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
Ahmad Nizam Zali / 0133446539
FOOD KNOWLEDGE
The menu planner must:
know the customers 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
products
Know 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:
Owners 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 guests
Capability of cooks
Equipment capacity and layout
Consistency and availability of
ingredients
Price and pricing strategy
Nutritional value
Contribution 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
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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
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Pricing Philosophies
Three (3) common approaches:
1. Demand-oriented / Perceivedvalue pricing
2. Competitive pricing
3. Cost-oriented pricing
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Demand-oriented/Perceived valuepricing
looks at the menu from the view point of
the customer and prices relative to what the
item is worth to the customer
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There 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
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Factors in Pricing
Considerations 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 economics
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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
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Price-value relationship
There are two (2) basic components
of value creation:
a. what you provide
b. what you charge for it
To build perceived-value, you need to
a. increase the perception of value of
what
you provide
b. lower the price you charge for it
c. or both
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Factors that go into building perceived pricevalue:
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 priceraising 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
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Menu analysis
Approaches :
Prof. Jack Miller the best menu
items called winner not only sold
more but also were at a lower foodcost 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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Prof. David Pasevic proposed a
combination 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)
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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
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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
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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
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THANK YOU,
FOR YOUR ATTENTION
by Ahmad Nizam Zali
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CHAPTER 7 - The Menu

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CHAPTER 4

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

1. Market skimming use relatively high price to

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

Approaches that make the priceraising process easier

Psychological factors that

Ahmad Nizam Zali / 0133446539

Menu Design and Layout

Ahmad Nizam Zali / 0133446539

Ahmad Nizam Zali / 0133446539

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