1. Menu Analysis & Engineering
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2. References
Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp Upper Saddle River, N.J. : Prentice Hall.
Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp rd ed. Upper Saddle River, N.J. : Prentice Hall, TX911.3.M45 D  
CD-ROM TX911.3.M45 D  
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3. Objectives
By the completion of this presentation you should be able to:
Analyze a menu for profitability
Apply menu engineering to menu analysis
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4. Important Terms Menu engineering Plowhorses Puzzles Stars Dogs
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5. Introduction This presentation explains how to evaluate a menu
When measuring a menu to see if it is successful 2 criteria must be met to declare it a winner:
Must be profitable in terms of individual item profitability
Most profitable item must be selling the best.
For evaluating menus, several systems are available. Two of the most widely used methods will be presented here.
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6. Stars, Plowhorses, Puzzles, & Dogs
Method, called menu engineering, developed by Donald Smith Ph.D., Westin Hotels Distinguished Professor at Washington State University
This method rates the menu by measuring each entrée as to its profitability (gross profit) and its sales. It then combines these measurements and places each menu item into one of four classifications.
Puzzle
Plow
Horse
Star
Dog
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7. Selling Price – Food Cost = Contributing Margin
Determine the contributing margin (CM) of each item
CM same as item’s Gross Profit
Use total food cost (include garnish, accompaniments served with entrée such as salad, potatoes, rolls, butter etc.).
Selling Price – Food Cost = Contributing Margin
One point to understand before delving into menu engineering is the theory of contributing margins.
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8. Contribution Margin Dollars vs. Food Cost Percentage
Lamb
Salmon
Coffee
Selling Price
$24.00
$22.00
$2.00
Cost
$10.78
$5.97
$0.19
Food Cost %
44.92%
27.14%
9.5%
Cont. Margin $
$13.22
$16.03
$1.81
Note:
Relationship between food cost % and contribution margin in $ is not consistent.
An item that has a high contribution margin in $ does not necessarily have a low food cost %.
Too often, management is led to believe that low food cost % are the primary objective.
Not so, you can’t take % to the bank, you take money.
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9. Contribution Margin Dollars vs. Food Cost Percentage
Lamb
Salmon
Coffee
Selling Price
$24.00
$22.00
$2.00
Cost
$10.78
$5.97
$0.19
Food Cost %
44.92%
27.14%
9.5%
Cont. Margin $
$13.22
$16.03
$1.81
Which one will/should your server sell ?
Note:
Relationship between food cost % and contribution margin in $ is not consistent.
An item that has a high contribution margin in $ does not necessarily have a low food cost %.
Too often, management is led to believe that low food cost % are the primary objective.
Not so, you can’t take % to the bank, you take money.
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10. Contribution Margin Dollars vs. Food Cost Percentage
Lamb
Salmon
Coffee
Selling Price
$24.00
$22.00
$2.00
Cost
$10.78
$5.97
$0.19
Food Cost %
44.92%
27.14%
9.5%
Cont. Margin $
$13.22
$16.03
$1.81
Which one will/should your server sell ?
Note:
Relationship between food cost % and contribution margin in $ is not consistent.
An item that has a high contribution margin in $ does not necessarily have a low food cost %.
Too often, management is led to believe that low food cost % are the primary objective.
Not so, you can’t take % to the bank, you take money.
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11. Data Trap Spring ‘06
See Dinner Hand Out
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12. Menu Engineering (1) (2) (3) (4) (5) (6) (10) Menu Item Number Sold
Soup/Salad
Number Sold
Item Sales Price
Food Cost Percentage
Total Sales
(2) X (3)
Total Food Cost
(4) X (5)
Crab Cake 38
$10.00
12.9%
$380
$49.02
Tapas 19
8.00
18.9%
152
28.69
Shrimp 30
10.00
32.9%
300
98.70
G Cheese 37
36.0%
296
106.56
Ravioli 34
7.00
30.6%
238
76.76
158
$1,366
$355.73
(10)
C/M
$8.71
6.49
6.71
5.12
4.86
(7) Food Cost Percentage: (6) / (5) =
(8) Total Contribution to Margin: (5) – (6) =
(9) Average Contribution Margin/ Customer: (8) / (2) =
(10) Contribution Margin per menu Item: (5) – (6) (2)
25.8% $
$6.39
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13. Popularity (11) Average Popularity
80% of the average item sales per appetizer:
100 / 5 X 80% = 16%
(12) Popularity of each menu item:
Number of portions sold divided by total number of meals sold
Crab Cake : 38 / 158 = 24.05%
Ceviche : 19 / 158 = 12.03%
J Shrimp: 30 / 158 = 18.99%
G Cheese : 37 / 158 = 23.42%
Ravioli: 34 / 158 = 21.52%
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14. HRT383 Dinner Appetizers 100% Plowhorse Star Dog Puzzle Popularity 16%
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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15. HRT383 Dinner Appetizers 100% Plowhorse Star Dog Puzzle Popularity 16%
*Crab Cake
$8.71/24.05%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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16. HRT383 Dinner Appetizers 100% Plowhorse Star * Tapas Dog Puzzle
*Crab Cake
$8.71/24.05%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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17. HRT383 Dinner Appetizers 100% Plowhorse Star * Tapas Dog Puzzle
*Crab Cake
$8.71/24.05%
*Shrimp $6.71/18.99%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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18. HRT383 Dinner Appetizers 100% Plowhorse Star * Tapas Dog Puzzle
*G Cheese
$5.12/23.42%
Star
*Crab Cake
$8.71/24.05%
*Shrimp $6.71/18.99%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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19. HRT383 Dinner Appetizers 100% Plowhorse *Ravioli $4.86/21.52% Star
*G Cheese
$5.12/23.42%
*Ravioli $4.86/21.52%
Star
*Crab Cake
$8.71/24.05%
*Shrimp $6.71/18.99%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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20. The Four Key Menu Categories
Plowhorses are items that are relatively popular but have a high contribution margin. Items in this category can have their menu prices increased or the portion size cut in a attempt to increase CM. If market is price resistant
Stars have both high popularity and high CM
Puzzles have relatively low popularity and high margins; lower price.
Dogs are both low in popularity and CM; eliminate
Plowhorses
If the market does not resist the price increase, this action will move a plowhorse into the star category.
If market is price resistant, the item can be buried in a inconspicuous place on the menu in the knowledge that people will find these relative bargains anyway.
Stars
It may be possible to increase menu price and/or cut portion size to increase profits while maintaining volume
Puzzles
They need to be promoted more to stimulate sales.
Dogs
Prime candidates to be dropped from the menu.
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
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21. HRT383 Dinner Appetizers 100% Plowhorse *Ravioli $4.86/21.52% Star
Reduce portion *G Cheese
$5.12/23.42%
*Ravioli $4.86/21.52%
Star
*Crab Cake
$8.71/24.05%
*Shrimp $6.71/18.99%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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22. HRT383 Dinner Appetizers 100% Plowhorse $ *Ravioli $4.86/21.52% Star
Reduce portion *G Cheese
$5.12/23.42%
$ *Ravioli $4.86/21.52%
Star
*Crab Cake
$8.71/24.05%
*Shrimp $6.71/18.99%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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23. HRT383 Dinner Appetizers 100% Plowhorse $ *Ravioli $4.86/21.52% Star
Reduce portion *G Cheese
$5.12/23.42%
$ *Ravioli $4.86/21.52%
Star
*Crab Cake
$8.71/24.05%
*Shrimp $6.71/18.99%
* Tapas
$6.49/12.03%
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16%
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Contribution Margin $6.39
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24. Data Trap Winter ‘06 See Dinner Hand Out for Main Courses & Desserts
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25. Exercise
Please work with your fellow students and come up with suggestions/decisions.
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26. HRT383 Dinner Main Courses
100%
Plowhorse
Star
Dog
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
13.33%
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Contribution Margin $14.14
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27. HRT383 Dinner Main Courses
100%
Plowhorse
Star
*Sirloin $13.75/40.62%
*Salmon
$16.03/14.14%
*Pork $10.85/12.08%
*Lamb
$13.22/11.31%
Dog
*Chix $14.48/11.05%
*Risotto
$14.91/10.80%
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
13.33%
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Contribution Margin $14.14
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28. The Four Key Menu Categories
Plowhorses are items that are relatively popular but have a high contribution margin. Items in this category can have their menu prices increased or the portion size cut in a attempt to increase CM. If market is price resistant
Stars have both high popularity and high CM
Puzzles have relatively low popularity and high margins; lower price.
Dogs are both low in popularity and CM; eliminate
Plowhorses
If the market does not resist the price increase, this action will move a plowhorse into the star category.
If market is price resistant, the item can be buried in a inconspicuous place on the menu in the knowledge that people will find these relative bargains anyway.
Stars
It may be possible to increase menu price and/or cut portion size to increase profits while maintaining volume
Puzzles
They need to be promoted more to stimulate sales.
Dogs
Prime candidates to be dropped from the menu.
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
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29. HRT383 Dinner Desserts 100% Plowhorse Star Dog Puzzle Popularity 16.0%
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16.0%
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Contribution Margin $4.73
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30. HRT383 Dinner Desserts 100% Plowhorse $ up *Cheese Cake $3.59/19.05%
Star
* Apple Crisp
$4.92/38.12%
4.51/18.03%
*Cookie
* Tiramisu $4.64/16.33%
Dog
$ Down* Choc $6.45/11.90%
Puzzle
Popularity
In the example; CHICKEN would be dropped from the menu, while the FILET would be promoted more heavily. The prices on the BEEF and the TURKEY might be raised a little and featured more visibly on the menu.
16.0%
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Contribution Margin $4.34
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31. Conclusion Menu analysis is important
If demographic studies, internal capacities, cost cards, and markups have been executed correctly, the score should be a good one
Analysis should be done using either the Smith or the Hurst methods to ascertain the profitability of the menu
If the analysis shows a poor menu, make improvements
Good menu: first step has been taken toward running a profitable operation.
It’s just that simple
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32. Where to Get More Information
Mill, Robert Christie (1998) Restaurant Management: Customers, operations, and employees / Menu Scoring & Menu Engineering, pp Upper Saddle River, N.J. : Prentice Hall.
Drysdale, John A. & Jennifer Adams Aldrich (2002). Profitable menu planning / Chapter 5: Menu Analysis, pp rd ed. Upper Saddle River, N.J. : Prentice Hall, TX911.3.M45 D  
CD-ROM TX911.3.M45 D  
Most Menu & F&B Management Books
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