Menu Engineering.
Raise the price of a popular steak and it sells less; whether it earns more depends on how sensitive its guests are. The menu analysis shows the result.
Menu engineering, introduced by Michael Kasavana and Donald Smith in 1982, uses a period's sales records. For each dish, two numbers: popularity — its share of the items sold, compared with 70 % of an equal share (so a menu of six counts an item popular if it has over about 11.7 % of sales) — and contribution margin, price minus plate cost (XXXI.5), compared with the menu's average. High on both: a star — protect it, keep its quality and position. Popular but below-average margin: a plough-horse — re-cost it, trim the plate cost or raise the price a little. Profitable but unpopular: a puzzle — promote it, rename it, move it on the menu, train staff to suggest it. Neither: a dog — remove or rework it.
Prices interact with popularity: most diners respond to a price rise by choosing something else a little more often (price elasticity), so raising a star's price may increase its earnings or tip it out of favour. Menu design matters too: dishes in the top right of a page and the first and last in a list are noticed more; boxes and descriptions draw the eye; prices without currency symbols and without dotted lines leading to them are read less as costs. None of this replaces good food, but it shows which dishes carry the restaurant. The workshop prices a steak.
Below: a six-dish menu (illustrative weekly sales, costs and prices, ¤): the steak's price is yours to set, and its sales respond with a teaching price elasticity of −1.5; each dish is classified by popularity and contribution margin (Kasavana and Smith), and the menu's total contribution shown.
- Classify dishes as stars, plough-horses, puzzles and dogs.
- Choose an action for each class.
- Weigh price against popularity.
- Use menu design.
Read the menu by sales and margin
At 30 ¤ the steak sells 120 a week and contributes about 2,316 ¤. At 36 ¤, with a teaching elasticity of −1.5, it sells about 91 and contributes about 2,310 ¤ — about the same money from some thirty fewer plates, and some of those guests may choose a cheaper dish or not come back. With guests this price-sensitive, the rise buys nothing; with a less sensitive dish it would. The risotto, cheap to make and popular, is the menu's quiet star; the duck, profitable but rarely chosen, is a puzzle worth promoting before it is cut.
Doing it in a kitchen: export a month's sales by item from the till; cost every dish (XXXI.5); compute each item's share of sales and margin; classify; act — protect stars, re-cost plough-horses, promote or rename puzzles, remove dogs or rework them; then repeat after the change. Watch the guest as well as the spreadsheet: a "dog" may be the dish that makes vegetarians choose the restaurant, and a menu without anything cheap may lose its regulars.
List the dishes you cook most often at home and estimate what each costs and how often your household asks for it. Which is your star, which your dog?
Terms
- Star
- Popular and above-average margin.
- Plough-horse
- Popular, below-average margin.
- Puzzle
- Above-average margin, unpopular.
- Dog
- Unpopular and low margin.
Sources
- M. L. Kasavana and D. I. Smith, Menu Engineering: A Practical Guide to Menu Analysis, Hospitality Publications, 1982: items classed by popularity (above 70 % of an equal share of sales) and contribution margin (above the menu's average) as stars, plough-horses, puzzles and dogs.
- A teaching value chosen for the course: the right order of magnitude and shape, not a measurement of a particular food.