by the
scholars. Following table illustrates the comparison and all the points which make feasible
understanding of the concept proposed by earlier scholars.

According to Miller, Pizza margherita is in “WINNER” and Heart meat lasagna is a “LOSER”.
Hear meat lasagna has been placed in this category because of the high food cost percentage
neglecting this factor that it is generating high profits from the selling of food dish items.

According to Pavesic, the Pizza margherita is “SLEEPER” because the high food cost for
making, and Hear meat lasagna is “Standard” because of high profitability irrespective of
popularity consideration.

76
Food Dish Item Miller’s Model Pavesic Model Proposed Model

Pasta Primavera MARGINAL PROBLEM PUZZLE

Pizza Margherita WINNER SLEEPERS PUZZLE
Heart meat lasagna LOSER STANDARD CASH COW
Moussaka MARGINAL SLEEPERS DOG
Beer Braised meatballs WINNER PRIME STAR
Toretellini Tomato Spinace Soup WINNER PRIME STAR
Potato Kielbasa Skillet MARGINAL PRIME CASH COW
Vietnamese Chicken Soup MARGINAL PRIME CASH COW
Light Crock pot Chili MARGINAL SLEEPERS DOG
Chicken Curry MARGINAL PRIME CASH COW
Table 14: Result of comparison of proposed model with earlier scholars’ work

The table shown above shows the comparison between results of earlier scholars chosen and the
current proposed model after applying various factors that has been put into consideration by earlier
scholars and in the current proposed model. During the analysis of the models, it has been found
that considering different factors, for the same dishes, the results of BCG matrix come out in
different categories. In the current proposed model, it has been tried not to put just internal factors
into consideration but also the external factors such as popularity of food dish items among
customers. This proposed model has also taken into account the factor of wastes in preparation into
consideration as this factor can alter the cost of food dish items by many ways. Thus, considering
the different factors altogether, a complete methodology can be proposed.

77
 Chapter 5

RESULTS &
DISCUSSIONS

78
Results & Discussions
The scope of the proposed dissertation lies in evaluation of real cost of a food dish item by
considering the actual cost of food dish ingredients involved in the preparation of food dish
item. During the research and study of previous works done by earlier scholars, it has been
found that many scholars were failed to count the effect of waste in preparation of food dish
item in terms of excessive purchase of food dish ingredients thus increasing inventory costs
by wasting lot of quantities without using them much. Thus, with the present dissertation, it
has been tried to show the effect of food dish ingredients on the cost of food dish item and
thus profits that could be gained from selling of these food dish items. This proposed model
has tried to overcome the weakness of previous work by not just considering food dish costs
and volume of selling on different axes but combined them in such a way so as to show their
cumulative effect against the popularity of a food dish item. The present dissertation, by
evaluating different kind of food dish costs not only provide a vision towards varying costs
but also describes the causes of high food dish costs and thus low profit figures. The proposed
model can act as a supporting tool for food service units’ managers and executives to have a
closer look on waste in quantities of food dish ingredients which contributing to excess of
food dish costs and thus helping them to put some control on them by carefully analyzing the
reasons behind those wastes.

The present dissertation and model provide a comparison between popularity and profitability
of food dish items and show the results on BCG matrix as four different categories, giving an
opportunity to executives and managers of food service unit to see which food dish items are
good for business and should be placed at attractive places in the menu and which food items
need an extra vision and control about their status in the menu.

The main two axes of BCG matrix chosen in this model are Popularity index and Profitability
index of food dish item. While the popularity of food dish item has been evaluated on the
basis of consideration of market structure, customer tastes, seasons, ease of preparation and
other related factors, the profitability of food dish items involved the evaluation of average
profit per food dish item. In order to calculate the average profit per food dish item, the total
profit gained from selling of all categories of food dish items has been divided by the total
number of food dishes been sold in a given period of time. This average profit per food dish
item has further been compared with the profit figures of each category of food dish items by
selling only single plate of particular food dish to know the profitability index of that food
79
dish item. At this point, there are two different alternatives available, either compare the real
values of average profit per food dish item with profit values of selling of single plate of any
particular food dish item or evaluate the percentage figures of average profit per food dish
item which is calculated by dividing the total profit obtained by selling food dish items with
total revenue generated and then compare the result with profit percentage value with respect
to the revenue generated for each and every food dish items. This percentage comparison
method seems to be easy and fast in giving results, but it involves lot of ambiguities as by
comparing percentage figures, the managers or executives cannot be sure enough of deciding
them as a good candidate or bad candidate to put in a food menu. The percentage figures
cannot explain themselves alone that particular dish is generating high profit in terms of real
values, there might be chance that high profit percentage values in real giving low profit in
terms of real money due to low costs and low selling prices. For this reason, in order to
evaluate the profitability index, the real values of profit figures have been compared with
average profit figures by selling single plate of food dish, as using this approach, the
managers or executives will be confident that a particular dish is generating high profit or not
and thus, could be a good candidate to be placed in menu or not.

The results of comparison of profitability index and popularity indexes lead to generation of
four different categories of BCG matrix, showing different combinations of profitability
indexes and popularity indexes. This result could be used by managers and executives of food
service units to analyze, make strategies and take appropriate actions on food dish items to
improve their corresponding categories. These four categories and corresponding corrective
actions that could be taken to improve their rating can be discussed below:

80
Figure 16: BCG Matrix Results of Model Proposal

 CASH COW: This category represents the food dish items with low popularity but
high profits. These food dish items can be considered as an income generator to the
business operations. Although with low costs involvement in preparation of these
food dish items and high selling prices, these food items stand a good place in menu
of food dish items, there could be improvement in their corresponding popularities
can be proposed as an alternative to make it likeable among the customers. One of
alternative that could be employed to achieve this is placing these food dish items in
the menu where they can attain high attention of customers and become attracted to
customers’ eyes. This could be done by performing an analysis on menu card
designing to know the places where customers’ usually gaze while looking down the
menu and then placing these food dish items at appropriate places with an intention
of making customers to order these food dishes more. By implementing this
alternative, there could be high chance of gaining the popularity of customers for
these food dishes and thus improving their ratings in BCG matrix.
 STAR: This category represents the food dish items with high popularity and high
profits. These food dish items are highly important for successful execution of
business operations, as these food dish items represent brand image of the food
service unit. As this category is of high importance for the food service unit, it needs
special care of attention in order not to make it lose its ratings. Several alternatives
can be proposed to help in maintaining the rating of this category food dish items,
81
 such as, keep promoting these food dishes so that the customers never lose interest in
these interests but persuade other customers to order the same food dishes. Second
alternative that could be proposed is to control the cost of preparation or cost of food
dish ingredients involved in preparation of these food dishes, thereby; lowering the
cost and increasing the overall profit by keeping the same selling price. Following
the same methodology, to gain high profits from this category food dishes, one can
increase the selling price of these food dishes without compromising the popularity
of food dish, as these food dishes are highly popular, customers might not hesitate in
paying little extra money for popular dishes.
 PUZZLE: This category represents the food dish items with high popularity and low
profits. This category is one of dubious category in the matrix, as on one side, it
might represent brand image of food service unit, and on the other side, it could
generate very less profit either due to high costs of preparation or low selling price.
The managers and executives need to devote high care of attention on this category,
to improve the rating of food dishes lie in this category. Out of several alternatives,
one could be to reduce the portion size of the food dish keeping the selling price
same. By doing this, food service units will not be playing with popularity of these
food dishes by maintaining the same selling price, but by reducing portion size, they
can lower down the cost of preparation, thus, increasing the profit figures for these
kind of dishes.
 DOG: This category represents the food dish items with low popularity and low
profits. This category food dishes can be regarded as a place holder in food dish
menu as they don’t serve much in generating revenues and profits and are not
popular among customers as well. To improve the ratings of these kind of food
dishes, several alternative measures could be taken, such as, reducing the portion size
for these kind of dishes so that cost of preparation of these food dishes get lower
down, making profit figures to go up. If possible, the selling price for these food
dishes could be increased a little, so that even if less number of plates of these food
dishes could be sold, the profit figures for these food dishes will raise. The managers
and executives can analyze this category food dishes to know the reason behind low
popularity of these food dishes, and then can bring suitable changes in ingredients,
preparation methods, servings, and other possible ways to improve the ratings. With
an objective of increasing the popularity of these food dishes, the food service units
can employ some kind of promotions marketing to these food dishes to attract
82
 customers and gain their attention to make them order these food dishes as well. The
managers can try to make these food dishes popular by employing suitable menu
card designing application to place them in places where they can gain the attention
of customers and thus increasing the possibility of ordering of these food dishes. If,
after implementing alternatives being chosen after careful analysis, the rating of this
category food dishes cannot be improved, sometimes, it is recommendable to remove
these food dishes from menu as they serve just as a place holder and increase the
overhead of keeping and maintaining these food dishes in the menu.

Thus, following the alternative measures for all categories, there will be high possibility of
improvement in each category food dishes in BCG matrix, thus facilitate the food service unit
to generate more profits by making food dishes popular amongst customers.

83
 Chapter 6

CONCLUSIONS

84
Conclusions:
The purpose of this dissertation was to gain knowledge about different factors having impact
in estimation of cost of offered food dishes and propose a new methodology using BCG
matrix by overcoming some limitations of earlier proposed models by focusing on food
service units. The proposed methodology not only generates a BCG matrix categorizing
different food dishes on the basis of profitability and popularity factors, but also suggests the
managers to put effective control on costs by lowering down the waste in ingredients.

To begin with the dissertation, an overview of previous works of scholars were put into
consideration and several questions were raised pointing out their limitations. The main factor
that come out in highlight was many of scholars failed to recognize the effect of wastes in
food dish ingredients on cost of food dish during the operations of business. This factor has
been then decided to set as an objective to evaluate and show its impact on total food dish cost
and ultimately effects on BCG matrix categories. The two dimensions chosen for
implementing the BCG matrix were Profitability and Popularity covering out internal as well
as external impacts on successful run of business.

During the development of model, covering the quantities of food dish ingredients bought and
wasted, it has been evidently proved that the wastes cause significant impact on total food
dish cost. The high waste in quantities of food dish ingredients can act as an eye opener to the
executives and managers of food service unit to forecast the sale in a better way and purchase
the quantities in controlled manner to improve the profitability of business. The popularity
factor of individual food dish items also showed the interests of customers on particular food
dishes over others. Thus, provide a feedback to executives and managers to work in the area
of promoting food dishes to attract more customers and gain high profits.

The finally generated BCG matrix with 4 different categories where food dish items were
placed on the basis of their results of popularity and profitability indexes, shows the food dish
items which are brand image of the business, food dish items which are responsible of high
profits to the business, and the food dish items which need a special attention and care either
to promote them in the menu or to remove them for successful operations of business.

85
Further recommendations to extend this work include:

 The scope of the present dissertation was limited to evaluation of food dish cost only
considering the cost of food dish ingredients. The scope can be extended in future by
including the other related direct and indirect costs to the food dish items
 The quantity and sale price of food dish items can be estimated using statistical analysis
and appropriate forecasting methodology
 The present dissertation has chosen only limited food dishes for analysis and evaluation
purpose, the final results can be verified by taking large number of food dishes in
consideration
 A more detailed analysis and study of factors impacting the business and categorizing
the food dish items in BCG matrix can be done to have more detailed and complete
results

To end I would say, studying and analyzing the work of earlier scholars and different factors
impacting the food service unit operations has broaden up my mind in the sector, giving me
insight that much progress can be done in the hospitality sector concerning strategy and
decision making applications for successful execution of business.

86
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Negoita, N. (2010), “The simulation of a project concerning the menu engineering in a food
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estimate the costs for a restaurant menu”. International Journal of Hospitality & Tourism
Administration, Vol.8 (3), pp.1-15.
Schwartz, B. (2006), “Menu Engineering: A Scientific Approach to Improved Menu
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Taylor, J., Reynolds, D., Brown, D.M. (2009), “Multi-factor menu analysis using data
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Uman, D. (1983), “Pricing for Profits”. Restaurant Business, 1 April, pp.157-168.
Yang, L.S., Lee, H.Y. (1998), “Evaluation of Menu Quality Management in Business &
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Nutrition, Vol.31 (9), pp.1508-1521.
Non scientific articles
Coop Report (2010), “The Co-operative Group Building a better society. Annual Report &
Accounts 2010”. Co-operative.coop.
Euromonitor International (2011), “Consumer Food service in Italy”, Research report.
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Mifli, M. (2000), “Menu Development and analysis”. Fourth International Conference
"Tourism in Southeast Asia & Indo-China: Development, Marketing and Sustainability".
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WD Partners (2005). “What Fast-Casual and Quick Service Restaurant can learn from each
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Books

88
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Kasavana, M.L. (1997), Managing computers in hospitality industry (3rd ed.). Educational
Institute of American Hotel & Motel Association.
Kasavana, M.L., Smith, D.I. (1982), Menu Engineering: A Practical Guide to Menu Analysis.
Okemos MI: Hospitality Publications.
Kasavana, M.L., Smith, D.I. (1990), Menu Engineering – A Practical Guide to Menu
Analysis, revised edition. Hospitality Publications, Inc., Okemos, MI.
Kivela, J.J. (1994), Menu Planning for the Hospitality Industry. Hospitality Press, Melbourne.
Kotschevar, L. (1987), Management by Menu (20th ed.). Editorial The Educational
Fundation of the National Restaurant Association, U.S.A.
Luise, F. (2006), Food cost. Bibliotheca Culinaria, Lodi, Italy.
Miller, J.E. (1980), Menu Pricing and Strategy. CBI Publishing, Boston.
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Miller, J.E., Hayes, D.K., Dopson, L.R. (2002), Food and beverage cost Control (2nd ed.).
New York: Wiley.
Miller, J.E., Pavesic, D.V. (1996), Menu Pricing and Strategy (4th ed.). Wiley, New York.
Miller, J.E., Pavesic, D.V. (1997), Menu pricing and strategy. New York: Wiley.
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The Management of Foodservice Operations, London: Cassell, pp.45-58.
Website links visited
http://www.emeraldinsight.com/journals.htm?articleid=867168&show=abstract
http://www.emeraldinsight.com/journals.htm?issn=0959-
6119&volume=9&issue=4&articleid=867206&show=pdf&PHPSESSID=bov7m2fj71ccaae2j
6m7o6g574
http://www.sciencedirect.com/science/article/pii/S0278431904000428
http://www.emeraldinsight.com/journals.htm?articleid=866971&show=abstract
http://www.emeraldinsight.com/journals.htm?articleid=867352&show=abstract
http://en.wikipedia.org/wiki/Menu_engineering
http://www.hotel-online.com/Trends/ChiangMaiJun00/MenuAnalysisMifli.html
http://www.sciencedirect.com/science?_ob=MiamiImageURL&_cid=271702&_user=108756
91&_pii=0278431983900336&_check=y&_origin=article&_zone=relatedPdfPopup&_cover
Date=1983-12-31&piiSuggestedFrom=S0278431904000428&wchp=dGLbVlt-
zSkzk&md5=b71eb6962c0e4d59763cfb832bbf2493/1-s2.0-0278431983900336-main.pdf
http://www.sciencedirect.com/science/article/pii/S0278431904000428
http://www.wdpartners.com/files/WDPartners_WhatFCandQSRCanLearn.pdf

89
http://www.speedlinesolutions.com/Portals/0/planforprofit/Inventory_Tips.pdf
http://www.speedlinesolutions.com/Portals/0/planforprofit/Inventory_Tips.pdf
http://www.indiangaming.com/istore/Apr06_Schwartz.pdf
http://www.kendallhunt.com/uploadedFiles/Kendall_Hunt/Content/Higher_Education/Upload
s/McVety_Ch7_4e.pdf
http://www.profitablehospitality.com/public/449.cfm
http://www.tracrite.net/screenshots.php
http://rrgconsulting.com/menu_engineering.htm
http://www.restaurantcentral.ca/menuengineering.aspx
http://www.hotel-online.com/Trends/ChiangMaiJun00/MenuAnalysisMifli.html
http://pedia.vaneefoods.com/index.php/Menu_Engineering
http://www.vaneefoods.com/RecipeGroupList.php?PageView=by_category&GroupID=14&G
roupName=Lunch/Dinner%20Entrees
http://www.illinoisbiz.biz/nr/rdonlyres/3A0A5FCF-E0A3-461B-B94E-
86C0F9B9DC6A/0/RestaurantProfile.pdf
http://www.calcipe.com/index.php/home/feature
http://www.chefs-resources.com/plate-cost-how-to-calculate-recipe-cost
http://sensetosave.com/2007/12/05/how-much-does-that-recipe-cost/
http://moneysavingmom.com/wp-content/uploads/2011/02/Recipe-Conversions.pdf
http://www.restaurantowner.com/public/805.cfm
http://www.chefs-resources.com/FoodCostCalculation
http://www.ehow.com/how_7648391_analyze-restaurant-menu.html
http://www.starting-a-restaurant.com/how-to-calculate-recipe-cost/
http://www.starting-a-restaurant.com/wp-content/uploads/2011/03/recipe-costing-report.png
http://www.ipm.edu.mo/p_journal/2005/05_4/12.pdf
http://www.foodcostwiz.com/2009/11/menu-planning-and-strategy.html
http://www.docstoc.com/docs/2696857/Menu-Engineering
http://www.indiangaming.com/istore/Jul06_Schwartz.pdf
http://www.technomic.com/_files/Newsletters/Viewpoint/Viewpoint_01-11.pdf
http://eta-design.com/capabilities_5.htm
http://weinstockrag.com/growing-your-business
http://www.gao.gov/special.pubs/bprag/frmenu.htm
http://www.technomic.com/_files/Newsletters/Viewpoint/Viewpoint_09-09.pdf

90
http://scholar.google.com/scholar?start=20&q=menu+design+restaurant&hl=en&as_sdt=0,5
http://www.emeraldinsight.com/journals.htm?articleid=872770&show=abstract
http://www.sciencedirect.com/science/article/pii/S0278431999000456
http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=5551781
http://m3.ithq.qc.ca/collection/00000144.pdf#page=64
http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=1500109
http://www.emeraldinsight.com/journals.htm?articleid=850012&show=abstract
http://www.hhcpa.com/files/publications/Fall10_Final.pdf : qt1
http://www.resortsoftware.com/pub/documentation/restaurant.pdf - Resort food cost
http://www.emeraldinsight.com/journals.htm?articleid=867308&show=abstract
http://www.kendallhunt.com/uploadedFiles/Kendall_Hunt/Content/Higher_Education/Upload
s/McVety_Ch7_4e.pdf
http://www.docstoc.com/docs/76409917/Food-Cost-Calculator-Template
http://www.business.com/retail-and-restaurant/restaurant-software/
http://www.failteireland.ie/Information-Centre/Publications/Reviews-and-
Reports/Policy/The-Cost-of-Food-Preparation-and-Service-Activitie
http://www.foodsoftware.com/Restaurant_Inventory_Software.asp?NavURLs=Restaurant_In
ventory_Software.asp&NavNames=Restaurant+Inventory+Software
http://www.restaurantowner.com/public/377.cfm
http://smallbusiness.chron.com/restaurant-food-cost-troubleshooting-36915.html
http://smallbusiness.chron.com/calculate-food-cost-restaurant-39551.html
http://www.foodcostwiz.com/
http://www.whitehutchinson.com/leisure/articles/primetime.shtml
http://www.cornell.edu/search/?q=food+cost&submit=go&tab=
http://blog.bodellconsulting.com/2008/05/07/how-do-i-figure-my-food-cost/
http://www.bodellconsulting.com/webstore.html
http://www.foodreference.com/html/artfoodcost.html
http://www.nutrientdataconf.org/PastConf/NDBC19/7-3_Hoover.pdf
http://www.ohioscpa.com/docs/conference-outlines/47-boosting-your-profits-of-restaurant-
clients-with-accurate-recipe-costing-and-menu-engineering.pdf
http://www.amazon.it/Professional-Controlling-Restaurant-Professionals-
ebook/dp/B001GNC7OC/ref=sr_1_8?ie=UTF8&qid=1332173844&sr=8-8
http://www.resortsoftware.com/products/restaurant/default.aspx
http://www.resortsoftware.com/pub/documentation/restaurant.pdf
91
http://printfu.org/kasavana
http://printfu.org/menu+engineering+kasavana
http://deliveringthedifference.net/MENUENGINEERING.aspx
http://www.dytelworld.com/food-costing-menu-engineering-software.aspx
http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1408&context=refereed
http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1534&context=refereed
http://steconomice.uoradea.ro/anale/volume/2008/v4-management-marketing/268.pdf
http://www.menufocus.com/images/menufocus/FM_Menu_Engineering.pdf
http://coherentfinancial.com/self_help/Menu%20Engineering.pdf
http://www.italiaatavola.net/cuochidilombardia/articoli.asp?cod=3892
http://onlinelibrary.wiley.com/doi/10.1111/j.1745-4506.2000.tb00007.x/pdf : hong-kong-
wiley
http://www.emeraldinsight.com/journals.htm?articleid=1774999&show=html :Multi Factor
menu (1-2-3)
http://www.hospitalityupgrade.com/_files/File_Articles/Sum02-BenchmarkingMenu-
Kasavana.pdf
http://www.edu-doc.com/index.php?q=kasavana
http://freedownload.is/ppt/menu-engineering
http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1408&context=refereed
http://books.google.it/books?hl=en&lr=&id=FnTG-
3JXpHgC&oi=fnd&pg=PA204&dq=kasavana+%26+smith&ots=bJqTGVaUkk&sig=iOKqjL
enn5niXh6-NuWPichyiPc&redir_esc=y#v=onepage&q=kasavana%20%26%20smith&f=false
http://140.122.100.145/acad/rep/r100/f4-1.pdf
http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1114&context=jhfm
http://blog.bodellconsulting.com/tag/menu-analysis-spreadsheet/
http://www.ijqr.net/journal/v4-n2/8.pdf
http://quality.usaeroteam.com/Training/ParetoAnalysisMiniTutorial.pdf
https://depts.washington.edu/oei/resources/toolsTemplates/pareto_principle.pdf
http://sixsigmatutorial.com/sigma-pareto-analysis-pareto-chart-download-free-template-
microsoft-excel/104/
http://quality.usaeroteam.com/Training/ParetoAnalysisMiniTutorial.pdf
http://www.projectsmart.co.uk/pareto-analysis-step-by-step.html
http://management.about.com/cs/generalmanagement/a/Pareto081202.htm
http://abc-pareto-analysis.blogspot.it/
92
http://www.sersci.com/ServiceScience/upload/12556582800.pdf
http://abc-pareto-analysis.blogspot.it/
http://www.informatik.uni-marburg.de/~databionics/papers/ultsch02proof.pdf
http://www.valuebasedmanagement.net/methods_bcgmatrix.html
http://www.marketing91.com/bcg-matrix/
http://www.bcg.com/about_bcg/history/history_1969.aspx
http://en.wikipedia.org/wiki/Growth-share_matrix
http://www.managementstudyguide.com/bcg-matrix.htm
http://www.ristorantevillaolmo.it/ristorante%20Villa%20Olmo.pdf
http://www.camarra.com/menu.pdf
http://twoguyshonesdale.com/TG_Web/TwoGuysMenu.pdf
http://www.roomservicedeliveries.com/Singapore/West/Vietnamese/TheOrangeLantern
Recipe Sources
http://www.food.com/recipe/moussaka-59130
http://www.food.com/recipe/beer-braised-meatballs-315985
http://www.food.com/recipe/hearty-meat-lasagna-oamc-418464
http://www.food.com/recipe/tortellini-tomato-spinach-soup-
35988?scaleto=2&mode=null&st=true
http://www.food.com/recipe/potato-kielbasa-skillet-34688?scaleto=2&mode=null&st=true
http://www.food.com/recipe/cheat-n-eat-vietnamese-chicken-soup-
28377?scaleto=2&mode=null&st=true
http://www.food.com/recipe/cooking-light-crock-pot-chili-
137337?scaleto=2&mode=null&st=true
K2-Donar Kebab
Online Visits Regarding Ingredients
http://www.lascelta.com
http://www.almagourmet.com
http://www.cheesetraders.com
http://www.tomatodirt.com/tomato-recipe-equivalents.html
http://www.thebeeressentials.com/beer/beer-specialty-malts.shtml
Super Markets Visited
Carrefour
Euro Spin
LD
93
Esselunga
Conad
Meta shop of Como, Via Milano
La Scelta

Visited Suppliers
Fresh Tropical, S.R.L , Chiasso, Italy.
Kashmir Mini Market, Via Milano, Como-Italy.
Restaurants Visited
Pizza Goal, 34-Viale Messenzio Masia, Como-Italy.
Como Kebab, Via Milano,Como-Italy.
K-2 Kebap, Via Milano,Como-Italy.
Dogana Kebab Ristorante , Ponte Chiasso, Via Bellinzona,341-Como-Italy.

94
 oil
D IS H 1 -

Garlic
Button
Fettuccine
PASTA

Extra virgin olive

P R IM A V E R A R e c ip e
Q u a n t it ie s r e q u ir e d

mushrooms 0,50 lb
1,00 lb
Table

3,00 cloves
2,00 Spoon
U n it APPENDIX 1: RECIPE LIST

2
0,0
0
6,0
8
0,0
5
1,0
N o r m a l C o s t p e r U n it B o u g h t

0,00
1,00
0,01
1,00

5
0
5
0
U n it c o n v e r s io n F a c t o r

0,063
3,000
0,160
1,050
N o rm a l co st

100
N u m b e r o f D is h e s
T o t a l Q u a n t it ie s r e q u ir e d in 1
m o n th
A d ju s t e d c o s t

300 0,06 0,59%

200 0,15 1,41%
33,11
13,52

50 3,60 %
100 1,47 %
P e r c e n t a g e C o n t r ib u t io n in C o s t
S in g le D is h C o s t f o llo w in g 9 5 %
c o s t p r in c ip le

19,37
180,00
30,56
147,00
A d ju s t e d c o s t fo r 1 m o n t h
A d ju s t in g R e la t iv e p r o p o r t io n a t e
c o s t o f in g r e d ie n t s w it h
p e r c e n t a g e c o n t r ib u t io n le s s t h a n

0,01
0,00
0,04
0,00
5%

11,63
P o p u la r it y f a c to r
S e llin g p r ic e o f S in g le p la t e o f
F o o d D is h

% 11 1100
T o ta l R e v e n u e
P r o f it f r o m S in g le p la t e F o o d D is h
T o t a l P r o f it
P o p u la r it y In d e x

1,10 109,79 HIGH LOW

P r o f it a b ilit y In d e x
PUZZLE

95
F o o d D is h C la s s
 Onions 24,0 0,0 0,02 240
0 ounce 1 8 0,170 0 0,18 1,62% 423,73 #N/D
Green peas 0,1 0,20
1,50 cup 2 0 0,180 150 0,21 1,93% 31,50 #N/D
Salt to taste Table 0,0 0,01
1,50 Spoon 0 5 0,002 150 0,00 0,02% 0,31 0,00
Black pepper to Table 0,1 0,01
taste 0,30 Spoon 8 5 0,055 30 0,05 0,50% 1,64 0,01
Grated
Parmesan 6,8 0,44 42,57
cheese 0,75 cup 2 0 5,115 75 4,63 % 347,21 0,00
Lemon juice Table 0,0 0,01
2,00 Spoon 4 5 0,073 200 0,07 0,67% 14,64 #N/D
Tomatoes 16,0 0,0 0,02 160
0 ounce 1 8 0,150 0 0,11 0,98% 171,13 0,14
Chopped basil 0,6 0,20
0,50 cup 0 0 0,300 50 0,33 3,06% 16,66 0,00

10,31 10,8 9,7

TOTAL 8 7 0 800,66 9,90
M A R G H E R IT A
D IS H 2 -
P IZ Z A

11,63
100 % 6 600 4,50 449,82 HIGH LOW PUZZLE
Pizza Crust 0,5 1,00 24,37
1,00 Piece 9 0 0,590 100 0,30 % 29,50 0,00
Extra virgin olive Table 0,0 0,01
oil 0,33 Spoon 8 5 0,026 33 0,03 2,08% 0,83 0,06

96
 Garlic 0,0 0,00
0,66 Cloves 2 5 0,014 66 0,01 1,17% 0,94 0,03
0,6 0,20 27,53
Chopped basil 0,50 Cup 0 0 0,300 50 0,33 % 16,66 0,00
Tomatoes 65,0 0,0 0,00 650
0 Grams 0 1 0,021 0 0,02 1,27% 99,62 0,17
Mozzarella 0,1 0,02 13,32
cheese 1,33 ounce 7 8 0,223 133 0,16 % 21,45 0,00
Grated
Parmesan Table 0,5 0,03 25,24
cheese 0,66 Spoon 1 3 0,338 66 0,31 % 20,17 0,00
Salt to taste Table 0,0 0,01
0,33 Spoon 0 5 0,000 33 0,00 0,04% 0,01 0,00
Black pepper to Table 0,1 0,01
taste 0,33 Spoon 8 5 0,060 33 0,06 4,98% 1,99 0,15

1,1
TOTAL 1,573 1,21 0 191,18 1,50
LA SA G N A
D IS H 3 -
H EART
M EAT

40 4,65% 13 520 8,42 336,89 LOW HIGH COW

Extra virgin olive Table 0,0 0,01

oil 0,33 Spoon 8 5 0,026 13 0,03 0,56% 0,33 0,04
Onions 0,0 0,20
0,33 cup 5 0 0,017 13 0,02 0,38% 0,23 #N/D
Garlic 0,0 0,00
2,00 cloves 2 5 0,042 80 0,04 0,96% 3,44 0,06
Ground beef 2,2 0,45 17,54
0,33 lb 7 4 0,749 13 0,79 % 10,40 0,00

97
 Salt to taste Table 0,0 0,01
0,50 Spoon 0 5 0,001 20 0,00 0,02% 0,01 0,00
Black pepper to Table 0,1 0,01
taste 0,50 Spoon 8 5 0,091 20 0,09 2,03% 1,83 0,15
Cream 0,7 0,20
0,13 Cup 0 0 0,088 5 0,09 1,95% 0,44 #N/D
Tomato pure 0,0 0,02
9,33 ounce 2 8 0,225 373 0,26 5,80% 97,23 0,00
Tomatoes 0,0 0,02
9,33 ounce 1 8 0,087 373 0,06 1,39% 23,28 0,48
Milk 0,0 0,02
5,00 ounce 2 8 0,085 200 0,09 2,00% 18,00 #N/D
Grated
Parmesan 0,9 0,06 17,04
cheese 0,88 ounce 7 2 0,846 35 0,77 % 26,80 0,00
Chopped Basil 0,6 0,20
0,25 Cup 0 0 0,150 10 0,17 3,71% 1,67 0,00
Egg 0,1 1,00
0,33 Piece 3 0 0,041 13 0,05 1,22% 0,72 #N/D
Lasagna noodles 12,0 0,1 0,02 31,16
0 ounce 1 8 1,361 480 1,40 % 672,00 0,00
Mozzarella 2,6 0,45 14,26
cheese 0,33 lb 8 4 0,885 13 0,64 % 8,46 0,00

3,8
TOTAL 4,694 4,49 5 864,83 4,58
M O U SSA KA
D IS H 4 -

50 5,81% 4,5 225 2,81 140,47 LOW LOW DOG

98
Extra virgin olive 1,0 0,20
oil 0,06 Cup 7 0 0,067 3 0,06 4,33% 0,20 0,23
Ground beef 2,2 0,45 81,21
0,50 lb 7 4 1,135 25 1,19 % 29,85 #N/D
Onions 0,0 0,02
6,00 ounce 1 8 0,043 300 0,04 3,00% 13,24 #N/D
Garlic 0,0 0,00
0,50 cloves 2 5 0,011 25 0,01 0,73% 0,27 0,03
Oregano Table 0,0 0,01
0,08 Spoon 0 5 0,000 4 0,00 0,00% 0,00 #N/D
Chopped basil Table 0,0 0,01
0,17 Spoon 5 5 0,008 8 0,01 0,57% 0,07 0,00
Ground Table 0,1 0,01
cinnamon 0,08 Spoon 1 5 0,009 4 0,01 0,95% 0,06 #N/D
Salt to taste Table 0,0 0,01
0,08 Spoon 0 5 0,000 4 0,00 0,01% 0,00 0,00
Tomato pure 0,0 0,02
3,75 ounce 2 8 0,090 188 0,10 7,12% 19,63 #N/D
Black pepper to Table 0,1 0,01
taste 0,17 Spoon 8 5 0,030 8 0,03 2,08% 0,25 0,12

1,3
TOTAL 1,392 1,47 0 63,57 1,69
D IS H 5 - B E E R
M EA TB A LLS
B R A IS E D

11,63 10,7
100 % 5 1075 7,81 780,52 HIGH HIGH STAR

Ground beef 2,2 0,45 34,68

0,50 lb 7 4 1,135 50 1,19 % 59,69 #N/D

99
 Breadcrumbs 0,3 7,05
0,25 Cup 2 4 0,079 25 0,09 2,61% 2,25 #N/D
Egg 0,1 1,00
1,00 Piece 3 0 0,125 100 0,17 4,81% 16,56 #N/D
Onions 0,0 0,02
2,00 ounce 1 8 0,014 200 0,01 0,43% 2,94 #N/D
Grated
parmesan 6,8 0,44 44,82
cheese 0,25 Cup 2 0 1,705 25 1,54 % 38,58 0,00
Garlic 0,0 0,00
1,00 cloves 2 5 0,021 100 0,02 0,63% 2,15 0,01
Salt to taste Table 0,0 0,01
0,04 Spoon 0 5 0,000 4 0,00 0,00% 0,00 0,00
Black pepper to Table 0,1 0,01
taste 0,08 Spoon 8 5 0,015 8 0,02 0,44% 0,13 0,01
Light-colored 0,0 0,02
beer 6,00 ounce 2 8 0,136 600 0,16 4,65% 96,00 #N/D
Ketchup 0,3 0,20
0,50 Cup 6 0 0,180 50 0,18 5,23% 9,00 #N/D
Tomato pure Table 0,0 0,01
1,00 Spoon 1 5 0,013 100 0,01 0,43% 1,48 #N/D
Brown sugar 0,1 0,20
0,25 Cup 6 0 0,040 25 0,04 1,28% 1,10 #N/D

2,9
TOTAL 3,464 3,44 2 229,88 2,94
T O R E T E L L IN I
TO M ATO
S P IN A C H
D IS H 6 -

SO U P

23,26 1346,8
200 % 10,5 2100 6,73 8 HIGH HIGH STAR

100
Extra virgin olive Table 0,0 0,01
oil 0,50 Spoon 8 5 0,040 100 0,04 0,95% 3,82 0,01
Onions 0,0 0,20
0,25 cup 5 0 0,013 50 0,01 0,32% 0,65 #N/D
Garlic 0,0 0,00
0,50 Cloves 2 5 0,011 100 0,01 0,27% 1,08 0,00
Chicken broth 3,8 1,00 56,43
0,50 Litre 0 0 1,900 100 2,26 % 226,38 #N/D
Tomatoes 0,0 0,02 140
7,00 ounce 1 8 0,065 0 0,05 1,17% 65,51 0,08
Tortellini 0,0 0,02
4,50 ounce 4 8 0,172 900 0,18 4,37% 157,95 #N/D
Salt to taste Table 0,0 0,01
0,50 Spoon 0 5 0,001 100 0,00 0,02% 0,07 0,00
Black pepper to Table 0,1 0,01
taste 0,50 Spoon 8 5 0,091 100 0,09 2,28% 9,14 0,03
Spinach 0,1 0,02 100 14,96
5,00 ounce 1 8 0,567 0 0,60 % 600,00 #N/D
Grated
Parmesan 6,8 0,44 19,23
cheese 0,13 cup 2 0 0,853 25 0,77 % 19,29 0,00

3,6 1083,8
TOTAL 3,712 4,01 4 8 3,77
K IE L B A S A
PO TATO
D IS H 7 -
S K IL L E T

80 9,30% 9,5 760 7,04 563,42 LOW HIGH COW

Potatoes kilogra 0,3 1,00 12,36

0,93 m 2 0 0,296 74 0,32 % 23,68 #N/D

101
 Kielbasa 1,0 0,45 21,09
0,50 lb 4 4 0,522 40 0,55 % 21,85 #N/D
Onions 0,0 0,20
0,50 Cup 5 0 0,025 40 0,03 1,00% 1,04 #N/D
Green pepper 0,4 0,20
0,50 Cup 0 0 0,200 40 0,21 8,09% 8,38 #N/D
Vegetable oil Table 0,0 0,01
1,00 Spoon 5 5 0,047 80 0,08 3,12% 6,47 #N/D
Oregano Table 0,0 0,01
0,50 Spoon 0 5 0,000 40 0,00 0,00% 0,00 #N/D
Chopped basil Table 0,0 0,01
0,17 Spoon 5 5 0,007 13 0,01 0,32% 0,11 0,00
Salt to taste Table 0,0 0,01
0,08 Spoon 0 5 0,000 6 0,00 0,00% 0,00 0,00
Pepper Table 0,2 0,01
0,04 Spoon 0 5 0,008 3 0,02 0,67% 0,06 #N/D
Shredded
American 1,7 0,20 53,34
Cheese 0,75 Cup 0 0 1,275 60 1,38 % 82,88 #N/D

2,4
TOTAL 2,380 2,59 6 144,46 2,46
V IE T N A M E S
E C H IC K E N
D IS H 8 -
SO U P

70 8,14% 8 560 6,86 480,36 LOW HIGH COW

Cellophane 0,0 0,02

noodles 0,50 ounce 3 8 0,017 35 0,04 3,13% 1,50 #N/D
Chicken breast 0,1 0,02 79,20
4,00 ounce 3 8 0,510 280 1,09 % 304,00 #N/D
102
Vegetable oil Table 0,0 0,01
0,50 Spoon 5 5 0,023 35 0,04 2,95% 1,42 #N/D
Garlic Table 0,0 0,01
0,33 Spoon 6 5 0,021 23 0,02 1,55% 0,49 0,05
Ginger Table 0,0 0,01
0,33 Spoon 5 5 0,017 23 0,02 1,74% 0,55 #N/D
Pepper Table 0,2 0,01
0,04 Spoon 0 5 0,008 3 0,02 1,26% 0,05 #N/D
Chicken broth 0,1 0,02
0,25 ounce 1 8 0,027 18 0,03 2,34% 0,56 #N/D
Fish sauce Table 0,0 0,01
0,33 Spoon 4 5 0,012 23 0,03 2,50% 0,79 #N/D
Cilantro Table 0,0 0,01
0,33 Spoon 8 5 0,025 23 0,05 3,40% 1,08 #N/D
Onions Table 0,0 0,01
0,33 Spoon 0 5 0,001 23 0,00 0,09% 0,03 #N/D
Chopped basil Table 0,0 0,01
0,50 Spoon 5 5 0,023 35 0,02 1,82% 0,87 0,00

1,0
TOTAL 0,684 1,37 9 311,34 1,14
CRO CK POT
D IS H 9 -
L IG H T
C H IL I

50 5,81% 4 200 2,76 137,84 LOW LOW DOG

2,2 0,45 62,50

Ground beef 0,33 lb 7 4 0,749 17 0,79 % 13,00 #N/D
Onions 0,0 0,20
0,33 Cup 5 0 0,017 17 0,02 1,36% 0,28 #N/D
Green pepper 0,25 Cup 0,4 0,20 0,100 13 0,10 8,31% 1,31 #N/D
103
 0 0
Chili powder Table 0,2 0,01
0,33 Spoon 0 5 0,064 17 0,10 8,25% 1,72 #N/D
Sugar Table 0,0 0,01
0,11 Spoon 1 5 0,001 6 0,00 0,16% 0,01 #N/D
Ground cumin Table 0,1 0,01
0,11 Spoon 4 5 0,015 6 0,02 1,43% 0,10 #N/D
Salt to taste Table 0,0 0,01
0,04 Spoon 0 5 0,000 2 0,00 0,00% 0,00 0,00
Garlic 0,0 0,00
0,33 cloves 2 5 0,007 17 0,01 0,56% 0,12 0,03
Kidney beans 0,0 0,02
5,00 ounce 2 8 0,085 250 0,11 8,57% 27,00 #N/D
Tomato pure 0,0 0,02
4,00 ounce 2 8 0,096 200 0,11 8,86% 22,34 #N/D

1,2
TOTAL 1,134 1,26 2 65,88 1,24
D IS H 1 0 -
C H IC K E N
CURRY

70 8,14% 9 630 6,08 425,38 LOW HIGH COW

Salt to taste Table 0,0 0,01

0,16 Spoon 0 5 0,000 11 0,00 0,01% 0,00 0,00
Ginger Table 0,0 0,01
0,50 Spoon 5 5 0,026 35 0,04 1,19% 1,27 #N/D
Curry Table 0,1 0,01 12,95
3,00 Spoon 7 5 0,495 210 0,39 % 82,50 #N/D
Chicken breast 2,0 0,45 71,65
0,50 lb 4 4 1,022 35 2,17 % 76,07 #N/D

104
Extra virgin olive Table 0,0 0,01
oil 1,00 Spoon 8 5 0,080 70 0,08 2,52% 5,35 0,10
kilogra 0,2 1,00
Onions 0,23 m 5 0 0,056 16 0,06 1,92% 0,92 #N/D
0,0 0,00
Garlic 1,00 cloves 2 5 0,021 70 0,02 0,71% 1,51 0,02
Table 0,0 0,01
Tomato pure 0,75 Spoon 1 5 0,010 53 0,01 0,37% 0,58 #N/D
1,0 0,20
Cilantro 0,13 Cup 0 0 0,125 9 0,24 7,76% 2,06 #N/D
0,2 0,20
Yogurt 0,13 Cup 6 0 0,033 9 0,03 0,92% 0,24 #N/D

2,8
TOTAL 1,867 3,03 0 170,50 2,92

Food Dish
Popularit 10,00 Total 4771,3
Total 860 y Factor % Profit 7

Averag
e Profit 5,55

105
APPENDIX 2: INGREDIENTS LIST

T o t a l Q u a n t ity b o u g h t

A d ju s t e d c o s t p e r u n it
T o t a l Q u a n t ity u s e d in
C o s t p e r U n it B o u g h t

W a ste p e rce n ta g e
W a s t e Q u a n t it y

C o st o f W a ste
In g r d ie n t L is t

fo r 1 m o n th

q u a n t it ie s
T o ta l C o st

1 m o n th
U n it

40,00 100,00 1,4700 42,00 28,57%

Fettuccine 140,00 lb 147,00 1,05
0,71 6,29 5,9429 3,79 10,14%
Extra virgin olive oil 7,00 litre 37,38 5,34
10,00 50,00 7,2000 60,00 16,67%
Button mushrooms 60,00 lb 360,00 6,00
0,10 3,90 4,3044 0,41 2,43%
Garlic 4,00 kilogram 16,80 4,20
3,29 86,71 0,2595 0,82 3,66%
Onions 90,00 kilogram 22,50 0,25
5,00 30,00 0,7000 3,00 14,29%
Green peas 35,00 kilogram 21,00 0,60
0,04 4,96 0,0907 0,00 0,73%
Salt to taste 5,00 kilogram 0,45 0,09
0,01 2,99 12,1813 0,06 0,18%
Black pepper to taste 3,00 kilogram 36,48 12,16
10,56 99,44 17,1460 163,68 9,60%
Grated Parmesan cheese 110,00 lb 1.705,00 15,50
0,00 3,00 2,4400 0,00 0,00%
Lemon juice 3,00 litre 7,32 2,44
0,09 279,91 0,3301 0,03 0,03%
Tomatoes 280,00 kilogram 92,40 0,33
106
 3,69 33,31 3,3323 11,07 9,97%
Chopped basil 37,00 kilogram 111,00 3,00
10,00 100,00 0,6490 5,90 9,09%
Pizza crust 110,00 Piece 64,90 0,59
0,86 4,14 7,1295 5,05 17,10%
Mozzarella Cheese 5,00 kilogram 29,55 5,91
2,47 47,53 5,2594 12,33 4,93%
Ground beef 50,00 kilogram 250,00 5,00
0,00 1,00 3,5000 0,00 0,00%
Cream 1,00 litre 3,50 3,50
4,11 25,89 0,9850 3,49 13,70%
Tomato pure 30,00 kilogram 25,50 0,85
0,33 5,67 0,6349 0,20 5,50%
Milk 6,00 litre 3,60 0,60
6,80 113,20 0,1325 0,85 5,67%
Egg 120,00 Piece 15,00 0,13
0,39 13,61 4,1152 1,57 2,80%
Lasagna Noodles 14,00 kilogram 56,00 4,00
0,09 0,66 0,0136 0,00 11,70%
Oregano 0,75 kilogram 0,01 0,01
0,04 0,06 11,2450 0,26 37,75%
Ground cinnamon 0,10 kilogram 0,70 7,00
0,00 10,00 1,8000 0,00 0,00%
Ketchup 10,00 kilogram 18,00 1,80
23,65 176,35 0,0510 1,06 11,83%
Breadcrumbs 200,00 ounce 9,00 0,05
2,99 17,01 0,9406 2,39 14,95%
Light-colored beer 20,00 litre 16,00 0,80
0,50 5,00 0,8800 0,40 9,09%
Brown sugar 5,50 kilogram 4,40 0,80
22,50 117,50 4,5277 85,50 16,07%
Chicken Broth 140,00 litre 532,00 3,80
0,48 25,52 1,3757 0,65 1,87%
Tortellini 26,00 kilogram 35,10 1,35

107
 1,65 28,35 4,2328 6,60 5,50%
Spinach 30,00 kilogram 120,00 4,00
6,00 74,00 0,3459 1,92 7,50%
Potatoes 80,00 kilogram 25,60 0,32
0,84 18,16 2,4064 1,93 4,42%
Kielbasa 19,00 kilogram 43,70 2,30
0,50 10,50 2,0952 1,00 4,55%
Green pepper 11,00 kilogram 22,00 2,00
0,28 1,73 3,5942 0,85 13,75%
Vegetable oil 2,00 litre 6,20 3,10
0,01 0,09 14,4444 0,13 10,00%
Pepper 0,10 kilogram 1,30 13,00
1,00 12,00 9,2083 8,50 7,69%
Shredded American Cheese 13,00 kilogram 110,50 8,50
0,01 0,99 1,2094 0,01 0,78%
Cellophane noodles 1,00 kilogram 1,20 1,20
1,07 8,93 5,0391 4,81 10,70%
Chicken breast 10,00 kilogram 45,00 4,50
0,13 0,87 4,0161 0,45 12,85%
Ginger 1,00 kilogram 3,50 3,50
0,05 0,35 2,7706 0,13 13,38%
Fish sauce 0,40 litre 0,96 2,40
0,02 0,48 5,2329 0,11 4,45%
Cilantro 0,50 kilogram 2,50 5,00
0,00 0,25 13,1313 0,03 1,00%
Chili powder 0,25 kilogram 3,25 13,00
0,02 0,08 0,6061 0,01 17,50%
Sugar 0,10 kilogram 0,05 0,50
0,02 0,08 10,9091 0,16 17,50%
Ground cumin 0,10 kilogram 0,90 9,00
1,91 7,09 0,7619 1,15 21,25%
Kidney beans 9,00 kilogram 5,40 0,60
0,25 1,75 1,4857 0,33 12,50%
Yogurt 2,00 kilogram 2,60 1,30

108
APPENDIX 3: UNIT CONVERSION TABLE

Primary Unit Secondary Unit Conversion Factor

Kilogram Grams 1000

Ounce Grams 28,35
Table Spoon Grams 13
Litre Grams 1000
Cup Grams 150
Can Grams 800
lb Grams 454
Litre lb 2,202
Grams Kilogram 0,001
Grams Ounce 0,0353
Grams Table Spoon 0,076
Grams Litre 0,001
Grams Cup 0,0066
Grams Can 0,00125
Grams lb 0,0022
lb Litre 0,454
Table Spoon Litre 0,013
lb Kilogram 0,454
Kilogram lb 2,202
Table Spoon lb 0,0286
lb Table Spoon 34,92
litre Table Spoon 76,92
Table Spoon Kilogram 0,013
Kilogram Table Spoon 76,92
109
cloves lb 0,0154
cloves Litre 0,007
cloves Kilogram 0,007
lb cloves 64,86
Litre cloves 142,85
Kilogram cloves 142,85
Ounce lb 0,0624
Ounce Litre 0,02835
Ounce Kilogram 0,02835
lb Ounce 16,03
Litre Ounce 35,27
Kilogram Ounce 35,27
Cup lb 0,33
Cup Litre 0,15
Cup Kilogram 0,15
lb Cup 3,03
Litre Cup 6,67
Kilogram Cup 6,67
Kilogram Litre 1
Kilogram Can 1,25
Ounce Table Spoon 2,18
Ounce Cup 0,189
Ounce Can 0,0354
Ounce cloves 4,05
Table Spoon Ounce 0,458
Table Spoon Cup 0,086
Table Spoon Can 0,0185
Table Spoon cloves 1,85
Litre Kilogram 1

110
Litre Can 1,25
Cup Ounce 5,29
Cup Table Spoon 11,53
Cup Can 0,214
Cup cloves 21,42
Can Kilogram 0,8
Can Litre 0,8
Can lb 1,762
Can Ounce 28,22
Can Cup 4,67
Can Table Spoon 53,84
Can cloves 100
lb Can 0,5675
Grams cloves 0,142
cloves Table Spoon 0,54
cloves Ounce 0,247
cloves Cup 0,046
cloves Can 0,01
cloves Grams 7
Kilogram Kilogram 1
Ounce Ounce 1
Table Spoon Table Spoon 1
Litre Litre 1
Cup Cup 1
can Can 1
lb lb 1
Grams Grams 1
cloves cloves 1
Piece Piece 1

111