drive more profits using predictive costing … · • bravo/brio restaurant group eddie...
TRANSCRIPT
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DRIVE MORE PROFITS USING
PREDICTIVE COSTINGPREDICTIVE COSTING
MODELS TO ENHANCE YOUR
MENU ENGINEERING
ECRM The Foodservice EPPSSheraton AtlantaAtlanta GAAtlanta, GAMonday, April 11, 2016 5:00 p.m. – 5:45 p.m.
© 2016 Return On Ingredients LLC P.O. Box 2387 Westerville, Ohio 43086-2387 614.558.2239 Fax 614.340.7946
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Mark Kelnhofer
• BA in Accounting and Business Administration in 1993
• Masters in Business Administration (MBA) in 2005Masters in Business Administration (MBA) in 2005
• Ohio Dominican University, Columbus, Ohio
• Manufacturing Cost (1993 – 2013)
• Plastics, Lighting, Tire Repair Kits, Buses, RestaurantsPlastics, Lighting, Tire Repair Kits, Buses, Restaurants
• Bravo/Brio Restaurant Group (2002 – 2010)
• Return On Ingredients (2009 – Present)
• Bravo/Brio Restaurant Group Eddie V’s Pistacia Vera Bob Evans Bravo/Brio Restaurant Group, Eddie V s, Pistacia Vera, Bob Evans Farms, Gordon’s Gourmet, Midwest Culinary Institute, Luce, Crème de la Crepe, Cooper’s Hawk Winery, Zauber Brewing Co., Hospitality USA
• The Ohio State University (2016 –Present), Lecturer, Food, Beverage, & Labor Cost Controls
Ohi U i i (2014 P ) Adj F l H i li • Ohio University (2014-Present), Adjunct Faculty, Hospitality Accounting
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Mark Kelnhofer
• BA in Accounting and Business Administration in 1993
• Masters in Business Administration (MBA) in 2005Masters in Business Administration (MBA) in 2005
• Ohio Dominican University, Columbus, Ohio
• Manufacturing Cost (1993 – 2013)
• Plastics Lighting Tire Repair Kits Buses Restaurants• Plastics, Lighting, Tire Repair Kits, Buses, Restaurants• Bravo/Brio Restaurant Group (2002 – 2010)
• Return On Ingredients (2009 – Present)
• Bravo/Brio Restaurant Group Eddie V’s Pistacia Vera Bob Evans • Bravo/Brio Restaurant Group, Eddie V s, Pistacia Vera, Bob Evans Farms, Gordon’s Gourmet, Midwest Culinary Institute, Luce, Crème de la Crepe, Cooper’s Hawk Winery, Zauber Brewing Co., Hospitality USA
• The Ohio State University (2016 –Present), Lecturer, Food, Beverage, & Labor Cost Controls
• Ohio University (2014-Present), Adjunct Faculty, Hospitality Accounting
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Paradigm Shift
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Bravo/Brio Restaurant Group
4.2% = $ millions in savings
Return On Ingredients LLC P.O. Box 2387 Westerville, Ohio 43086‐2387 614.423.4410 Fax 614.340.7946Return On Ingredients® and its logo are registered trademarks by Return On Ingredients LLC
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Other Food Manufactures…
• Restaurants
• Casinos
• Hotel & Lodging
• Sports Arenas
• Hospitals
Colleges and Universities• Colleges and Universities
• Catering and Banquet Centers
• Theme ParksTheme Parks
• Horse Race Tracks
• ….and others!
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The Missing Link
+
Cu
linm
ber
sary
Ar
Th
e N
um
rtsT
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ROI Methodology
Recipe costing is the base for manyRecipe costing is the base for manyother aspects of the operations.
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The Reality Is…
• Some restaurant operators do not phave any written or documented recipes.
• Some have recipes that are written are only for execution, not costing.
• The few that have costing in many cases do not take a manufacturing approachapproach.
• Menu pricing in some cases is not based on proper analysis and databased on proper analysis and data.
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What is in your control?
Knowing your costs Knowing your costs
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What is in your control?
Knowing your costs Knowing your costs
Establishing your selling price
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Recipe Writing
Analyze and question the recipe to account Analyze and question the recipe to account for accuracy and the process. Ask questions!
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Recipe Writing
Th i ld d lt i i d f ti !The yield or end result is required for costing!
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Recipe Writing
The DETAILED ingredients are required for costing!
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Weights & Measures
Portion control thro gh the se of • Portion control through the use of utensils (Tbsp tsp dishers spoodles etc )(Tbsp, tsp, dishers, spoodles, etc.)
• Accuracy of weights and measures is paramount.is paramount.
1 cup, Basil Leaves 1 cup, Granulated Sugar
0.2 ounce 6.8 ounces
Density: 2.5% Density: 85.0%
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Weights & Measures
#10 cans• #10 cans
• Know the yield!
Brand A Brand B
Marinara SauceBrand A Brand B
116 ounces 106 ounces
Density: 120.8% Density: 110.4%
$8.00, $0.069/oz. $7.75, $0.073/oz., / , /
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Published Articles
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Batch Recipes & Yields
• Batch recipes should account for the • Batch recipes should account for the proper yield (what the result is) including known waste and the gprocess (labor)
• When the purchased product has p pchanged form in any way, a batch recipe should be created to account f h “H d h ”for the cost. “Hands on the process”.
• If you don’t account for the process d i ld l l t i and yields, your menu level costs in
most cases is understated!
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Packaging
• Packaging is part of the raw g g pmaterial cost, similar to the ingredients
• Packaging includes:
• Bottles, lids
• Boxes
• Labels
• Wraps
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The Costing Problem
Ingredients
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Commodities In The News
Food Business Newsfoodbusinessnews.net
June 10, 2015
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Commodities In The News
Wall Street Journal, 12/08/2014
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Commodity Research
Foodservice Council Council Executive Leadership RetreatA il 28 29 2015April 28-29, 2015
Maggie O’Neill(216) 649-7278moneill@[email protected]
Disclosures: Our Analysts certify that the views expressed in the research report(s) accurately reflect our personal views about the subjectcompany(s). Further, we certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendations orviews contained in the research report(s). The analysts responsible for the preparation of this report have no ownership stake in this company.Cleveland Research Company provides no investment banking services of any type on this or any company.
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Commodity Research
Foodservice Council Council Executive Leadership RetreatA il 28 29 2015April 28-29, 2015
Maggie O’Neill(216) 649-7278moneill@[email protected]
Disclosures: Our Analysts certify that the views expressed in the research report(s) accurately reflect our personal views about the subjectcompany(s). Further, we certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendations orviews contained in the research report(s). The analysts responsible for the preparation of this report have no ownership stake in this company.Cleveland Research Company provides no investment banking services of any type on this or any company.
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Commodity Research
Foodservice Council Council Executive Leadership RetreatA il 28 29 2015April 28-29, 2015
Maggie O’Neill(216) 649-7278moneill@[email protected]
Disclosures: Our Analysts certify that the views expressed in the research report(s) accurately reflect our personal views about the subjectcompany(s). Further, we certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendations orviews contained in the research report(s). The analysts responsible for the preparation of this report have no ownership stake in this company.Cleveland Research Company provides no investment banking services of any type on this or any company.
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Cost Modeling
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Cost ModelingPredictive Costingg
Commodity Commodity price increase
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Cost Management
Do we just “eat” the cost?j
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Cost ModelingPredictive Costingg
Menu Item Highest Cost
Labor Cost Increase Highest CostIncrease
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Our Challenges
Source: National Restaurant Association (NRA), 2015 Restaurant Industry Forecast
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Our Challenges
Source: National Restaurant Association (NRA), 2015 Restaurant Industry Forecast
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Prime Cost
Ingredients Labor
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The Costing Problem
The most dangerous The most dangerous h i h l h i h l phrase in the language phrase in the language
is “We’ve always done is “We’ve always done is, We ve always done is, We ve always done it this way.” it this way.” yy–– Admiral Grace HopperAdmiral Grace Hopper
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Prime Cost
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Prime Cost
Source: www.Bloomberg.com, “Here’s America’s New Minimum Wage Map”, 04/01/2015
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Prime Cost
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Total Cost
Ingredients Labor
Overhead
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Total Cost Breakdown
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Labor & Overhead Costs
• Your labor and overhead can be accounted for in the recipe
• Prep Time, Labor Routing• Time/motion studies (stopwatch)
• Time (hours) is loaded on every recipe
• Standard Labor (BOH) Rates• By store
• Includes wages and fringes
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Direct (BOH) Labor Rate
• The direct (BOH) labor rate should ( )include the base rate plus any other additional fringes associated
h h lwith those personnel• Unemployment Insurance
Workers’ Compensation• Workers Compensation
• Social Security & Medical
• Health, dental and vision insurance plans
• 401(k) or other retirement plans
• Vacation & Sick Pay
Child• Childcare
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Overhead Rates
• Based on budgeted expenses and
Predetermined Overhead Rate
g pdirect labor hours (BOH) by location.
Total Budgeted OverheadTotal Budgeted Overhead
Direct Labor BOH Hours = $0.000/hr.
OverheadRate
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Overhead Rates
• FOH Labor & Fringes
Predetermined Overhead Rate
• FOH Labor & Fringes• Advertising & Marketing• Repair & Maintenance• Supplies• Training• Utilities Utilities • Communications• Landscaping• Research & Development• Research & Development• Occupancy• Taxes
BudgetedDirect Labor
HoursHours
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Menu Level Costing
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Menu Level Costing
Prime Cost
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Menu Level Costing
Total Cost
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Beverage Costing
Wine & Liquor Bottle Conversions Keg Conversions
Beer, Wine and Liquor recipes can be account for.
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Wine Glass Pour Costs
750ml bottle750ml bottle
Bottle cost $8.99fl. oz. 25.3613fl. oz. cost $0.354Pour cost $2.127Pour cost $2.127
Standard recipe pour = 6.0 fl. oz.
Item Description Qty UOM Unit Cost Extended
Estancia Pinot Noir 6.00 fl. oz. $0.354 $2.127
Direct Labor 0.025 hr. 12.00 0.300
Overhead 0 025 hr 34 97 0 874Overhead 0.025 hr. 34.97 0.874
Total Cost $3.301
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Draft Beer Pour Cost
½ BBL½ BBL
Keg cost $89.00fl. oz. 1,984fl. oz. cost $0.0449Pour cost $0.718Pour cost $0.718Standard recipe pour = 16.0 fl. oz.
Item Description Qty UOM Unit Cost Extended
Sam Adams Lager 16.00 fl. oz. $0.045 $0.718
Direct Labor 0.017 hr. 12.00 0.204
O h d 0 017 h 34 97 0 595Overhead 0.017 hr. 34.97 0.595
Total Cost $1.517
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Our Response
Source: National Restaurant Association (NRA), 2015 Restaurant Industry Forecast
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Menu Engineering
The Guest
MENU
ReputationCommunity
MENU
BusinessFamilies
Employees
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Menu Engineering Team
Culinary
Purchasing
- Research & Development Chefs; Corporate Chefs; Brand Chefs
Restaurant Operators
- Director of Purchasing; Sourcing Issues
Accounting
Restaurant Operators
- General Manager; Executive Chef; Line Chefs
Accounting
Information Technology
- CFO, Cost Accounting
Information Technology
- Point of Sale (POS) Systems Maintenance
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Menu Engineering
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Menu Offering
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Menu Offering
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Menu Offering
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Menu Offering
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Menu Offering
165 165 menu menu items!items!
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Menu Offering
2323appetizers!appetizers!
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Size Offering
24 variations/recipes!
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Menu Rationalization
M R i li iMenu Rationalization
The creation of a simplified menu for the sake of menu for the sake of
operational efficiency and t ti f tiguest satisfaction.
Source: Managing Service in Food and Beverage Operations, Fourth Edition, by Source: Managing Service in Food and Beverage Operations, Fourth Edition, by Ronald F. Cichy, Ph.D., NCE, CHA and Philip J. Hickey, Jr., ISBN-13: 978-0133097269
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Menu Engineering
Do they know their cost? Do they know their cost? What is their pricing strategy?
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Menu Engineering
Do they know their cost? What is their pricing strategy?
• 6 menu items at the same price point?• Pricing of $7 42?Pricing of $7.42?• Pricing of $12.06?
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Menu Engineering
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Menu Engineering
Question of the DayH i t ti lHow many intentional
not for profit restaurants not-for-profit restaurants do you know?do you know?
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Menu Engineering
FSR Magazine, By Kevin Hardy, December 2014, p. 71-72.
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Menu Engineering
• Your menu(s) are what you are in ( ) ythe business to do.
• Types of Menus• Lunch
• Dinner
• Brunch
• Banquet
• Kids
• Pricing Structures• By Markets, Demographics
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Wh • What are we engineering?
• Engineering sections of the menumenu
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Wh • What are we engineering?
• Engineering sections of the menumenu
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Wh • What are we engineering?
• Engineering sections of the menumenu
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Wh • What are we engineering?
• Engineering sections of the menumenu
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• What are we engineering?engineering?
• Engineering sections of the menu
• Similar dishes in different different categories should be
l danalyzed separately.
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• What are we engineering?
• Engineering sections of the menu
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• What are we engineering?
• Engineering sections of the menu
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www.jgilberts.com
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Cost-Volume-Profit (CVP)
The components that we will be analyzing:The components that we will be analyzing:
• Menu items in the category
Quantity/volume sold• Quantity/volume sold
• Selling Price
U it C tPRODUCT COSTS:I di t Di t • Unit Cost
• Cost Percentage
G M i P Pl
Ingredients, Direct Labor and Variable
Overhead
• Gross Margin Per Plate
• Contribution Margin PERIOD COSTS:Fixed Overhead
and Profit
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Cost-Volume-Profit (CVP)
The components that we will be analyzing:The components that we will be analyzing:
• Menu items in the category
Quantity/volume sold• Quantity/volume sold
• Selling Price
U it C tTOTAL COSTS:
I di t Di t • Unit Cost
• Cost Percentage
G M i P Pl
Ingredients, Direct Labor and Total
Overhead
• Gross Margin Per Plate
• Total Profit PROFIT
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My Famous Quote
“You cannot place You cannot place percents in your percents in your
pocket!”pocket!
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My Famous Quote
Change the focus from cost Change the focus from cost
percent to gross margin dollars
Menu Item Qty Sold
MenuPrice
Unit Cost
Cost % UnitGM $s
Pasta Fettucine 1 $11.99 $1.98 16.5% $10.01
Filet Mignon 1 $32.95 $12.49 37.9% $20.46
Which one would you rather have?Do we focus too much on cost percents?f p
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Loss Leaders
Items that are sold at a loss Items that are sold at a loss that will result in other menu items being sold at a profit.
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Loss Leaders
Items that are sold at a loss Items that are sold at a loss that will result in other menu items being sold at a profit.
Drive profits!Drive profits!
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Dog/Star Graphex
%
ty I
nd
e
StarHigh PI %, High GM $s
PlowhorseHigh PI %, Low GM $s
pu
lari
tPo
PuzzleLow PI %, High GM $’s
DogLow PI %, Low GM $s
Average Unit Contribution Margin $
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Dog/Star Graphex
%
ty I
nd
e
StarHigh PI %, High GM $s
PlowhorseHigh PI %, Low GM $s
pu
lari
tPo
PuzzleLow PI %, High GM $’s
DogLow PI %, Low GM $s
Average Unit Contribution Margin $
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Dog/Star Graph Flaws
Flaw #1Flaw #1Traditional Dog/Star reports only
l lanalyze entrees only.
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Dog/Star Graph Flaws
Flaw #1Flaw #1Traditional Dog/Star reports only
l lanalyze entrees only.
Flaw #2The calculation looks as unit
gross margin as a basegross margin as a base.
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Contribution Margin
Unit Contribution MarginUnit Contribution MarginUnit Contribution Margin =
S l P i l V i bl CSales Price less Variable Costs
Our Variable CostsIngredientsIngredients
Direct Labor
V i bl O h dVariable Overhead
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Dog/Star Graph Flaws
Flaw #1Flaw #1Traditional Dog/Star reports only
l lanalyze entrees only.
Flaw #2The calculation looks as unit
gross margin as a basegross margin as a base.
Flaw #3The graph plots all entrees together.
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Cost Volume Profit Example
Which menu item should be reviewed?
Menu Item MenuPrice
Unit Cost
Cost % UnitProfit $s
SALADS Menu in place for 6 months.
Chopped Salad $5.50 $0.43 7.8% $5.07
Wedge of Iceberg $5.50 $0.33 6.0% $5.17
Caesar Salad $5 50 $0 41 7 5% $5 09Caesar Salad $5.50 $0.41 7.5% $5.09
House Salad $5.50 $0.48 8.7% $5.02
Averages $5.50 $0.41 7.5% $5.09
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Cost Volume Profit Example
Which menu item should be reviewed?
Menu Item Menu Price
Unit Cost
Cost % UnitProfit $s
SALADS Menu in place for 6 months.
Chopped Salad $5.50 $0.43 7.8% $5.07
Wedge of Iceberg $5.50 $0.33 6.0% $5.17
Caesar Salad $5 50 $0 41 7 5% $5 09Caesar Salad $5.50 $0.41 7.5% $5.09
House Salad $5.50 $0.48 8.7% $5.02
Averages $5.50 $0.41 7.5% $5.09
If the decision was based on cost percent alone, the ‘House Salad’ would be reviewed for action. House Salad would be reviewed for action.
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Cost Volume Profit Example
Which menu item should be reviewed?
Menu Item Qty Sold
Menu Price
Unit Cost
Cost % UnitProfit $s
Total Profit $s
SALADS Menu in place for 6 months.
Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437
Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116
Caesar Salad 1 508 $5 50 $0 41 7 5% $5 09 $7 676Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676
House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246
Averages $5.50 $0.41 7.5% $5.09
If you would have chosen the ‘House Salad’, you would have reviewed the menu item driving the most dollars to cover fixed overhead costs and profit and possibly to cover fixed overhead costs and profit and possibly removing it from the menu.
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Dog/Star Calculation
Which menu item should be reviewed?
Menu Item Qty Sold
Menu Price
Unit Cost
Cost % UnitProfit
Total Profit $s
GM MM Rank
Ch d S l d 1 664 $5 50 $0 43 7 8% $5 07 $8 437 L H Pl h ?
SALADS Menu in place for 6 months.
Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437 L H Plowhorse?
Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116 H H Star?
Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676 H H Star?
House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246 L H Plowhorse?
Averages $5.50 $0.41 7.5% $5.09
MM = (1/4) * .7 = 17.5%; GM = $32,474 / 6,396 = $5.08Flaw: Gross margin rank for dog/star calculation is based on unit level only, not extended contribution based on unit level only, not extended contribution margin dollars.
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Dog/Star Calculation
Which menu item should be reviewed?
Menu Item Qty Sold
Menu Price
Unit Cost
Cost % UnitProfit
Total Profit $s
GM MM Rank
Ch d S l d 1 664 $5 50 $0 43 7 8% $5 07 $8 437 L H Pl h ?
SALADS Menu in place for 6 months.
Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437 L H Plowhorse?
Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116 H H Star?
Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676 H H Star?
House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246 L H Plowhorse?
Averages $5.50 $0.41 7.5% $5.09
MM = (1/4) * .7 = 17.5%; GM = $32,474 / 6,396 = $5.08Flaw: Gross margin rank for dog/star calculation is based on unit level only, not extended contribution based on unit level only, not extended contribution margin dollars.
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Dog/Star Graph
35.0%House Salad
25.0%
30.0%
dex
%7
.5% StarPlowhorse
Chopped Salad
Caesar Salad
15.0%
20.0%
arit
y I
n.7
= 1
7
17.5% Wedge Salad
5.0%
10.0%
Pop
ula
(¼)
*
.08
Dog Puzzle
0.0%
$5.00 $5.02 $5.04 $5.06 $5.08 $5.10 $5.12 $5.14 $5.16 $5.18
P
$5
Menu Item Unit Gross Margin $s$32,475 / 6,396 = $5.08
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Stellar / Cellar Graphex
%
Stellar The Bank
The Engineer• Reengineering of Menu Items
• Labor Process Improvements
ty I
nd
e Stellar - The Bank• Sacred Items• Most Profitable Items
p• Alternative ingredients• Menu placement
• Price increase possibility
pu
lari
t
The Push or Sell• FOH Suggestive Selling
The Cellar• New menu item opportunity
Po • FOH Contests
• Review price with value proposition; price too high?• Quality or flavor issue
• Exception: Unique menu item
Menu Item Total Profit $s
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Stellar / Cellar Graphex
%
Stellar The Bank
The Engineer• Reengineering of Menu Items
• Labor Process Improvements
ty I
nd
e Stellar - The Bank• Sacred Items• Most Profitable Items
p• Alternative ingredients• Menu placement
• Price increase possibility
pu
lari
t
The Push or Sell• FOH Suggestive Selling
The Cellar• New menu item opportunity
Po • FOH Contests
• Review price with value proposition; price too high?• Quality or flavor issue
• Exception: Unique menu item
Menu Item Total Profit $s
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Stellar / Cellar Graph
35.0%
House Salad
25.0%
30.0%
dex
%0
%
25.0%Chopped Salad
Caesar SaladThe
StellarThe Engineer
15.0%
20.0%
arit
y I
n =
25
.0
Wedge Salad
Stellar
10.0%
Pop
ula
(¼)
19
The Cellar The Push
0.0%
5.0%
$2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 $11,000
P
$8
,11
Menu Item Total Profit $s$32,475 / 4 = $8,119
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Cost Volume Profit Example
Which menu item should be removed?
Menu Item Qty Sold
Menu Price
Unit Cost
Cost % UnitProfit $s
Profit $s
SALADS Menu in place for 6 months.
Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437
Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116
Caesar Salad 1 508 $5 50 $0 41 7 5% $5 09 $7 676Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676
House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246
Averages $5.50 $0.41 7.5% $5.09
The proper item to target to be reviewed is the ‘Wedge of Iceberg’of Iceberg .
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What are my options?
• Review the menu placement
• Reengineer an existing menu itemg g
• Review process
• Alternative ingredientste at e g ed e ts
• Price increase
• Remove the item and create a new itemRemove the item and create a new item
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Engineering a New Menu Item
Menu Item Qty Sold
Menu Price
Unit Cost
Cost % UnitProfit $s
Total Profit $s
Wedge of Iceberg 1,183 $5.50 $0.33 6.0% $5.17 $6,116
New Menu Item - $TBD $TBD > $5.17
When engineering the new menu item, attempt to create the item that will increase the average create the item that will increase the average gross margin on the item being removed. In this case - $5.17/menu item.
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Menu Placement
Menu Item Qty Sold
Menu Price
Unit Cost
Cost % UnitProfit $s
Total Profit $s
SALADS
House Salad 2,041 $5.50 $0.48 8.7% $5.02 $10,246
Chopped Salad 1,664 $5.50 $0.43 7.8% $5.07 $8,437
Field Greens NEW $5 75 $0 43 7 5% $5 32Field Greens NEW $5.75 $0.43 7.5% $5.32
Caesar Salad 1,508 $5.50 $0.41 7.5% $5.09 $7,676
Averages $5.56 $0.44 7.9% $5.12
When reading the menu, customers read from top to bottom of the category they are looking at. Place the menu items that drive the most contribution margin to the top. The two top menu items are my highest “The Bank” category items.
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Menu Placement & Eye Gaze
Source: Bowen & Morris, 1995; Hug & Warfel, 1991; Kelson, 1994; Scanlon,1998; Main, 1994; Miller, 1992; Panitz, 2000; National Restaurant Association, 2007;Kotschevar, 2008; Pavesic, D.V., 2011
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Menu Placement & Eye Gaze
Source: Glazer, Emily, Wall Street Journal, “The Eyes Have It: Retailers Now Track Shoppers’ Retinas”, 07/12/2012, p. B1
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Menu Placement & Eye Gaze
Source: Glazer, Emily, Wall Street Journal, “The Eyes Have It: Retailers Now Track Shoppers’ Retinas”, 07/12/2012, p. B1
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Menu Placement & Eye Gaze
Source: Livingston, 1978
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Menu Placement & Eye Gaze
ABSTRACT“Results offer an average menu scanpath and suggests Results offer an average menu scanpath … and suggests traditional menu “sweet spots” may not exist.”
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Front of House (FOH) Sales
• If the menu layout is structured • If the menu layout is structured with the most profitable items on top, it should not be a secret!p,
• FOH personnel can play an active roll in suggesting to the gg gcustomers items that drive profit!
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Front of House (FOH) Sales
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Front of House (FOH) Sales
FRIENDLINESS & PRODUCT KNOWLEDGEFRIENDLINESS & PRODUCT KNOWLEDGE
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Where do I start?
Step 1: Purchased Items Step 1: Purchased Items
Step 2: Batch Recipes Ingredient level only
Step 3: Serving Recipes
Step 4: Time Standards
Step 5: Labor and Overhead Rates Step 5: Labor and Overhead Rates
Step 6: Performance Benchmarking
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Manage By Excel (MBE)
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Manage By Excel (MBE)
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Systems
• MBE (Manage By Excel)( g y )
• Systems & Software (do your Systems & Software (do your research!)• Features (i.e.
recipes, production, ordering,
• invoicing, menu engineering, etc.)
• Service
• Cost
• Your overall plan (short and long term)
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hThe
Top 10 Top 10
kTakeaways
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The Top 10 Takeaways
Takeaway #1Takeaway #1
Ensure that your recipes costs y pare accurate before the menu
engineering process engineering process. Understated costs translates to
overstated profit.
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The Top 10 Takeaways
Takeaway #2Takeaway #2
Use historic data combined with pricing and costs to assist in future menu decisions Data future menu decisions. Data
should match day part in print.
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The Top 10 Takeaways
Takeaway #3Takeaway #3
Your menu is too
important to guess at! G i i t d h!Guessing is not good enough!
There is too much as risk.There is too much as risk.
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The Top 10 Takeaways
Takeaway #4Takeaway #4
Unique printed menus should q pbe engineered separately.
Engineer any menu that is in Engineer any menu that is in print or displayed.
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The Top 10 Takeaways
Takeaway #5Takeaway #5
Engineer sections of menu. g fDo not engineer the
complete menu in whole complete menu in whole. Decisions should be made
within each menu category.
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The Top 10 Takeaways
Takeaway #6Takeaway #6
“You cannot place percents in p pyour pockets!”. Shift the
focus from cost percents to focus from cost percents to cost volume profit methods. Look at total profitability!
Money in the bank!Money in the bank!
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The Top 10 Takeaways
Takeaway #7Takeaway #7
Make decisions not only based yon the passion and emotion of the menu item but also of the menu item – but also
empirical data. Be methodical.
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The Top 10 Takeaways
Takeaway #8Takeaway #8
The menu layout and yplacement of menu items does matter Place higher does matter. Place higher contribution margin items on top in descending order.
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The Top 10 Takeaways
Takeaway #9Takeaway #9
This is your call to action!y
Start the process. If you do t h d t ti not have adequate time or
skills, get some professional , g p fassistance!
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The Top 10 Takeaways
Takeaway #10Takeaway #10
To ensure success –
The bottom line is
know your costs!
Plan for success!Plan for success!
Be proactive, not reactive!p ,
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Cost Control
ACCURATE RECIPE
Audit to Improve ffRECIPE
COSTINGEfficiencies
MENU ENGINEERING
Benchmarking (Actual v.
Theoretical)
JIT Production &
Ordering(Dynamic
P )Pars)
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Results
• Quality• Consistency• Efficiency Improvements• DisciplineDiscipline• Cash• Profits
• Waste• Waste• Inventory Levels• Costs
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Testimonial
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Published Articles
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Published Articles
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F&B Cost Group
Over 6,100+ members from over f h ld150+ areas of the world!
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Reference Books
Note: This reference is NOT comprehensive. You need to practice the costing methods discussed in this presentation.costing methods discussed in this presentation.
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Reference Books
Note: This reference is NOT comprehensive. You need to practice the f p pcosting methods discussed in this presentation.
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Reference Books
Note: This reference is NOT comprehensive. You need to practice the f p pcosting methods discussed in this presentation.
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The App
Search “Restaurant Institute”Search Restaurant Institute$1.99
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Reference Books
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Cost Management Summits
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Questions & Answers
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