The restaurant plans to introduce a new menu. Using menu-engineering principles, we are going to analyze the popularity and margins on each dish and beverage and come up with the new menu. The menu engineering principles are psychology, managerial accounting, marketing strategy, and graphic design. Psychology is the perception that people have towards the dish. It can also be described as the effect that the dish has on people(Walker, 2007). Managerial accounting is concerned with the pricing of the menu item. It looks at the cost of production of each menu item and the contribution margin from each item. This results in the menu price, which is the price at which the item is sold to the customer. Marketing and strategy refers to the pricing of the menu items. This occurs where the menu designer decides on the prices to offer products to attract people (Walker, 2007). Generally, menu items with a low cost of production and an above average profit margin are preferred. This is because they result in high volume sales. Graphic design refers to the visual design of the menu.
In this plan, we are going to look at the two most popular items and the two items with the best profit margins in each category. These categories are soups and snacks, main courses, club burger and salads and desserts. The beverage category is going to consist of wines, champagne, beers, ciders, and cold drinks.
Managerial accounting
Soups and snacks
The two most popular soups are celeriac soup and brown onion soups. Both these items cost £1.15 to produce and retail at £4.95. Margin = £4.95- £1.15 =3.8. The two items with the highest margins are ploughman’s large and ploughman’s small. The ploughman’s large is not popular with zero sales in the last six weeks. The ploughmans small, is also not very popular with sales of just over two per week for the last six weeks. These two items will be removed from the new menu because they are not popular and have little contribution to the margins of the business. When designing the menu, the two most popular items on the soups and snacks menuwill be included. This is because they have a healthy profit margin and their volumes make them ideal. Other items to be included in the soups and snacks menu are going to be items that cost relatively low to produce but have a high margin on the retail price. These are the items, which have the greatest contribution margin to the whole menu. The low cost of production and the relatively low menu price make them more popular among customers visiting the restaurant.
Sandwiches
The club sandwich is the most popular item on the sandwich list. It costs £3.64 to produce and retails at £10.50. Margin = £10.50 - £3.64 =6.86. this is a star item on the menu. The next most popular item in this list is the roast beef sandwich, which costs £1.98 to produce and retails at £7.25.Margin = £7.25- £1.98 =5.27. the roast beef sandwich is a star item. These are also the items with the highest profit margins on the list. The new menu item will have these two items along with the crayfish, coronation chicken and ham and piccalilli sandwiches. All these items have large volumes and a good profit margin. They are workhorse items on the menu. They are significant contributors to the overall margins of the restaurant.
Main courses
The main course menu is going to contain items that move more than twenty servings per week. According to the figures available, fish and chips are the most common main course item. The cost of production is £2.54 and retails at £12.95. Margin = £12.95- £2.54 =10.41. Fish cake is the second most popular item on this list and pushes over 310 items in the last six weeks. The cost of production is £2.50 and retails at £13.95. Margin = £13.95- £2.50 =11.45. these are the star items in the main course menu. Alongside these two items, cottage pie, kedgeree, Cumberland and venison sauce, ravioli, calf liver and gammon are going to be included. These items are all popular with customers and they have above average profit margins. They are the workhorse items on the main course menu. Items in this category have the most significant contribution to the overall margins of the restaurant due to the high volume of sales.
Club burger and salads
The classic burger is the most popular item in this category with sales well over double of any other item in this list. The contribution margins are good and this qualifies as a workhorse. It is therefore the first item to be included in the burger and salads list. All the other burgers will also be included because they have a high mark-up on the cost of production and they have a significant contribution to the overall margins of the restaurant. The crab salad has low popularity but has very high contribution margins to the business. It is classified as a puzzle item on the menu.
Desserts
Sticky toffee pudding and Eton mess are the most popular dessert items. They have a healthy profit margin and contribute greatly to the overall margins of the restaurant. These are star items on the menu. Other items in the dessert list are not very popular but they contribute significantly to the overall margins and therefore will be included in the list. The other items included are rated as workhorses because they have high demand but low contribution margins.
The research on the market has been conducted by analyzing the sales figures for the restaurant. By analyzing these figures, we are able to determine the most popular items on the menu. After these items have been identified, we can determine the importance of each item to the business in terms of overall contribution to the profit margins(Ojugo, 2010). The most popular food items and those with the most significant contributions have been identified for the menu. After this has been done, it is now possible to conduct a research for available suppliers of the goods. Ideally, the best supplier will provide the best quality raw materials at the most competitive price(Kasavana, Donald, and Raymond, 1990). Location is also another factor that is important to consider since it affects the final cost of the product. The raw materials are of two types. There are perishable materials and durable materials. Perishable materials like fresh farm produce need to be purchased on a daily basis. Durable goods like wheat flour and cooking oil can be purchased in bulk.
The ordering system is also an important factor to consider. The restaurant will arrange with local farmers to supply the restaurant with fresh produce. The average quantities needed have been calculated and this will influence the ordering system. Each supplier will know the quantity he or she is required to deliver and ensure that it is delivered when required. In case of any problems, the restaurant will communicate directly with the suppliers to inform them of the changes. Durable products will be ordered in bulk so to maximize the economies of scale. These will be ordered from recognized suppliers at monthly intervals(Gordon & Brezinski, 2009). The sales figures can provide an estimate of the quantity of products needed in the period. The restaurant will try to keep its prices as constant as possible. This cushions the customers from price fluctuations for the raw materials used. In order to ensure this, the menu prices have a high markup, which ensures that the restaurant still breaks even without changing menu prices even when the cost of raw materials has increased. Price reviews will only be considered when the cost of raw materials starts eating into the normal profits of the restaurant (Gordon & Brezinski, 2009).
The products will be received by the store manager as required. The supplier will issue a delivery notice on each delivery, which will be filed by the store manager. This will ensure that the restaurant is able to offer all the items on the menu because their ingredients will always be available. The store manager has a responsibility of ensuring that all items are available(Davis, Andrew, Ioannis, and Peter, 2008).
Fresh farm produce will be ordered in only the required daily quantities. This avoids a case where farm produce goes bad. In addition, the restaurant has a walk in freezer where all these materials are going to be stored. The chef will then request the store manager for items they need which will promptly be made available. This system frees the chef from the responsibility of managing inventory. The chef can now concentrate on delivering high quality food items to the customers.
The system for preparation and sales is going to be dependent on the item in question. The most popular items on the menu such as fish and chips will usually be prepared in large quantities beforehand(Pizam, 2005). This is because their demand is almost guaranteed as long as the restaurant is open for business. The large quantities involved also mean that preparing the food items in bulk makes more sense. The items with a lower but steady demand will also be prepared in this manner but using lower quantities. The chef will decide on the quantity to produce based on the average demand. This mode of preparation ensures that the items are available when a customer orders for them. Items with less demand and short preparation time will be made on order. When a customer requests for such an item, they will be informed that the item is made on order and they will have to wait for a short time. Refreshment will be offered to them as they wait for their order to be prepared. The use of both these systems ensures that the restaurant operates at an optimum level with minimum wastage.
Work Cited
Davis, Bernard, Andrew Lockwood, Ioannis Pantelidis, and Peter Alcott. Food and Beverage Management. Hoboken: Taylor and Francis, 2008. Internet resource.
Gordon, R. T., & Brezinski, M. H. (2009). The complete restaurant management guide. Armonk, N.Y: Sharpe Professional.
Kasavana, Michael L, Donald I. Smith, and Raymond S. Schmidgall. Menu Engineering: A Practical Guide to Menu Analysis. Okemos, Mich: Hospitality Pub, 1990. Print.
Ojugo, Clement. Practical Food & Beverage Cost Control. Clifton Park, NY: Delmar, Cengage Learning, 2010. Print.
Pizam, A. (2005). International encyclopedia of hospitality management. Amsterdam: Elsevier Butterworth Heinemann.
Walker, John R. The Restaurant: From Concept to Operation : Study Guide. Hoboken, N.J: Wiley, 2007. Print.
Appendix
Purchasing cycle table
