Question

Utilizing Menu Engineering Concept in a Restaurant Operation The purpose of this assignment is four fold: Step 1. To learn basic menu engineering principles Step 2. To learn menu engineering strategies 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 assignment. This will be accomplished by answering 9 questions found at the end of this document. Important! Important! Important! ı. Please fully read and understand each step, so 2. Your answers must be fully_supported by your 3. Please write clearly and neatly! If I can read, I can 4. Full credit will not be given for work that is s. Please use the EXCEL SPREADSHEET for you can properly answer each question findings!!! grade. incomplete Menu Engineering and P&L Report. This assignment will provide you all the tools you need to complete it. Please read each step carefully!!! Step 1: Read Menu Engineering Principles Definition. Menu engineering is an application 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's menu mix (MM) or popularity 2. Menu item contribution margin (CM) or profitability How do you compute menu item popularity and contribution margin? 1. Contribution Margin (CM-(Menu price -food cost) Contribution Margin If a menu item's contribution margin (CM) 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- S3 If a menu item had a contribution margin of $4.00 (or higher than S3.0), it would receive a "H." If a menu item had a contribution margin of S2.00 (or lower than S3.0), would receive a "L. 2. Menu Mix-Itotal number of menu items sold x 0.70 (Most students make mistake here!!! Please read and do accordingly!!) 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 Menu Mix (MM). Example If there are 10 items on the menu, the Menu Mix (MM) 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 lessthan 7% wouldreceivea rating of "L" stem. All menu items can be classified into four groups as follow: 1. Stars (Winners)-HH (tems which high in MM and high in CM 2. Plow Horses (Marginal) HL (Items which are high in MM but low in CM 3. Puzzles (Potential)- LH (Items are low in MM but high in CM 4. Dogs (Losers) LL (Items are both low in MM and CM Step 2: Read Menu Engineering Strategies In the menu engineering report, you will classify eaclh competing menu item against two benchmarks: Contribution Margin (CM) and Menu Mix (MM) (or percentage of sales). Each item is classified as "High" or "Low" using the rating scale denoted above. Stars (Winners) HH: These are relatively popular items on the menu and generate above average profits per sale. Some strategies to follow to enhance their profit potential: I. 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 inelasticity. Be proud of star items. If the customer is willing to pay more without affecting your total demand, logic says, increase the price. . Push a "sales" program. Use suggestive selling techniques. Have the wait staff suggest these items when asked by customers. Plow Horses (Marginal) HL: These items 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 star items. Some strategies to follow: I. Don't offer as a special! If a plow horse item does not exceed the average contribution margin, why offer it as a special? Instead, turn the demand to high profit items 2. Increase price carefully! If price could be increased the item may remain popular and may generate a higher profitability. 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 into star 4. Find alternative ingredients. See if less expensive ingredients can be utilized without sacrificing quality and consistency 5. Test for demand (price elasticity). Will raising the price significantly reduce demand? significantly reduce demand? Puzzles (Potential) LH: 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: I. Offer as daily specials. A quick and easy way to attract consumer attention and increase demand is to offer an item as a "Special. Use suggestive selling techniques, or rename the item 2. Give the item high menu visibility. Make it "stand out" on the the price. The item may be overpriced. Test for 3. Reduce elasticity 4. Add value to the item Offer a large portion size, add high-quality ingredients 5. Drop from the menu. Especially if it has a poor shelf life, or it is difficult to prepare. Dogs (Losers) = LL: These items are the poorest performers of the menu and may often be dropped from the menu entirely (eg disqualified). Some strategies to follow: I. 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 dog' into a star or a plow horse price Please utilize the following glossary for the terms used in the assignment Glossary: Menu engineering (ME): A product management application used for evaluating decisions regarding current and future menu piecing, design, and contents. Contribution Margin (CM) or profitability: Sales Price Item (Sales) Cost Menu Mix (MM): Composite food percentage of sales (percentage of MM share): Each item's count divided by the total number of menu items sold. Price elasticity: It measures how much consumers respond in their buying decisions to a change in price. The basic formula used to determine price elasticity is (percentage change in quantity) / (percentage change in price). Types of elasticity: Elastic, inelastic, (high, low, or moderately) Menu Mix (MM): The menu mix is l÷ Number of Menu Items x 0.70 (One divided number of menu items multiply with zero point seventy) Step 3: Complete Menu Engineering Reports (Please use the EXCEL SPREADSHEET for calculations as posted) Menu Engineering Report Sold Sales Item Selling Item MM CM Item Mena Item % Cost Price CM Class(*)Class'.) Rank

Answer 1

1) 84.97

2)crabmeat -- 18.79

3)Famous cat fish dinner

4)Baked snapper and Prime rib because the sales are low

5)Famous cat fish dinner because the sales are high

6)Prime rib, Baked snapper and south western chicken

7) all the items are puzzles and dogs

8)sirloin strip, Crab meat Chateaubriand, Chicken Kiev

9)it does not make any sense if any thing should be hided it should be prime rib because the sales are low also the revenue and total contribution margin is low

10).

Book1 Microsoft Excel Homen Foot PDF 盖Cut Ea Wrap Teit Cop Pa try,om at Pa ter Blu le 5-A-E..佷 R Merge & Center . S %," d conditional aFormat Sye" insert Delete Format 2Clear Soera r a Font Styles Quantity Total Item Costs Total Items Revenues Sold s 3 Menu Item Entrie Total Contributi #sold Sales% item Selling Item MM CM Item Cost price CM Class Class Rank Margin $ Baked Snaper 10.44 L Baked Snaper 100 406 4.97 4.97 Blackened chicken LH 200 894 Blackened Chicken 200 10 3.98 12.98 9L 11 Chicken Kiev 150 7.5 2.98 14.5 11.52 L H LH Chicken Kiev 150 447 447 84.97 Crabmeat Chateaubriand 20 112 29.99 18.79 L LH 4004,480 13 Crabmeat 14 Chateaubriand 1,29% Famous Catfish Dinner 500 1,295 500 25 2.59 12.5 9.91 L Famous Catfish 17 Dinner Prime Rib 100 498 100-5 4.98 13.5 8.52 เ เ แ 300 15 3.67 14.95 11.28LH LH 250 12.5 1.74 7.25 5.5111 แ Prime Rib Sirloin Strip 300 1.101 Sirloin Strip 435 Soutwestern 24 Chicken Soutwestern Chicken Total 2000 9556 2000 35.2 120.17 84.97 s Total 4.4 15.02125 10.62125 Sheett Sheet2 Sheet32