1. Chapter 5
The Menu: The Foundation
for Control
Planning and Control for Food and Beverage Operations
Seventh Edition
(464TXT or 464CIN)
© 2009, Educational Institute

2. Competencies for
The Menu: The Foundation for Control
1. Explain how a system of food service control points
helps managers carry out critical functions on a daily
basis.
2. Describe factors that influence menu planning strategies
and identify external and internal factors that influence
menu changes.
3. Discuss subjective methods for pricing menu items, and
calculate a base selling price for menu items using
simple mark-up pricing methods.
4. Calculate a base selling price for menu items using the
contribution margin pricing method .
© 2009, Educational Institute (continued)

3. Competencies for
The Menu: The Foundation for Control
(continued)
5. Calculate a base selling price for menu items using the
ratio pricing method.
6. Calculate a base selling price for menu items using
prime costs pricing methods.
7. Describe important pricing considerations that affect
the final selling price of menu items.
8. Explain the menu engineering method for pricing food
and beverage items.
9. Describe menu planning in multi-unit organizations,
and discuss how technology can help managers with
menu planning, design, and management.
© 2009, Educational Institute

4. Control Points
in a Food and Beverage Operation
• Menu planning
• Purchasing
• Receiving
• Storing
• Issuing
• Preparing
• Cooking
• Holding
• Serving
• Service
© 2009, Educational Institute

5. Operational Areas Affected
by the Menu
• Product control procedures
• Cost control procedures
• Production requirements
• Nutritional content of meals
• Equipment needs
• Sanitation management
• Layout and space requirements
• Staffing needs
• Service requirements
• Revenue control procedures
© 2009, Educational Institute

6. Factors in Menu Planning
Guest wants/needs/expectations
Quality of menu item
• Flavor
• Consistency
• Texture/form/shape
• Nutritional content
• Visual appeal
• Aromatic appeal
• Temperature
© 2009, Educational Institute (continued)

7. Factors in Menu Planning
(continued)
Cost
Availability
Peak volume production/operating concerns
Sanitation
Layout
Equipment
© 2009, Educational Institute

8. Menu Changes—External Factors
• Consumer demands
• Economic conditions
• Competition
• Supply levels
• Industry trends
© 2009, Educational Institute

9. Menu Changes—Internal Factors
• Facility’s meal pattern
• Concept/theme
• Operational system
• Menu mix
© 2009, Educational Institute

10. Subjective Pricing Methods
• Reasonable price
• Highest price
• Loss leader
• Intuitive price
© 2009, Educational Institute

11. Mark-Up Pricing Methods
• Ingredients mark-up method
• Prime-ingredient mark-up method
• Mark-up with accompaniment costs method
© 2009, Educational Institute

12. Mark-Up by Multiplier Issues
• Impact of sales mix
• Variations in labor and energy costs to
produce items
• Transfers to and from food department
• Theft, overportioning, spoilage
• Minor costs add up over time
© 2009, Educational Institute

13. Contribution Margin Pricing Method
Step 1
Determine the average contribution margin
required per guest by adding non-food costs to
required profit and dividing by the number of
expected guests.
Step 2
Determine the base selling price by adding required
average contribution margin per guest to an item’s
standard food cost.
© 2009, Educational Institute

14. Ratio Pricing Method
Step 1
Determine the ratio of food costs to all other costs plus
profit requirements.
Step 2
Calculate the amount of non-food costs and profit
required for a menu item.
Step 3
Determine base selling price by adding result of Step 2
to the standard food cost for the menu item.
© 2009, Educational Institute

15. Prime Costs Pricing Method
Step 1
Determine the labor cost per guest by dividing labor
costs by the number of expected guests.
Step 2
Determine the prime costs per guest by adding the
labor cost per guest to the menu item’s food cost.
Step 3
Determine the base selling price by dividing the prime
costs per guest by the desired prime costs percentage.
© 2009, Educational Institute

16. Pricing Considerations
• Value (price relative to quality)
• Supply and demand
• Volume of business
• Competition
• Elasticity of demand
© 2009, Educational Institute

17. Menu Engineering
Popularity—ordered frequently by guests
Profitability—contribution margin
Stars: Highly popular and profitable
Plowhorses: Not highly profitable but popular
Puzzles: Profitable but not very popular
Dogs: Not very profitable and not very
popular
© 2009, Educational Institute

18. Managing Stars
• Maintain rigid specifications
• Place in highly visible location on the menu
• Test for selling price inelasticity
• Use suggestive selling techniques
© 2009, Educational Institute

19. Managing Plowhorses
• Increase prices carefully
• Test for demand
• Relocate item to lower profile on the menu
• Shift demand to more profitable items
• Combine with lower cost products
• Assess the direct labor factor
• Consider portion reduction
© 2009, Educational Institute

20. Managing Puzzles and Dogs
Managing puzzles
• Shift demand to these items
• Consider a price decrease
• Add value to the items
Managing dogs
• Remove from the menu
• Increase the selling price
© 2009, Educational Institute