# It All Starts with the Menu

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It All Starts with the Menu
Chapter 1 It All Starts with the Menu

Learning Objectives After completing this chapter, you should be able to: • Tell why menus are important, explain who should be on the menu planning team, and describe basic menu planning tactics. • Describe basic procedures useful to design a menu. • Provide information useful in establishing menu selling prices. • Explain procedures to analyze the menu sales mix and implement menu improvements.

Objective Menu Pricing Methods Food Cost Percentage Method Contribution Margin Pricing Method Ratio Pricing Method Prime Cost Pricing Method More About Objective Menu Pricing

Managers Math Answer the Questions: 1. \$17.11 2. \$14.22 3. \$ 17.44

Performing a Sales Mix Analysis

Managers Math Answer the Questions: 1. 2.80% 2. 5.83% 3. 11.67

Managers Math Answer the Questions: 1. \$9.10 2. \$16.30 3. \$7.57

Sales Mix analysis and Menu Change
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2. Describe basic procedures useful to design a menu.

3. Provide information useful in establishing menu selling prices.
The best pricing methods consider the operation’s financial goals and use information available in the property’s operating budget. One common pricing method uses the budget’s approved food cost percent-age to determine the menu item selling price. Three additional menu pricing methods consider the contribution margin (Revenue – Food cost), the ratio between food cost and contribution margin, and the prime cost percentage to develop base selling prices. A challenge with any objective menu pricing method is to determine the actual food cost for items being processed. This requires knowledge of a menu item’s ingredients, current food cost, and yield (number of servings) of the recipe.

4. Explain procedures to analyze the menu sales mix and implement menu improvements.
A menu sales mix analysis is undertaken to determine the popularity and profitability of food items that compete with each other on an establishment’s menu. A sales mix analysis involves determining the popularity and profitability of each menu item and then comparing these benchmarks against the average popularity and profitability of a menu item on the menu. Menu items can be classified according to popularity and profitability and, when this information is known, menu improvements can be made.

Key Terms: Àla carte menu A menu that has different prices for each menu item. Brand The combination of qualities that makes an establishment’s products and services different from those of its competitors. Call brand (spirits) A specific brand of liquor requested by a customer. Contribution margin (CM) The difference between an item’s revenue (selling price) and food cost. Cross-selling Strategies used to promote products and services offered in addition to those noted on a specific menu. Cyclical (cycle) menu A menu that is planned for a specified time period and then repeated. Du jour menu A menu that changes daily.

Key Terms continued: Fire suppression system A system containing chemicals that are automatically sprayed on equipment surfaces below the system if a fire begins. Food cost percentage The percentage of all food revenue that was spent to purchase the food products required to generate that revenue. Garnish An edible decoration used to make a menu item attractive. Investment The amount of money an owner has used to start and operate a business. Market form The way a food product is purchased, such as frozen or fresh. Menu classification A similar group of items such as entrées, soups, or salads.

Key Terms continued: Menu mix The frequency with which a menu item is ordered compared to other menu items. Menu mix percentage A number obtained by dividing the number of each specific item sold by the total number of items sold. Menu mix popularity percentage The percentage of total menu items that must be sold for a menu item to be considered popular when sales mix analysis is performed. Prime costs Food costs and labor costs together. Repeat business Revenue from customers who return because they enjoyed their experience during previous visits. Sales mix analysis A study designed to determine the popularity and profitability of competing items on a menu.

Key Terms continued: Serving cost The cost to produce one serving of a menu item prepared according to a standardized recipe. Standardized recipe The set of instructions to produce and serve a food or beverage item that will help ensure that quality and quantity standards will be consistently met. Suggestive selling The tactic of using recommendations to ensure that customers know about the products and services offered by the restaurant or foodservice operation. Table d’hôte menu A menu that offers an entire meal at a set price. Table turn The number of times a dining-room table is occupied during a meal period. Target market A group of people with similar characteristics and similar demands of the marketplace.

Key Terms continued: Temperature danger zone The temperature range at which most microorganisms grow best: 41°F to 135°F (5°C to 57°C). Trend A gradual change in customers’ food preferences that is likely to continue for a significant time. Value The relationship between selling price and quality.

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