Costing a Menu

          

Planning                 Costing                   Layout                   Marketing

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To ensure you obtain the desired profit margins on every dish, a scientific approach to the costing of your menu is necessary. As we stated earlier, if you are calculating a selling price for each dish, then you will need to know the EXACT cost of each dish to prepare. One reliable method is to prepare a recipe card for each and every dish on the menu. A recipe card is a card which is compiled either by a food consultant or the head chef. Several proprietors prefer to get outside help with compiling recipe cards to ensure accuracy with the food costing. 

It will clearly outline the:

• cost of every ingredient
• total cost of every dish
• profit margin
• proposed selling price
• gross profit percentage

By having these figures you will then be able to accurately achieve consistent profit margins for every dish. By using a recipe card system you will be able to know what dishes you are serving have a high profit margin as which ones have a lower profit margin. 

There are certain dishes which most restaurants need to have on a menu because of customer demand, for example, a steak. A steak will always be one of your lowest profit margin items but it will always be one of your highest selling items. You will not have the same profit margin on a steak which you will have on a pasta dish for it would work out as being too expensive and you would in turn lose business, so you must take a “hit” on some menu items.

As a restaurant without a steak will lose customers very quickly, what we propose is to place your lowest margin items (traditionally steak and seafood dishes) in a part of the menu where it will not be ordered as often.

By looking at our illustration it is easy to see the path that your eyes follow when you look at the menu for the first time. It is scientifically proven that the items you place into these areas are the ones which are ordered more often, as it is here your eyes are drawn to first. This is where you should place your highest profit margin items like your pasta dish, chicken dish and your vegetarian dishes which are traditionally your lowest cost items.

This then leaves us with the menu pricing. How do you calculate the price of each dish?

As previously mentioned it is impossible to accurately price your menus without costing each dish beforehand. If you are in a restaurant and see that a dish costs €12.00 and another at €11.99 you will feel that the dish at €11.99 is better value for money.

Most menus end their pricing in either a “5” or a “0”. To calculate the effectiveness of changing all the dishes on your menu which end in a “5” to a “9” simply multiply the amount of dishes sold by four cent. Although it can be a little more difficult with providing change it is an increase in revenue of thousands of Euro per year. It’s the same principle which is used by Dunnes Stores, Tesco and most car dealerships so why should the hospitality industry be different? Factors to be taken into consideration when deciding on the final price should include competitors prices, the maximum price the general public are likely to pay and the margin you require from each dish as well.

For menu layout and sales techniques, read the next article in this series entitled Menu Layout.

  

          

Planning                 Costing                   Layout                   Marketing

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