FACTORS AFFECTING MENU DESIGN AND PLANNING

CHAPTER 5
FACTORS AFFECTING
MENU DESIGN AND
PLANNING
FOOD AND BEVERAGE
OPERATIONS
PREPARED BY: MUMTAZUL ILYANI

MENU DESIGN
• The menu is the heart of any
restaurant; it showcases everything
that restaurant have to offer for food
and beverages.
• The menu should reflect the restaurant
concept. The restaurant concept is
based on that the guests in the target
market expect and the menu must
satisfy or exceed their expectations.
• Responsibility for developing the menu
may begin with the chef, individually or
in collaboration with restaurant owner,
manager, cooks and servers.

MENU MANAGEMENT
• The major menu management issues are:
1. MENU
PLANNING
Process of generating menu
content that is optimal for
the specific restaurant.
Outcome – menu content
Relevant variables –
(i) menu item selection
criteria
(ii) menu changes and
variety
(iii) menu item innovation
2. MENU
PRICING
Process concerned with the
formulation of prices for
each menu item.
Outcome – menu item
prices
(i) pricing methods
(ii) price elasticity or
sensitivity
(iii) price perceptions of
customers
(iv) psychological pricing
3. MENU
DESIGNING
Process focused on designing
the menu display whether it
is on a card or on a display.
Outcome – menu display
(card or board)
(i) menu card characteristics
(ii) menu item layout
(iii) menu item description
(iv) menu item label

MENU MANAGEMENT (CONT…)
4. MENU
OPERATING
Process associated with the creation
of standards and procedures that are
implemented by the restaurant.
Outcome – operations
(i) budgeting (ii) sales
forecasting (iii) assuring food
safety (iv) controlling costs
(v) standard recipes (vi)
standard costs (vii) standard
yields (viii) standard portions
5. MENU
DEVELOPMENT
Process that involves analysing the
performance of different menu items
and leads to the improvement.
Outcome – menu items'
performances and
improvements
(i) analysis methods
(ii) improvement strategies

FACTORS AFFECTING MENU
ITEMS DESIGN
1. Physical factors - availability of
equipment and facilities needed for the
preparation and serving of the menu.
2. Labour considerations - skills, experience
and availability of staff.
3. Guest expectations - menu items are
associated with the specific
establishment and standards.
4. Variety and psychological factors -
several menu items with low quality of
product and more basic restaurant
service.

ITEMS DESIGN (CONT…)
5. Appearance, temperature, texture, and
consistency of menu items - preparation
and serving processes.
6. Time and seasonal considerations - forcing
restaurants to include certain menu items
or eliminate items.
7. Rating food preferences - focusing on
customer satisfaction and analysis of
trends amongst regular guests.
8. Patron expectations - relate to the brand
recognition, clear brand image and
stereotypes.

ITEMS DESIGN (CONT…)
9. Truth-in-menu standards -
affecting menu designs. Ex:
calories of each dish.
10. Health concerns - affect the entire
menu, selecting healthier options.
11. Menu pricing - align the selection
of items to the affordability of the
restaurant’s customers.

CONSIDERATIONS IN PLANNING
MENU
• Some of the most common considerations we should have
when planning a menu are as follows:
1. Restaurant class – fine dining restaurants are likely to have
far more expensive food and designs compared to boards
used in fast food restaurants.
2. Type of menu – some restaurants have fixed prices for set
menus, while others prefer individual pricing of each dish.
3. Kitchen staff skills and experience – the complexity and size
of the menu depends on what can be delivered by chefs.
4. Physical infrastructure – depending on the size of the kitchen,
size of serving area and equipment available, restaurants can
design an appropriate menu.

CONSIDERATIONS IN PLANNING
MENU (CONT…)
5. Language of the menu – this should be kept simple but
offering clear and concise description of each dish.
6. Clientele type – the affordability and preferences of the
guests is likely to affect the content of the menu but also its
design.
7. Seasonality and availability of raw materials – restaurants
adapt their menu to meet seasonal needs of their guests.
8. Pricing of the menu – each restaurant has to design a menu
that is in line with its clientele, the expectations for its cuisine
and also the area and the premises (Ex: low investment in
furnishings and service cannot support a demanding and
pricy menu).

PRICING METHODS
SUBJECTIVE PRICING METHODS – depend on whether the restaurant is
meeting its targets and what managers think will work best. Largely based on
assumptions or results of other establishments or personal experience.
1. REASONABLE PRICE - based on using a price that will represent good
value for money to the customer. Considers what similar products are
available, what people are already willing to pay for similar items.
2. HIGHEST PRICE - picking the highest price that customers are willing to
pay for an item that has the perception of quality and excellence.
3. LOSS LEADER - pricing certain items very low with the aim to persuade
customers to buy. Product or service that is offered at a price that is not
profitable, but it is sold to attract new customers.
4. INTUITIVE PRICE - based on a wild guess of the manager. Process of trial
and error. Picking a price through guessing what price customers will pay for
the menu item.

PRICING METHODS (CONT…)
OBJECTIVE PRICING METHODS – take into account budgetary factors
such as the food cost as well as overhead. Incorporate the restaurant’s
financial plans into menu item selling price decision.
1. Simple mark-up - considering a mark-up from the cost of the goods sold,
covering all associated costs in order to generate profit.
Food cost/(1 – Mark up %) = Base selling price
Example: In Restaurant Y, food cost for grill salmon per plate is $8. They want
to get desired profit 30% from the sales.
$8 / (1 – 0.30) = $11.42

3. Mark-up with accompaniment costs – calculating the selling price by
considering the main ingredients together with the accompaniments (side
dishes).
Example: In Restaurant Y, total ingredient cost for ribeye steak per plate is
$8.00; the steak costs $5, the asparagus $2, and the potatoes $1.
If the restaurant decides a 30% markup is necessary to meet business goals,
figures out the multiplier by dividing 1 by 0.30. This gives a multiplier of 3.33.
Since the ingredient cost is $8, the formula to get the selling price looks like:
$8 X 3.33 = $26.64.
2. Prime ingredient mark-up - considering only the main ingredient of the
menu in the pricing of each dish.
Example: In Restaurant Y, main ingredient cost for ribeye steak per plate is
$5. Revenue per night for ribeye steak is $24,000 and the main ingredient
cost is $4000.
To determine the multiplier $24,000/$4000 = 6.
Selling price: $5 X 6 = $30

4. Contribution margin pricing method – calculating the difference between the
selling price and the food cost, which must be sufficient to cover the non-food
costs.
The CM is determined by first identifying the total non-food costs of operating the
restaurant such as rent, utilities, labor, and cleaning supplies over a certain period
of time. Secondly, restaurant needs to determine the total dollar amount of profit
it would like to make. The sum of these two numbers is then divided by the
expected number of guests to give the contribution margin.
(Non-food costs + Desired profit) / Number of customers = Contribution margin.
By adding the contribution margin to the food ingredient cost per customer, we can
determine the base selling price (minimum menu price that covers costs).
Contribution margin + (Food cost / Number of customers) = Base selling price (for
one menu)
Example: Last quarter Restaurant Y spent $300,000 on food and another $504,000
in non-food costs. They can serve 3000 people a month, or 9000 people a quarter.
They want to earn a profit of $60,000 for the quarter.
CM: ($504,000 + $60,000)/9000 = 62.66
BSP: 62.66 + ($300,000/9000) = $95.99 per menu item.

5. Ratio pricing method – based on determining the ratio of food costs to non-food
costs and profits. Used to calculate a price for menu items based on the ratio of
ingredient costs to other non-food costs.
Calculated by dividing non-food costs and required profit by total food costs. The
ratio of food costs to non-food costs is then multiplied by the standard food cost of
a specific menu item. The result is added to the food cost for a given menu item
and then added to the standard food cost. This gives us a base selling price.
Example: Restaurant Y’s annual budget for last year is $300,000 on food and all
other expenses such as rent, labor and utilities totaled $800,000. The profit goal
for the year is to make $100,000.
Ratio = (Non-food costs + Required profit)/Food costs
($800,000 + $100,000)/$300,000 = $3
If a cheeseburger has an ingredients costs of $2.25, the amount would be
multiplied by the ratio 3 go get the base selling price.
BSP: $2.25 X 3 = $6.75
This means that in order for the restaurant to get desired profit based on ratio, it
must sell the cheeseburger for at least $6.75.

6. Simple prime costs method – the most significant costs include labour costs and food costs, meaning
that the method mainly calculates these two cost categories for food pricing.
The first step in the simple prime cost method is to determine the average labor cost per guest. This can
be found by taking the labor cost of the operation and dividing it by the expected number of guests over
a given time period.
The Four Bean Bistro's labor costs amounted to $4,000 for the month of March, and the expected
number of guests for the month of April is 2000 guests.
Labor Costs Per Guest: $4,000 / 2000 = $2
This means that on average, it takes $2 worth of labor to serve each guest.
The next step is to determine the prime cost per item, which is done by taking the labor cost per guest
and adding in the food cost for a particular menu item.
The bistro has determined the total ingredient cost per portion for the risotto is $4.
$2 + $4 = $6 prime cost per item
The final step is to determine the selling price. This is found by taking the prime cost per item and
dividing it by the target prime cost percentage (60% in this example).
$6/0.60 = $10 selling price - This means that in order for the bistro to hit its 60% prime cost target, it
must sell the risotto for at least $10.
7. Specific prime cost method – calculating different mark-up for food
depending on how labour intensive preparation is required for each
dish.

MENU ENGINEERING
 Menu engineering is a way to design a menu in
order to push your most profitable dishes and up-sell
to your guests.
 The goal is simple: to increase profitability per guest.
 With the right menu engineering, you will be able to
feature the most popular, important and profitable
dishes on your menu, you will make it easy for your
guests to choose a dish, you will be increasing your
profit margins and you will have a menu that is
memorable.

MENU ENGINEERING (CONT…)
 Stars: Most profitable
and most popular
 Plow Horses: Most
popular but not profitable
 Dogs: Not popular and
not profitable
 Puzzles: Most profitable
but not popular (does not
sell much)

STRATEGIES FOR
MENU ENGINEERING
 Plow Horses:
 Increase the price
 Relocating popular items in
the menu
 Suggestive selling
 Portion reduction
 Stars:
 Maintaining quality
 Menu positioning (remain)
 Testing price elasticity
(change the price)
 Suggestive selling

STRATEGIES FOR
MENU ENGINEERING
 Puzzles:
 Shifting demands by
advertising, promotion,
creating special menu board
 Reducing the price
 Adding value (side dish)
 Dogs:
 Remove from the menu
 Replace with new menu

AESTHETIC FACTORS IN
PLANNING MENU
1. Colour - aiming for color variety, multiple
colours are preferred.
2. Texture - using ingredients with similar
consistency, soft or hard, firm or crunchy, liquid
or solid.
3. Flavor - contrasting tastes, sweet, sour, salty,
bitter.
4. Form - shape and size, can be round, square
and can be served in a tall or flat portion.

NUTRITIONAL INFLUENCE IN
PLANNING MENU
 Should be a primary concern for planning menus.
 Motivated by increasing public awareness of the importance
of nutrition.
 According to Food Guide Pyramid.
 Carbohydrates – providing energy
 Proteins – building the body, growth and maintenance
 Fats – proving energy, maintains body temperature
 Minerals – building and maintaining healthy bones and
teeth. Keeping muscles, heart and brain working properly
 Vitamins – body protectors
 Most on-site foodservice operations have registered dietitian
or consultant for nutritional aspects of menu planning.

FACTORS AFFECTING MENU DESIGN AND PLANNING

FACTORS AFFECTING MENU DESIGN AND PLANNING

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