How do we increase profits (or maintain them) when we’ve shaved all the expenses off that we could find, but still wages go up, food costs go up, and so do rents and other fixed and variable costs. Do we increase the price of dishes on the menu? Will our competition or our customers allow us to so? Menu Engineering may be the only option.

Let’s dispel the myth straight away. To some, this may seem only the responsibility of chefs, for it is they who “balance the menu” with the “right” number or selection of starters, mains, desserts etc. Selecting which of these items to go on the menu is of course crucial, but the way in which we select them is what is important here.

The term Menu Engineering may conjure up different things to different people and may be seen as doing anything to a menu that makes it more profitable. Put simply, it determines what menu items are profitable and which ones are not. With this data you then proceed and make certain decisions regarding what goes on the menu, where it goes, and in the final analysis, how to get your patrons to buy more of the profitable dishes and less of unprofitable ones.

Often we begin the process of working on a new menu and conclude to ourselves that “this dish sells”. If not convinced we begin the task of crystallizing these vague assumptions in factual analysis by asking the floor staff penetrating questions like. “How well do you think does this dish sells?” or “How popular is it?” Not satisfied with one answer we ask that same question to the kitchen staff and get different answer about the exact same dish.

Sometimes we find out that what appeared to e a hot seller, where there is a run on that item one day, may only add up to moderate performer at the end of the week. Or sometimes contrary to popular belief, a slow relatively understated dish performs relatively well week after week. The best and simplest way of collecting data is from PLU systems in registers and POS systems available today. The systems, if programmed and used properly, will provide you with this information effortlessly. At the end of the day we must remember that we are only human and tend to respond to factual factors as well as emotional ones.

One thing I noticed is that it’s just amazing how strong that law of average really is. At the end of the month most items on the menu (assuming nothing on the menu has been changed) will usually constitute the same percentage of sales as the month before, give or take some small variances in sales.

Menu engineering or restaurant menu analysis was originally credited to Michael L Kasanvana PhD and Donald J Smith, in 1982 at Michigan State University’s School of Hospitality business. They looked at the relationship between gross profit margins of each items on the menu and how that contributed to overall sales. For further reading, a book from this work, is titled “Menu Engineering: A Practical Guide to Menu Analysis”.

To begin we must find out which items on the menu are profitable. This is done must accurately by tracking the actual cost of preparation (food costs) for each dish regularly. The best way of doing this is storing standardized recipes on computer and linking those recipes to the actual cost of ingredients at any point in time.

In today’s environment of fluctuating food prices, especially perishables, we ought to consider software that allows us to track these prices based on standardized recipes that have exact quantities and price with exact preparation and cooking procedures.

With good software, a change in the price per kilo or litre of any ingredient will change all the food cost pricing for all the recipes containing that ingredient. The end result is that you will know exactly how much any dish on the menu is costing you at any point in time as well as the exact food cost percentage based on the selling price of that dish.

If more sophisticated software is not possible or available simple spreadsheets will do this by linking cell addresses with simple formulas?

Armed with the actual profit for each dish and the exact quantity of each dish sold, each period, we can continue the exercise of becoming more profitable by classifying dished in the following four categories

1) Stars (Popular and profitable Dishes)
2) Plow Horses (popular but not profitable)
3) Puzzles (not popular but highly profitable)
4) Dogs (neither popular nor profitable)

Armed with this information it easy to see how this can change the way we look at dishes and their place on our menu. Hopefully we can begin to see how we can transform innocent lists of meals into profitable user friendly tools of sales analysis. Flexible menu covers are very important here in facilitating swift menu changes, allowing paper inserts to be changed with relative ease. The next step is to see what amount of money as a dollar value each dish is bringing in.

Example 1: In one period, 100 x 350gm porterhouse steaks garnished with vegetables were sold, with each having a nominal food cost (excluding labour) of $12.05 and the selling price (excluding GST) is 21.50.

Profit of $9.45 or a 56.06% of food cost.
Profit for period is 100 x $945

Example 2: In one period 100 x capricciosa pizzas were sold, with each having a nominal food cost (excluding labor) of $3.75 and the selling price (excluding GST) is 12.75.

Profit of $9.00 or a 29.41% food cost.
Profit of period is 100 x $9.00 is $900

Which dish would be most profitable to you? The item with lower food cost percentage and lower dollar profit or the one with the higher food cost percentage and high dollar profit. (The answer is at the end of the article).

Question: How in the world can I do this sort of analysis in this business? Who’s going to give me the time to do all this?

Answer: Get people involved to record this stuff, even if it is done on paper to begin with. It may seen an unnecessary expense to start, but will prove to be a profitable exercise if executed properly. Work on the business not always in it!

Question: My chef and kitchen staff will not assist with this level recording and scrutiny.

Answer: Sometimes what we think is that case does not always turn out that way. Given an opportunity, most kitchen staff today, after understanding the benefits, should be more than happy to take on new skills and challenges. This after all, should make their job easier, by increasing their knowledge and managerial ability. If they become profitable exponents of this knowledge and possess the ability to streamline the operation of a commercial kitchen with standardized recipes, then their job becomes easier because they can train using recipe cards, know exactly where the money is going and then, in the end, can command more money for themselves in the market place as a result of what they have done with the food cost.

Ideally, our aim is to see as many Stars move as possible and have as few Dogs as possible. The challenge is to introduce the Puzzles into the mix and make the team work. Proper pricing must always be based on the value perception of our customers, not just pre – established formulas only. Remember to give your menu the importance it deserves as it truly is your indispensable sales tool!

The next article on menu engineering is on the placement of items on the menu and analysis on the effect this has on sales. This will teach you how to direct your customers to picking dishes off the menu that you want them to buy, techniques available and how to implement them, the importance of image and how the menu reflects the whole atmosphere of the restaurant. For more information about this article please contact me, Joe Ritorto, at Menucorp, PO Box 495, kew Victoria 3101 or email joe@menucorp.com.au

PMQ’s Magazine Australia Information, as published, in this article, is intended be used as a guide only, and may not be necessary or apply to experienced restaurateurs, and may not suit all restaurants – professional independent advice is advised.

As suggested in my previous menu article, if you calculate, cost and record the sales of each dish, then you can design your menu to be as profitable as possible. Use suggestions (recommendations), positioning, positive descriptions and perhaps illustrations to guide your customers to certain selections. Allow your clients to choose dishes from the menu that are, in an ideal world, nourishing, tasteful and value for money – as well as produce a healthy and nourishing bottom line for you.

In this article I hope to show you some basic design techniques that may assist to direct attention to certain dishes that you have calculated to be profitable ones. In that previous edition (April 2008) of this series of articles on menus, we discussed how to determine which dishes are profitable ones. We spoke of obtaining an up to date food costing for each dish based on a percentage of the selling price as well as the actual dollar value. Armed with this information we can begin to sell more of the profitable dishes (Stars) and less of the unprofitable ones (Dogs). To do this we need to become an Expert!

Today we live in a society of experts, in various fields; consultants, specialists etc. who all affect various facets of our lives. These people may range from a personal trainer to a specialist teacher to a specialist medical practitioner. The point here is that we all have learned, or have been conditioned to allow others, to make decisions for us. We accept that there are people that know more than us in certain facets or areas of our lives.

Why don’t you become the expert in your chosen field of expertise? Develop a reputation to be, in the eyes of your customers, consciously or subconsciously, the expert. If customers feel confident that there in the right place then their more likely to be receptive to your suggestions, and, your advice. Evidence of this may be when a regular comes in and says, “What’s good on the menu today?”; This is a genuine recognition of your opinion and the way you do things. The art, however, is to make as many customers align themselves with the same positive expressions of interest.

Being an expert is easy for me to say. Right! Unless you have an enviable position that allows you to replace one customer with another, we must make the customer feel that their in good hands and we must be able to instill confidence by making our customers feel that their experience, in your premise, is positive. Always!

To do this, as previously touched on in the first article (Dec 2007), every facet of the operation must be scrutinized so that service procedures front of house and back of house work together in a team environment where continual service systems improve and flourish.

Position, ambiance, general service levels are hard to quantify as to how they translate in the eyes of your customers unless data is obtained through the use of well conducted and analyzed internal surveys containing specific questions relating to specific criteria.

Your menu is the only real sales tool that measures the success of your venue based on, total sales, average sales, no. of sales and a further breakup of each using manual or automated POS systems.

Every one of your customers has to read it, so why don’t we Advertise it on the menu.

That’s right just like I just did. I drew your attention to the words (on the line above) by making the words stand out. I’ve printed it bold, italics, and underlined it. Ask yourself. Why do items on a blackboard sell? Answer – because you advertise them as something special. An item on a blackboard is usually (depending on the venue’s overall environment) a recommendation or invitation to consume, and in the final analysis, to buy. If we agree that your hand held menu can work exactly the same way we are now on the same page (pardon the pun). Lets look at how a typical customer looks at a menu by analyzing eye focus studies. (below)

Sales Concentration

The arrows show where the eyes travel. You will notice the hot spots on the menu are just beyond the centre points on the pages. Conclusion – place items that you want to sell at the top half of the menu (and if available) the centre. This works just the same way as a newspaper where certain parts of the paper are more expensive to advertize in.

Further points are as follows:

Use descriptive terms that describe ingredients. Do not use frivolous descriptions that go on and on. It may advertise your depth culinary knowledge but may make the customer less safe and out of his or her comfort zone. Use recommendations that aid the selection process. Use terms like “Signature Dish” or “House Specialty” or other descriptive recommendations with simply an asterisk next to some dishes and the word at the top to bottom of the page as legend “Recommended”. If you don’t have a signature dish maybe it’s time to create one that is identified with your restaurant.

Sales Concentration

Enlarge or change the font style and size to create attention. Use shading or a different colour in the background. Put a box around a dish you wish to promote or simply allow a blank space around a description. Place side orders next main courses so the complementary nature of the two can work hand in hand. Menu copy or dishes on the menu can be divided up onto the following.

Title

Description and Price

Place prices after the description using a normal spacing, font and size, not in a column on the right-hand side in a tabbed format. The title should be in bold for easier reading and the description in a normal font. Don’t use ($) dollar sign as the main criteria that your customers use to choose what to order. Most menus have a decimal point tab on the right-hand side of the page set so all the decimal points line up, almost as if we wish to publicize our ability to use the software that enables us to do this. What we have actually done is allow our patrons, if they choose to, to scroll down the prices column first see what is less expensive and potentially direct them to that dish.

Printing the menu yourself allows changes to be made relatively easily. To create a more professional look, print the pages without text (with just your design or logo on the paper) whether it is a frame or watermark etc. Keep the printed templates aside and print the menu over them when required.

Finally let’s not forget the overall look and feel of the menu cover itself. Making sure it is in keeping with the desired message and experience you want to project about your venue. Make sure that a regular cleaning roster exists to keep it presentable.

Once you determine which dishes are important sellers give some thought how to direct your patrons to them. Consider the assistance of graphic designers or more software or hardware if required.

Consider the menu as your primary selling tool. Position things well and it will do the talking to you.

PMQ’s Magazine Australia Information, as published, in this article, is intended be used as a guide only, and may not be necessary or apply to experienced restaurateurs, and may not suit all restaurants – professional independent advice is advised.