http://rrgconsulting.com/menu_engineering.

htm
Is Your Menu Working For You or Against You?
By John Nessel
Restaurant Resource Group

As a restaurant operator you already know the importance of keeping your food
costs in line. Pretty obvious stuff huh? That’s because combined with your wages and
other payroll expenses, food and beverage costs account for anywhere from 60-70+
percent of your total revenue. Moreover, your food and labor are relatively
controllable costs compared to rent, utilities, insurance and most of the remaining
expenses that make up your monthly payables list.

Menu Engineering

We’re going to save the labor conversation for another day. Today we’ll take a
unique look at controlling your food costs. More specifically I’m going to introduce to
you a powerful tool to help you achieve this. This tool, along with techniques for
utilizing it, has been called menu engineering. In simpler terms I would describe
the process as the methodical selecting, costing, pricing and evaluating of your menu
items.

Menu engineering provides the manager with information about a menu item’s
profitability, as well as popularity, so that proactive planning, recipe design and
customer pricing decisions can be made. Menu engineering is not a substitute for
proper purchasing, food rotation, standard recipes or any of the other basic kitchen
controls that can negatively impact your costs. Rather it is a method of evaluating
every item on your menu relative to its present contribution to bottom line dollars,
thereby allowing managers to recognize the items they want to sell!

Contribution Margins

While the concept of food cost percentage (an item’s ingredient cost divided by it’s
menu price) is the most commonly used criteria for assessing effective cost controls,
the concept of contribution margin (an item’s menu price less it’s food cost) is the
basis of menu engineering. A simple question should make the distinction clear. If
you could sell one more item before your restaurant closed today, would it be a
sirloin steak for $20 that costs you $8 or a plate of pasta primavera for $10 that
costs you $2. While the food cost percentage of the pasta is 20% versus 40% for the
steak, the steak will contribute $12 to gross revenue as opposed to $8 for the pasta.
I’ll take the $12… thank you very much. Contribution margin then is based on the
dollars you take to the bank.

Accounting for the Popularity of Menu Items

While a menu item's contribution margin tells us how many dollars each individual
sale of the item contributes to the cash register, you need to know how popular the
item is to determine the total dollars it contributes to the restaurant’s revenue. A
popular item with a high contribution margin is a “star” while an unpopular item with
a low contribution margin would fairly be called a “dog”. Menu engineering therefore
takes each menu items contribution margin and its popularity into account to
determine into which of four categories it falls: star, workhorse, challenge or dog.
We’ll get back to these categories shortly.

The Evaluation

I have included a completed Menu Engineering spreadsheet to demonstrate how the

process is performed based on the required information listed below (click on the
image to enlarge it). This fully automated spreadsheet is available for sale along with
other useful restaurant operations spreadsheets at
www.rrgconsulting.com/spreadsheets.htm

click on the above image to enlarge...

The information that you need to perform a menu engineering exercise is as

follows:

1. Column A. A list of your competing menu items (a separate evaluation

should be performed for each menu category e.g. appetizers, entrees, and
desserts)

2. Column B. A periodic (weekly or monthly) total of the number of each item

sold (use your POS report)

3. Column D. The ingredient cost of each menu item (not just the “center of the
plate” cost but the entire cost of the item)
 4. Column E. A list of the menu selling price for each item being evaluated

You can perform the evaluation yourself by manually calculating the numbers in the
following: Columns C, F, G, H, L, N, I, J, M, K, O, and Q. (Note that the
spreadsheet above automatically calculates these numbers)

The inputs in Columns P, R and S are calculated as follows:

Column P: Profit Category is LOW if the menu item profit is less than the menu’s
Average item profit ($4.16 in this example). Conversely, enter HIGH in the cell if the
menu items profit is greater than average for the menu.

Column R: Popularity Category is LOW if the menu item's menu-mix percentage

(e.g. the total number of the item sold divided by the total number of items) is less
than 80% of the average. Conversely this means that we are considering an item to
be popular, and placing the word HIGH in the column, if it sells at least 80% of an
average item’s popularity. In the example below, the average menu popularity
equals 8.3% (100% divided by 12 items = 8.3%). Therefore we consider an item
popular (HIGH) if it sells 80% of 8.3% or 6.7%.

Column S: The Menu Item Class is determined by the results of Columns P and R. If
an item is both profitable and popular then it’s a STAR. It it’s profitable but relatively
unpopular then enter the word CHALLENGE. If the item is relatively unprofitable but
popular then enter the word WORKHORSE. Finally, a DOG is an unprofitable and
unpopular menu item.

How to Take Action Based on the Results

Let’s start with the obvious. Keep the STARS and dump the DOGS.

Your creativity is now required dealing effectively with your CHALLENGES and
WORKHORSES. Lets start with the CHALLENGES. These items are profitable but
relatively unpopular. Your “challenge” is to make them more popular. There are
many ways to accomplish this including changing the preparation (Veal Marsala may
be more popular than Veal Putanesca, but still just as profitable). Re-naming or re-
plating the item to make it sound and/or appear more appealing is another
alternative. Alternatively you might want to create a whole new menu item using the
same “center of the plate” ingredient, but doing it in a way that will be more
appealing to your customers.

As for the WORKHORSES, they are popular items with less than ideal profit
margins. Here is where your best opportunities lie. Your job is to re-engineer the
menu item to reduce its cost while not sacrificing what makes it popular. This can
involve substituting a single relatively expensive ingredient for a one that is less
costly (e.g Assiago cheese in a Caesar salad for Reggiano Parmesan). It may involve
substituting one cut of meat for a less expensive one knowing that the preparation is
what makes the item popular. It might be as simple as using a less expensive
garnish. How about increasing the items selling price? Your chef’s imagination and
talent takes over here. If I knew how to perform this magic I would be wearing an
apron and a tocque instead of sitting in this chair banging on my keyboard!
Hopefully it is now easy to see how this information allows you to proactively
manage your menu. From collaborations with your chef to tinkering with your prices
you can use menu engineering to effectively manage a key aspect of your food
costs!
http://www.benjaminchristie.com/blog/menu-engineering-food-costing-for-chefs

Benjamin Christie
Menu Engineering & Food Costing
Posted in: Professional Cooking
01 / 01 / 2008

Most executive chefs and head chefs know the basic costs of a particular dish, but do
most know how that particular dish performs as part of the restaurant sales mix? From
my experience, the majority of chefs around the world have no idea what menu
engineering is and how it can play an important role in determining overall profitability
and food costs.

Menu engineering examines the sales history for each dish on the menu, and
examines the item's selling price and cost price. It then relates their profit margins and
their menu mix percentages to see which items are proving popular and thus profitable.

The best resource about menu engineering was written by Michael L. Kasavana and
Donald J. Smith and is titled Menu Engineering: A Practical Guide to Menu Analysis.
The book was published in 1982 and is difficult to locate today. The book includes
various case studies as well as detailing the process of menu engineering. Menu
Engineering involves dividing the menu and its dishes into 4 categories;

Stars
Stars are extremely popular and have a high contribution margin. Ideally Stars should be
your flagship or signature menu item

Plow Horse
Plow Horses are high in popularity but low in contribution margin. Plow horse menu
items sell well, but don’t significantly increase revenue.

Puzzles
Puzzles are generally low in popularity and higher contributions. Puzzle dishes are very
difficult to sell, but have a high profit margin.

Dogs
Dogs are low in popularity and low in contribution margin. Basically they are difficult to
sell and when you do they are not all that profitable.

Recently Philip Norman emailed me a copy of a menu engineering spreadsheet which

takes the Kasavana and Smith theory on menu engineering and automates the process in a
excel spreadsheet. The results are automatically charted in the spreadsheet for complete
menu analysis.
It’s well worth getting the menu engineering file and applying it to your current menu to
better analyse the menu. Then simply use it when developing a menu in the future. After
all isn’t it important to understand the financial position of your menu?

To get a copy of menu engineering spreadsheet, simply register at Kitchen Profitability

and you’ll be emailed the file straight away.
http://www.olivermagro.com/Spreadsheets/Menu_engineering.htm
menu Engineering The concept of menu engineering is a
common one and is found in a number of text books (amongst others
refer to Menu Engineering by Michael L. Kasavana and Donald J.
Smith).

Menu engineering examines the sales history of a number of menu

items, their selling price and their cost price. It then relates their profit
margins (also referred to as contribution margins) and their menu mix
percentages to see which items are proving both popular and
profitable. The worksheet provides a menu engineering worksheet,
with field names for you to follow. The worksheet determines the
classification of every menu item into one of the following
classifications, discussed briefly below:

Stars These are the most profitable items on your menu. One should
maintain rigid specifications for quality, portion size and presentation. These items
should be in a highly visible position on the menu and well be your restaurant's

signature items. Plowhorses These items are popular, even though

they do not yield a high contribution margin. They are normally items popular with

your price-conscious clientele. Puzzles These items are low in popularity

yet yield high contribution margins. You may have to consider whether these items

should be on your menu at all. Dogs These are your losers - they are
both unpopular and yield low contribution margins. These items may have to be
eliminated or their price increased to see whether they can at least reach the status
of Puzzles.
http://www.syscohamptonroads.com/BBTOps/Menu%20Engineering.pdf

Why is menu engineering so important?

As you try to fi nd ways to increase profi ts in your restaurant, the
easiest way to do that is to maximize
the profi t dollars from your existing customers. In other words...if you
have the exact same number
of people eat at your restaurant in a given year, you still have the
opportunity to achieve higher profi ts
by encouraging your guests to order more profi table items. This menu
engineering exercise will allow
you, as a business owner, to take the emotion out of decisions you
make pertaining to your menu and
allow you to base those decisions on data and facts.

Menu Engineering is a Three Step Process

Step 1 : Gather Your Data
There are four things you will need to gather to complete a Menu
Engineering Exercise....
1. A Menu Engineering Spreadsheet
• This can be found in the member section of
www.RestaurantOwner.com.
2. Your current pricing for each item on your menu
3. The food cost of every item you sell on your menu
• For help with this, please contact your Sysco Hampton Roads
Marketing Associate. They have
a menu analysis program that will break down the cost of each
ingredient that goes into a
menu item. This program also updates pricing automatically, so as
prices fl uctuate, it adjusts
your costs.
• Be sure to include some of the all too often “forgotten costs” such as
plate garnish and
sauces.
4. Your sales of each item on your menu for a given time frame
• With most POS systems, a sales report can be generated for a given
time frame.
• For an accurate menu engineering analysis, at least one month of
sales totals is needed;
however, the longer the time frame, the better information you will
obtain.
Step 2 : Enter Your Data
There are several tabs on the spreadsheet, the fi rst of which is a
detailed set of instructions and the
second tab is an example spreadsheet for you to refer to. The rest of
the tabs are actual worksheets
for you to enter in your data. The only information that you are
required to enter is an item
description, the quantity sold, the item food cost and the item sell
price. The rest of the worksheet
populates automatically.

What to do with Stars:

• Do give these items the best placement on your menu.
• Do use these items in sales promotions and contests.
• Don’t change the price too drastically.
• Don’t change the presentation or recipe...your customers
like it the way it is.
• Do encourage your staff to suggest these items to
customers.
• Do highlight these on your menu as “house favorites” or
“signature dishes”.
What to do with Workhorses:
• Don’t raise the price on these items above what the local
market can bear. For a competitive comparison of chain
restaurant pricing, refer to our Operational Tool called Key
Components to Consider When Pricing Your Menu or compare
your pricing as it relates to local competitive restaurants.
• Do look at alternative products to decrease the food cost
without compromising the quality. Remember that
Workhorses sell well, so your customers like the item.
• Do hide these items on your menu so it is easier for the
customer to be drawn to more profi table items.
What to do with Challenges:
• Do evaluate the price on these items to be sure they are not
priced above what the local market will bear. For a competitive
comparison of chain restaurant pricing, refer to our Operational
Tool called Key Components to Consider When Pricing Your Menu
or compare your pricing as it relates to local competitive
restaurants.
• Do get staff and customer input on the menu item...it might
not sell well because it doesn’t taste good or fi t the market.
• If you determine that the item is a good one, highlight these items
on your menu to increase sales and use these items in sales
promotions and contests.
What to do with Dogs:
• Do consider removing these items completely since they do
not positively contribute to the profi t or popularity of your
business.
• Do visit Sysco Hampton Roads for a Customer Menu
Consultation to have our Chefs show you ideas for more
profi table and unique items to replace your Dogs. If you
decide to keep a Dog on the menu, our Chefs can also give
you ideas on how to make enhancements to increase the
profi tability and popularity of the item.
• Do get staff and customer feedback on the menu item to fi nd
out why it doesn’t sell well.
Step 3 : Analyze the Data
Below is a copy of the sample spreadsheet that is provided in the Menu
Engineering Worksheet from www.RestaurantOwner.com. The last
column on the far right provides you with valuable information to make
educated business
decisions regarding items on your menu. Each item falls into a “Menu
Item Class”: Star, Workhorse, Challenge or Dog. Below is an
explanation of what each Menu Item Class means and what to do with
those items.
Star
Makes Good
Money Sells Well
Workhorse
Doesn’t Make
Good Money Sells Well
Challenge
Makes Good
Money
Doesn’t
Sell Well
Dog
Doesn’t
Sell Well
Doesn’t Make
Good Money
MENUENGINEERING
Gotowww.SyscoHamptonRoads.comformoreinformation.
Stars are menu items that have a high gross profi t
and are very popular! The more you can infl uence
the consumer towards these items, the more
profi table your operation will be.
Workhorses are menu items that sell well but do
not contribute all that well to your bottom line
profi ts.
Challenges are items that have a high gross profi t, but are
not very popular. Typically, these are the more expensive
items on your menu.
Dogs are menu items that are not very popular and
do not contribute very much to your profi ts.
What to do with stars
• Do give these items the best placement on your menu.
• Do use these items in sales promotions and contests.
• Don’t change the price too drastically.
• Don’t change the presentation or recipe...your customers
like it the way it is.
• Do encourage your staff to suggest these items to
customers.
• Do highlight these on your menu as “house favorites” or
“signature dishes”.
What to do with Workhorses:
• Don’t raise the price on these items above what the local
market can bear. For a competitive comparison of chain
restaurant pricing, refer to our Operational Tool called Key
Components to Consider When Pricing Your Menu or compare
your pricing as it relates to local competitive restaurants.
• Do look at alternative products to decrease the food cost
without compromising the quality. Remember that
Workhorses sell well, so your customers like the item.
• Do hide these items on your menu so it is easier for the
customer to be drawn to more profi table items.
What to do with Challenges:
• Do evaluate the price on these items to be sure they are not
priced above what the local market will bear. For a competitive
comparison of chain restaurant pricing, refer to our Operational
Tool called Key Components to Consider When Pricing Your Menu
or compare your pricing as it relates to local competitive
restaurants.
• Do get staff and customer input on the menu item...it might
not sell well because it doesn’t taste good or fi t the market.
• If you determine that the item is a good one, highlight these items
on your menu to increase sales and use these items in sales
promotions and contests.
What to do with Dogs:
• Do consider removing these items completely since they do
not positively contribute to the profi t or popularity of your
business.
• Do visit Sysco Hampton Roads for a Customer Menu
Consultation to have our Chefs show you ideas for more
profi table and unique items to replace your Dogs. If you
decide to keep a Dog on the menu, our Chefs can also give
you ideas on how to make enhancements to increase the
profi tability and popularity of the item.
• Do get staff and customer feedback on the menu item to fi nd
out why it doesn’t sell well.
http://72.14.235.132/search?
q=cache:HShoxxzn2ycJ:www.indiangaming.com/istore/Jul06_Schwartz.pdf+menu+engi
neering&cd=5&hl=en&ct=clnk&gl=in
FOOD & BEVERAGE
by Bill Schwartz

T
he concept of menu engineering was developed by
Michigan State University's Dr. Michael Kasavana and
Donald Smith in the early 1980s, and has been used widely in
the restaurant industry since that time. Based on Boston
Consulting Group's (BCG) matrix conceptualization model,
Kasavana and Smith extended and specialized the BCG
concept for the foodservice industry.
In a nutshell, menu engineering is an approach that can be
used to classify menu items into four basic categories - stars,
plow horses, puzzles or dogs, and based on the classification,
determine what to do with those items to make the menu
perform more profitably. Among the decisions menu engineer-
ing helps operators make are when to keep items on and when
to take items off the menu. It helps operators determine which
items are under or overpriced, and which items need to be repo-
sitioned on the menu to gain more popularity. It also helps to
point out when item recipes should be changed to reduce por-
tions or otherwise reduce the cost of the menu item in ques-
tion. Experts claim the use of this approach results in signif-
icantly improved menu performance.
The Basics
To understand menu engineering, it is first necessary to
understand some of the key values used. First and foremost,
menu engineering ignores food cost percentages and focuses
strictly on dollars. 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 per-
centages can't be banked, consider the dollars. If the steak din-
ner 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, mak-
ing the other key factor in the analysis the number sold of the
item for the study period. These two factors must be consid-
ered together in order to properly rank items on the 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 restaurant, 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 classifi-
cations are to maintain the status quo for stars (no changes),
and to replace the dogs with something that will be more pop-
ular, 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 prof-
itable 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.
Easy to Calculate, Harder to Implement
What could be simpler than a system that allows you to clas-
sify all your menu items and scientifically decide what to do with
them? Of course, nothing worthwhile is quite that simple,
and in addition to software for performing menu engineering,
entire books have been written about menu analysis using
menu engineering techniques. A number of consultants make
their living helping operators implement and get the most of
the menu engineering approach.
Rather than focus on calculation methods or other techni-
cal details in this article, the necessary information can be
found using Google or other internet search engines (type
“menu engineering” as the search text) to get a list of web sites
and articles which can be helpful. Another good source for infor-
mation is the National Restaurant Association's website,
www.restaurant.org. Instead, let's focus on some of the issues
associated with implementing a menu engineering approach.
Page 2
July 2006
Indian Gaming 31
Plenty of software is available to calculate the necessary
information. Some software is specifically designed for menu
engineering as a stand-alone product. Most full-featured food
and beverage inventory systems include menu engineering
reports. Some web sites offer menu engineering reports free
or for a small fee. And of course, spreadsheets are fully
capable of handling the fairly simple calculations associated with
the approach.
The problem really isn't getting the math done, or even
getting the data gathered. The point of sale system generates
sale mix information routinely. Recipe costing is a bit more
difficult, but many of the systems on the market help with that
as well. However, as with any other management system,
expertise separates success and failure. A great deal can be
learned from reading the books about menu engineering, but
there is no substitute for experience.
“A menu is like a real estate development,” says Greg Rapp,
menu engineering consultant and president of MenuTech-
nologies.net based in Palm Springs, California. “Knowing
where to place things, how they should look, what their
perceived value needs to be and how to attract customers to
the right products are critical aspects of successful real estate
development and successful menu engineering implementation.
That's why operators use specialists to help them get the most
benefit from their investment in time, money and effort.”
Menu engineering has been used by the food service indus-
try for many years now, and casino operators are approaching
the sophistication level where work in this area could be very
helpful. It is important to note that, like other management
approaches, it is not something that can simply be purchased.
Success depends on the right mix of products and services, and
of course the necessary expertise. In the end, a well-implemented
approach for menu engineering can be a significant way to
improve food and beverage profitability. p
Bill Schwartz is President of System Concepts, Inc. (SCI).
Based in Scottsdale Arizona, SCI is the developer of the
FOOD-TRAK Food and Beverage Management System.
He can be reached by calling (480) 951-8011 or email
bills@foodtrak.com
http://jan.ucc.nau.edu/~grc3/ha270/class/restaurant/menu/menueng.htm

MENU ENGINEERING EXERCISE

Instructions: The purpose of this exercise is fourfold:

Step 1. To learn basic menu engineering principles.

Step 2. To learn menu engineering strategies (Menu Magic, 1993).

Step 3. To use a spreadsheet program in generating two menu engineering reports.

Step 4. To evaluate the information found in the menu engineering reports using the
menu engineering strategy model presented in this exercise. This will be accomplished by
answering 9 questions found at the end of this document. Please e-mail the two
engineering reports (Excel attachment) and answers to Galen.Collins@nau.edu.

Read Menu Engineering Principles - Step 1

Definition. Menu engineering is a concept developed at Michigan State to help

food service professionals track variables, which influences a menus' profitability.
 Important questions. Can we influence the customers' decisions towards menu
items that generate more profit? It is important to remember that the menu is the primary
marketing tool where items compete with one another - some offer more profit, others
offer higher sales, others offer both and some neither.

Tool. This is a key tool that a college graduate should have in their tool chest.
Because it enables you to evaluate why certain menu items do better than others - is it
visibility, a poor sales program, food presentation, etc. It is a tool that provides you with
the necessary information to make decisions about menu items to improve the overall
profitability of the menu.

Individual merits. However, it also important to judge each item on its individual
merits. We look at two basic attributes:

1. Menu item popularity or demand.

2. Menu item contribution margin or profitability.

How do you compute menu item popularity and contribution margin?

1. Contribution Margin= Menu price - food cost. If a menu item's contribution

margin is greater than the average contribution margin for the entire menu, it receives a
rating of "H" indicating that it has an above average contribution margin.

Example - Sum of CMs = $30 # of items on menu = 10 Avg. CM= 30/10 = $3

If a menu item had a contribution margin of $4.00 it would receive a "H."

If a menu item had a contribution margin of $2.00 it would receive a "L."

2. Demand = Number of items sold of a particular menu item/total number of

menu items sold. If a menu item's percentage of sales is greater than the average sales
percentage for the entire menu, it receives a rating of "H" indicating that particular item
has a higher sales percentage than the demand mix.

Example - If there are 10 items on the menu, the demand mix would equal 1/10 X .
70= .7 or 7%.

Any menu item with a sales percentage equal to or greater than 7% would receive a
rating of "H."

Any item with a sales percentage less than 7% would receive a rating of "L."

Menu Classification System. All menu items can be classified into four types:

1. Stars or Gold = HH. (Items which are both profitable and popular)
 2. Plow Horses or Silver = HL (Items which are high in popularity but low in
profit)

3. Puzzles or Bronze = LH (Items are low in popularity but high in profit)

4. Dogs or DQ = LL (Items are both low in popularity and profit)

Read Menu Engineering Strategies - Step 2

In the menu engineering reports you will classify each competing menu item against two
benchmarks: Contribution Margin and Menu Mix (or percentage of sales). Each item is
classified as "High" or "Low" using the rating scale denoted above.

Gold/Stars - These are premier items of the menu. They are relatively popular and
generate above average profits per sale. Some strategies to follow to enhance their profit
potential:

1. Maintain rigid specifications. Special attention should be given to these items to ensure
they are of the highest quality.

2. Give high menu visibility. The menu can be a great sales tool. Customers tend to order
items which "stand out". Make sure your gold items present themselves well on the
menu.

3. Test for price elasticity. Be proud of gold items. If the customer is willing to pay more
without affecting your total demand, logic says, increase the price.

4. Push a "sales" program. Have the wait staff suggest these items when asked by
customers.

Silver/Plowhorse - These items trudge along doing a great deal of work (sales) while
actually doing very little (making profits). They reflect good volume sales, but generate
little profit compared to the gold items. A silver item is a good candidate for inventory
control. Some strategies to follow:

1. Don't offer as a special. If a silver item does not exceed the average contribution
margin, why offer it as a special? Instead, turn the demand to high profit items (e.g., gold
and bronze).

2. Maintain low menu visibility. Try to hide these items on the menu.
 3. Reduce portion sizes slightly. This will reduce food cost, and in turn help to increase
contribution margin. This can sometimes turn silver into gold.

4. Find alternative ingredients. See if less expensive ingredients can be utilized without
sacrificing quality and consistency.

5. Test for price elasticity. Will raising the price significantly reduce demand?

Bronze/Puzzles - These are the most misunderstood items on the menu. They manage to
make above average contribution margin, but are weak in demand. The issues that arise
are twofold: why aren't they selling well and how can we increase demand without
sacrificing the high profitability? Some strategies to follow:

1. Offer as daily specials. A quick and easy way to attract consumer attention and
increase demand is to offer an item as a "Special."

2. Give the item high menu visibility. Make it "stand out" on the menu.

3. Reduce the price. The item may be overpriced. Test for price elasticity.

4. Drop from the menu. Especially if it has a poor shelf life, or it is difficult to prepare.

DQ/Dogs - These items are the poorest performers of the menu and may often be
dropped from the menu entirely (e.g., disqualified). Some strategies to follow:

1. Drop from the menu. These items may be nothing more than dead space on the menu,
and thus serve no purpose. By dropping them you can free space, reduce clutter, and
concentrate on more profit bearing items. This also may reduce inventory.

2. Rename and describe to make more attractive. A catchy name and description may be
all it takes to increase demand and turn a DQ into a silver or gold.

Complete Menu Engineering Reports - Step 3

MENU ENGINEERING REPORT

Menu Item # Sold Sales% Item Cost Selling Item DM CM Item

Price CM Class Class Rank

Baked Snapper 100 5.00 4.06 14.50 10.44

Blackened Chicken 200 10.00 3.98 12.98 9.00

Chicken Kiev 150 7.50 2.98 14.50 11.52

Crabmeat 400 20.00 11.20 29.90 18.70

Chateuabriand

Famous Catfish Dinner 500 25.00 2.59 12.50 9.91

Prime Rib 100 5.00 4.98 13.50 8.52

Sirloin Strip 300 15.00 3.67 14.95 11.28

Southwestern Chicken 250 12.50 1.74 7.25 5.51

P & L REPORT

Entree Quantity Sold Total Item Costs Total Item RevenuesTotal Contribution
Margin

Baked Snapper

Blackened Chicken

Chicken Kiev

Crabmeat
Chateuabriand

Famous Catfish Dinner

Prime Rib

Sirloin Strip

Southwestern Chicken
Total

Answer Questions - Step 4

Please review the attached engineering reports and answer the following questions:

1. What is the total contribution of the menu?_________________________(Look at P &

L report)

2. What item generates the highest contribution margin in terms of gross dollars?
___________(Look at P & L report)

3. How would you characterize the price elasticity for Southwestern Chicken?_________

Crabmeat Chateubriand?_________________ (Look at Menu Engineering report)

4. What are the weakest menu items?_______________________ (Look at Menu

Engineering report)

5. What specific menu items would it make sense to offer as a daily special?
__________________ (Look at Menu Engineering report)

6. What specific menu items should be given high menu visibility?_________________

(Look at Menu Engineering report)

7. What specific menu items could be possibly renamed to transform them into silver or
gold?

_____________________________ (Look at Menu Engineering report)

8. What specific menu items may be overpriced? ___________________________ (Look

at Menu Engineering report)

9. Why would it make sense to possibly hide the blackened chicken menu item?
_____________

______________(Look at Menu Engineering report)

http://www.restaurantchecklists.co
m/article2.html
Restaurant Business Articles

Engineering your menu for profit...

By Andreas Breitfuss
Restaurant Checklists.com

Today I wanted to talk to you about your menu and more specifically about engineering it
for profit.

Menu engineering is the analysis of your menu which look at the sales price, sales history
and the cost of each item of the menu. From the collected data engineering refers to the
calculation of the profit or contribution margin of each item in relation to all the other items
on the menu for a period of time.
Menu engineering is an integral part of hospitality management in today’s robust and
competitive market. Each of the items once calculated will be classed into one of four
categories:

1. Stars (popular and profitable)

2. Plow Horses (popular but not as profitable)
3. Puzzles (not popular but highly profitable)
4. Dogs (neither popular or profitable)

And it is with this information you are able to make an informed and calculated decision on
what to do with the items on your menu. Engineering is not a one time calculation it is done
on a regular basis like monthly or quarterly. It will allow you to maximise cost reduction in
food and beverage costs and enhance your profitability of your menu. Engineering does
not stop there as it allows you to position items on your menu to gain the maximum
exposure to your customers to gain maximum profit. Engineering allows you to focus on
the profit or contribution of each item rather that the usual practice of the individual cost
percentage.

Some of the benefits of menu engineering include:

1. Increased average gross profit per customer

2. Item analysis for decision making on what item to keep or get rid of

3. Cost control analysis to decrease your F & B costs

4. Sales promotion analysis allows you to promote higher profit items

5. Staff sales analysis and linked incentive programs

6. Menu pricing analysis

7. New menu evaluation

8. Menu layout analysis for increased profitability

9. Trend analysis for food styles on your menu

Remember dollars pays the bills not percentages.