CHAPTER 7 - The Menu

CHAPTER 4

THE MENU

To plan a profitable menu in the foodservice industry, the menu planner must be

knowledgeable about foods, management, and accounting/financing

1Ahmad Nizam Zali / 0133446539

FOOD KNOWLEDGE

The menu planner must: know the customer’s likes & dislikes about food Be able to identify the various about food products

that are available in the markets Be able to explain the different criteria that establish

the quality grades of food products


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Know the availability of the food productsKnow how the food items are prepared,

produced, plated, served, and consumed by the guest

Know how the food product is packaged, shipped, and stored, and know the shelf life of the product


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Know which foods are complementary to each other for proper garnishing of dishes & for achieving an aesthetic & nutritionally balanced menu

Know the yields of the food products to help set up recipes


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Know how to do recipes conversions, how to merchandise, & how to market the food product

Know cross utilization. Refers to using a menu product in more than one menu or in more than one product


Accounting / Finances

Must understand the relationship between food cost and other expenses such as labor and overhead costs

Must be able to produce a menu that is profitable Thus, must be able to understand how the portion

cost affects selling price The price of the menu must be appealing to the

customer


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• How to do recipe costing• Portion cost and markup must be related to

volume to make a profit• Knowing how to establish a check average • Know how to project annual sales


MANAGEMENT

Menu planner must take into consideration:

• Owner’s wants and needs in these areas: profit, check average, style of operation, style of menu, theme of restaurant, type of service, atmosphere, personnel skills, and market to established

• Customer food preference and the price customer willing to pay


CONSIDERATIONS IN MENU PLANNING

Needs and desires of guestsCapability of cooksEquipment capacity and layoutConsistency and availability of ingredientsPrice and pricing strategyNutritional valueContribution theory


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Accuracy in menu Type of menu Actual menu items Menu analysis Menu design and layout Standard recipes Food cost percentage


MENU PRICING

• The pricing of items on the menu requires the knowledge of both marketing and accounting• Marketing – setting a price that will appeal to

the market• Accounting – involves establishing a price that

will contribute to the profitability of the operation


Pricing Philosophies

Three (3) common approaches:

1. Demand-oriented / Perceived-value pricing2. Competitive pricing3. Cost-oriented pricing


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Demand-oriented/Perceived value-pricing

looks at the menu from the view point of the customer and prices relative to what the item is worth to the customer


continueThere are two(2) common approaches:

1. Market skimming – use relatively high price to attract or skim a small segment of the market

2. Market penetration – setting prices as low as possible

• this approach sets out to attract as large market as possible

• greater sales volume and long-term profitability• lower prices will deter competition from invading

the market


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Competitive pricing

Establishes prices according to those set by the competition

Prices are set slightly below or above those of the competition

This pricing allows the competition to “control” the pricing of the operation


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• It is not advisable to compete mainly on the basis of price because price is the factor that can readily be met by a strong competitor• The prices set must take the competition into

account and it is not advisable to offer the same product as the competition but at a higher price


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Cost-oriented pricing

The most commonly used method of pricing in the industry

Prices are set on the basis of the cost incurred by the operation


Factors in PricingConsiderations in pricing:• Type of restaurant – limit on what can be

charged according to the type of operation• Meal occasion – the time at which the

customer consumes the food affects what the customer expect to pay• Style & elaborateness of service – whether

the restaurant is English, French, American, the style influences pricing• Competition – is extremely important, based

on the laws of economics18Ahmad Nizam Zali / 0133446539

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• Customer mix – this is based on customer demographic information such as age, gender, occupation, income bracket, ratio male & female, population, etc• Profit objective – owners/managers are in a

great deal of frustration in trying to determine when to change the price of a menu item. Customer is sensitive to price changes, so when is the best time price changes


Price-value relationship

There are two (2) basic components of value creation:

a. what you provideb. what you charge for it

To build perceived-value, you need toa. increase the perception of value of what

you provideb. lower the price you charge for itc. or both


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Factors that go into building perceived price- value:

Amount of product (portion size) Quality of the product (dining pleasure) Reliability or consistency of the product and

services Uniqueness of the product


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• Service convenience (such as speed of service)• Comfort level (such as courtesy, friendliness,

etcs) • Tie-in offers or freebies included with the

purchase• Product options or choices (incl. new products)

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Approaches that make the price-raising process easier

• Make the price increase as bearable as possible• Add something to a standard item to create a

new package (added value)• Try to avoid rapid increases over a short period

of time (timing is very critical)• Continued maintenance of quality standards is

essential after any price increase• The best time for any menu price increase is

when the govt. announces the cost of living, changes in the GNP


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• Avoid increasing prices on the most popular menu items when they have reached one of the “magic numbers” – with a nine or a five as the last digit.• Select the format for the menu that makes

price changes easy (seasonality/market price)• Try to maintain price ranges that are generally

within customer expectation


Menu analysis

Approaches : Prof. Jack Miller – the best menu items called

winner – not only sold more but also were at a lower food-cost percentage

Prof. Michael Kasavana & Donald Smith proposed Menu Engineering – the best menu items called stars – are those have contribution margin per unit and the highest sales


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of three variables: food cost percentage, contribution margin, & sales volume. The best menu items are called primes – those with a low food-cost percentage & a high contribution margin weighted by sales volume

Prof. Mohamed E. Bayou & Lee B. Bennet – recommended an analysis on individual menu items, categories of menu offering (appetizers, entrees), & meal periods or business categories (breakfast meal period, the banquet business)


Psychological factors that influence guests’ price perception

Guidelines in menu pricing: Use odd-cents increments for digits to the right

of the decimal point Do not write price increases over old prices Resist increases that raise the dollar amount of

the item Never increase the price on all menu items Put “market-priced” on items that fluctuate

wildly in price


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Try reducing large portions before raising prices, because regular guests can notice the smaller portions and feel that they were being cheated

Do not lists menu items according to cost, and make sure that menu prices appear after an items description, rather than in a straight column


Menu Design and Layout

Menu design and layout have been called the silent salespersons of the restaurant

The design should reflect the ambiance of the restaurant

The menu size may range from a single page up to several pages and be of a variety shapes


continue The menu cover is a symbol of the restaurant

identity The focal point of a single-page menu is just

above the center and ideal place to list items with good profit margin

While menus with two or three more pages may be laid out in a more appealing way with a signature items or special dishes highlighted in the focal points


THANK YOU,FOR YOUR

ATTENTION

by Ahmad Nizam Zali


CHAPTER 7 - The Menu

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