1. Menu Analysis & Engineering
HRT383 By
Dr. Ben Dewald

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
Apply menu scoring methods to menu analysis.
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4. Important Terms Menu engineering Menu scoring Placement Pricing
Plowhorses
Puzzles
Stars
Dogs
Menu scoring
Placement
Pricing
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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
1st Method, called menu engineering, developed by Donald Smith Ph.D., Westin Hotels Distinguished Professor at Washington State University
This method rates the menu by measuring each entrée as to its profitability (gross profit) and its sales. It then combines these measurements and places each menu item into one of four classifications.
Puzzle
Plow
Horse
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
Steak Dinner
Fish Sandwich
Coffee
Selling Price
$15.00
$4.00
$0.75
Cost
$7.50
$1.00
$0.15
Food Cost %
50%
25%
20%
Cont. Margin $
$3.00
$0.60
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. Menu Engineering (1) (2) (3) (4) (5) (6) (10) Menu Item Number Sold
Item Sales Price
Food Cost Percentage
Total Sales
(2) X (3)
Total Food Cost
(4) X (5)
Chicken 65
$9.95 35
$646.75
$226.36
Beef 75
11.95 38
896.25
340.58
Turkey 90
10.25 31
922.50
285.98
Filet 55
12.95 45
712.25
320.51
285
$3,177.75
$1,173.43
(10)
C/M
$6.47
7.41
7.07
7.12
(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)
39.93%
$2,004.32
$7.03
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10. Menu Engineering (11) Average Popularity
80% of the average item sales per entrée:
100 / 4 X 80% = 20%
(12) Popularity of each menu item:
Number of portions sold divided by total number of meals sold
Chicken: 65 / 285 = 22.8%
Beef: 75 / 285 = 26.3%
Turkey: 90 / 285 = 31.6%
Filet: 55 / 285 = 19.3%
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11. Menu Engineering Analysis
100%
Plowhorse
*Chicken
(6.47/22.8%)
Star
*Turkey
(7.07/31.6%)
*Beef
( %)
Dog
*Filet
(7.12/19.3%)
Puzzle
Popularity
20%
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Contribution Margin
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12. 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.
Dogs are both low in popularity and CM
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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13. Menu Engineering Analysis
100%
Plowhorse
*Chicken
(6.47/22.8%)
Star
*Turkey
(7.07/31.6%)
*Beef
( %)
Dog
*Filet
(7.12/19.3%)
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.
20%
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Contribution Margin
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14. Menu Scoring
Method developed by Michael Hurst, Professor of Restaurant Management at Florida International University, a restaurant owner and past president of the NRA.
Devised to ascertain whether menu changes (additions, deletions, and price adjustments) actually improved the profitability of the menu by comparisons of a menu score.
One advantage: quick to complete because it does not track every menu item.
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15. Menu Scoring
Combines profitability and popularity of menu items to arrive a a consensus score
The higher the score, the better the menu
An existing menu can be scored, then compared with a proposed menu, after sales for the new menu have been estimated.
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16. Menu Scoring (1) (2) (3) (4) (5) (6) Menu Item Number Sold
Item Sales Price
Food Cost Percentage
Total Sales
(2) X (3)
Total Food Cost
(4) X (5)
Chicken 65
$9.95 35
$646.75
$226.36
Beef 75
11.95 38
896.25
340.58
Turkey 90
10.25 31
922.50
285.98
Filet 55
12.95 45
712.25
320.51
Total
285
$3,177.75
$1,173.43
Meal Check Average: 5 / 2 =
Gross Profit: 5 – 6 =
Gross Profit %: 8 / 5 =
Gross Profit Average Meal: 7 x 9 =
Total Meals Served:
Popularity of Meals Analyzed: 2 / 11 =
Menu Score: 10 x 12 =
$11.15
$2,004.32
63%
$7.02
450
4.42
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17. The Higher the Score the More Profitable the Menu
This method takes into account not only # of items sold, but also their contributing profit
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18. Placement Two Schools of thought Menu Sequence Focal Points
Menu should follow progression of meal
Focal Points
Use focal points on the menu to push certain menu items
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19. Focal Points Focal Point Single Sheet Menu Twofold Menu 5/16/2019
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20. Focal Points 2 3 4 5
Focal Point
Threefold Menu
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21. Specials Larger Bolder type than the rest of menu Longer description
Concept of Closure
people’s eyes are drawn to what ever is enclosed by a box
Color, illustration, and/or pictures, bullets can be used to draw attention to signature items.
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22. Branding
Fast food
Coke / Pepsi
TGIF
Jack Daniels
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23. Menu Pricing Odd-Cents pricing Price rounding. Placement
Majority of prices end in either a “5” or a “9”
Price rounding.
Within certain price bands, price increases have little negative impact on customers
Placement
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24. Price Placement BAKED CHICKEN Tender pieces of chicken breast $8.99
LEMON SOLE
Fresh filets sautéed with lemon caper sauce
$11.99
LAMB STEAK
Center cut of lamb served on a bed of rice
$12.99
SWORDFISH STEAK
Charcoal grilled served with beurre blanc $14.99
Baked Chicken……….$8.99
Lemon Sole………….$11.99
Lamb Steak………….$12.99
Swordfish Steak…..…$14.99
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25. Price Placement BAKED CHICKEN Tender pieces of chicken breast
Eight dollars and ninety nine cents
LEMON SOLE
Fresh filets sautéed with lemon caper sauce
Eleven dollars and ninety nine cents
LAMB STEAK
Center cut of lamb served on a bed of rice
Twelve dollars and ninety nine cents
SWORDFISH STEAK
Charcoal grilled served with beurre blanc Fourteen dollars and ninety nine cents
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26. 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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27. 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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