Business Re-engineering with the Restaurant’s Menu

Menu Engineering Matrix

Menu Engineering Matrix

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The word menu derives from the French word meaning ‘a detailed list’. The very first menu was developed and used in a restaurant in Paris. Originally, its main purpose was to help waiting staff to remember the products offered by the restaurant (The International Culinary Schools, 2008) (Spang, 2001). This

The word menu derives from the French word meaning ‘a detailed list’. The very first menu was developed and used in a restaurant in Paris. Originally, its main purpose was to help waiting staff to remember the products offered by the restaurant (The International Culinary Schools, 2008) (Spang, 2001). This device was then developed into something very exclusive to the foodservice industry. In its obvious function, it informs customers what is offered at what price, but more importantly, it also communicates with customers the personality and concept of a restaurant (Miller & Pavesic, 1996). While from a business operation’s point of view, a menu implies a guideline for the management of a restaurant. It can be seen as an integrative working plan of a restaurant as it serves a variety of functions, especially as a guide to purchasing and cost control, and production management in the kitchen (The International Culinary Schools, 2008).

 

That is to say, a menu is a ready-to-use platform for a number of business functions. When considering the business performance, a menu jumps onto centre stage, as the sales mix shows each product performance in the menu, leading to a comparison and evaluation. All these have been developed into a continuous process called menu engineering. The practice of this tool might be slightly varied. While in many restaurants, there is no such tool but the same practice is employed. These similar concepts are used from the marketing perspective for analysing the sales performance or popularity of each product, against its contributing margin or profit in a form of matrix.

 

This tool was first introduced by Dr.Michael Kasavana and Donald Smith at Michigan State University in 1980s (Schwartz, 2006). It put each menu item into four groups requiring two key criteria — its contribution or profitability and its popularity or sales. In using this analysis, there are two key terms: contribution margin, which is the amount of money calculated by subtracting the total food cost from the selling price, and popularity, which is the number of an item sold in a given period. When classifying, the dividing point for high or low popularity is established depending on the benchmark of the restaurant, any item that is lower than this point is classified as low, any item that is higher than this point is classified as high, while each item’s contributing margin is classified as either high or low by considering whether it meets the average contribution margin or not (Drysdale & Aldrich, 2002).

 

The items are put into four categories: stars, plough horses, puzzles, and dogs. Any menu item with higher than average popularity and profitability is put in the star group, whereas any item with higher than average profitability and lower than average popularity is called a puzzle. While any item with lower than average profitability and higher than average popularity is categorized as a plough horse. And the last category is dog, where any item with lower than average profitability and popularity is put in.

 

When all the menu items are put in categories, it is time to analyse and evaluate. For stars – popular and profitable products, the most precious items in the menu, and maybe less price-sensitive than other items, they should be maintained with all their qualities. Their prices can be increased at the right time. For plough horses – popular but less profitable items, one solution to increase their performance is to increase their prices carefully, making sure they are not price-sensitive, if it works, they can be new stars. If any horse is very less profitable but more resource consuming, it might be better to replace it with new similar item that is more profitable. For puzzles – unpopular but profitable dishes, the ideal goal is to make them stars by using more marketing communication without lowering their prices. If there’s the only way to make them more popular by decreasing their prices, the consequence must not end up beating stars. If any puzzle item causes any inventory problem, like having short shelf life, this issue must be considered carefully, if it’s not a part of the restaurant image, it should be removed from the menu. For dogs – unpopular and unprofitable items, they should be taken off the menu as soon as they are diagnosed. If their ingredients have a long shelf life, it does make sense to reserve those ingredients in inventory for special request dishes or made to order dishes with high prices (Drysdale & Aldrich, 2002).

 

Consequently, the menu is improved or re-engineered by removing some items, and developing and adding new items. After the new menu has been introduced, it always comes to the recursive process when the whole menu gets analysed again, as each product or menu item has its life cycle (Miller & Pavesic, 1996).

 

Undoubtedly, the role of a menu can be a solid structure for other business functions to adhere to.