The Principles of

Management
Menu
EVERYTHING START
WITH THE MENU

1
BASIC CONCEPT
 THE MENU

The menu dictates much about how
your operation will be organize and
managed, the extent to which it
meet it’s goal, and even how the
building itself should be designed
and constructed
Restaurant’s Menu is one of the
most important internal advertising
tools that can be used to educate
a guest about the experience they
are about to have.

The first Reason for the guest

come the restaurant is to fulfill
their Basic Need
 MENU PLANNING CONSIDERATION

The Perfect Menu Planning

• Equipment and Facilities Available
• Labor skill
• Profit and Financial Consideration
• Product Availability
• Time and Seasonal consideration
• Guest Expectation
• Taste and Variety
• Appearance, texture, consistency
• Nutrition
2
You Can’t Mange What You
Can’t Measure

MENU ENGINEERING
 The Main Objectives

• To analyze the guest perception about the product

• To maximizing Profitability
• Controlling the Food Cost
• Minimize waste

Managing Perishable items is one of

our challenge
 Menu engineering is the study of
“ the profitability and popularity of
menu items and how these two
factors influence the placement
of these items on a menu. The
goal is simple: to increase
profitability per guest.
 Table Of Content

• Food Cost %
• Selling Price
• Contribution Margin
• Menu mix
• MM Achievement Rate
• CM Achievement Rate
• Menu Classification
 How Restaurant Makes Money

Food Cost is one of the

Revenue : biggest Cost in F&B
Operation (plus or minus 1%)
is the amount of dollars you take in.
Expenses :
are the costs of the items required to
THE PRIME COST IS RANGE
operate the business. BETWEEN 50 – 65 %
Profit :
is the amount of dollars that remain after
all expenses have been paid.

Revenue – All Expenses = Profit

 Food Cost Percentage

Calculating food cost percentage requires you know exactly what

you’re paying for when ordering food, which ingredients match
with which recipes, and how much each ingredient Food cost
percentage can be a benchmark that you track on a weekly,
monthly, or quarterly basis.

Food Cost = Food Cost %

Selling Price

Item : Club Sandwich Standard Recipe is

Example : Food Cost = Rp. 22.470 the Key
Selling Price = Rp. 75.000
Rp. 22.470
100
Rp. 75.000
= 29.96 %
 Selling Price

Food Cost
 100
Food Cost %

Example : Food Cost = Rp. 22.470-

Food Cost % = 29.96%
Rp.22.470
Selling Price = 29.96
 100

= Rp. 75.000
 Contribution Margin

Contribution margin is an efficient way to measure profit, analyze

how sales affect net income, and ultimately explain how different
factors of your food business react to changes.

CM = Selling Price – Food Cost

Example : Selling Price = Rp. 75.000

Food Cost = Rp. 22.470

CM = Rp. 75.000 – Rp. 22.470 = Rp. 52.530

 Menu Mix Achievement Rate

Menu mix is the number of each menu item that were sold during
some time period of same point in time ( items sold).

1/n x 70% x Total menu mix

High MM% > MM% Achievement Rate

Low MM% < MM% Achievement Rate

Example : Menu item = 8

Menu mix = 134 portion
Tot Menu mix = 796 portion

Average MM = 1/8 X 70% X 796

= 69 Portion
 Contribution Margin Achievement Rate

This rate determined by dividing total contribution

margin by total menu mix

CM Achievement Rate = Total CM : Total Menu Mix

Club Sandwich

CM = Rp. 52.530
Example :
Total CM = Rp. 36.052.130 : 797
CM Achievement Rate = Rp. 45.235.,

High CM > CM Achievement Rate

Low CM < CM Achievement Rate
 Menu Engineering Analysis

Star items that are popular and profitable.

Plow items that are not profitable but popular.

horses
Puzzles items that are profitable but not popular.

Dogs items that are neither profitable nor

popular.
 Managing Star

Stars are items that are high in CM and high in popularity.

The best advise for managing stars includes :
• Maintain rigid specifications. Do not attempt to alter the quality of
the product being served.
• Place in a highly visible location on the menu. Stars are items that the
food and beverage operator wants to sell. Therefore, make sure
guests are aware of their availability.
• Test for selling price inelasticity. Perhaps the star is popular because it
is a significant value to the guest, or, perhaps the star is not available
in its existing form elsewhere in the market place. These might be two
instances in which the price could be increased without a decrease
in popularity.
• Use suggestive selling techniques. Some of the techniques for shifting
demand might be useful.
 Managing Flow Horses

Plowhorses are items that are low in CM but high in popularity. Guest like
these items, but, unfortunately, it does not contribute their fair share of
contribution margin. Strategies for managing a plow horse menu items:
• Increase prices carefully. Perhaps the item is popular it represent a
great value to guests. If prices could be increased, the item may still
represent a good value, may remain popular, and may generate a
higher contribution margin. This alternative may be most effective
when the item is unique to the property and cannot be obtained
elsewhere.
• Test for demand. If there is no strong resistance to price increases, it
may be useful to complement an increased price with other strategies
such as repackaging the item or repositioning it on the menu.
 Managing Flow Horses

• Relocate the item to a lower profile on the menu. Depending, upon

the menu layout, certain areas of a menu represent a better
location than others. A plow horse can be relocated to a less
desirable area of the menu. Since the item is popular, some guests
will search it out.
• Shift demand to more desirable items. Menu engineering allows the
manager to determine which items to sell – those high in popularity
and high in contribution margin.
• Consider portion reduction. If the portion size is reduced, the product
cost will be decreased and the contribution margin will increase.
 Managing Puzzle

Puzzles are items that are high in CM but low in popularity. The challenge is to
find ways to increase the number of guests ordering these items. Strategies to
manage:
• Shift demand to these items. Techniques include repositioning the items to
more visible areas of the menu, renaming them, using suggestive selling
techniques, developing advertising campaigns,.
• Consider a price decrease. Perhaps an item is low in popularity because
it does not represent a value to guests.
• Add value to the item. Offering a larger portion size, adding more
expensive meal accompaniments or garnishes, and using higher quality
ingredients are among the ways that value can be increased..
 Managing Dog

• Dogs are items that are low in contribution margin and low in
popularity are obvious candidates for removal from the menu. After
all, they do not contribute their fair share of contribution margin and
they are not popular.
• When a menu item “dog” requires a significant amount of direct
labor, does not permit sufficient use of leftovers, and has a relatively
short storage life, the reasons for removing the item from the menu
become more compelling.