This report focuses on the Menu Engineering in Food and Beverage operations in the hospitality industry. The several advantages and as well as the disadvantages of using the Menu Engineering in the food and beverage operations are introduced in this research report. In addition, the analysis of menu engineering using the Kasavana and also Smiths method and as well as the offer solutions are briefly introduced in this complete study report. Thus, as a hospitality organization, the Aberdeen Marriott Hotel is chosen where the menu engineering is applied by its manager for the owners of this hotel. Every hospitality industry focuses on its services. The word service refers as a complete experience which all guests get from people’s performance who serves the requirements (Nabavi, Fox, Proulx, Lin, Tsien, & Malinow, 2014). The Service from any hotels effectively touch several sense of all its guests include sight sense, smell sense, hearing sense, taste sense, touch sense and so on.
Aberdeen Marriott Hotel is a five-star luxurious hotel based in Scotland (Marriott, 2017). The hotel is located at United Kingdom, as it is a part of Marriott group of hotels. The exact location of the hotel is Aberdeen, Scotland AB21 7AZ United Kingdom. It is one of the best hotels among all the hotels of Marriott hotel groups. Aberdeen Marriott Hotel is called Overton Circle-Dyce. This hotel has a feature called smoke free policy. As the Marriott group of hotels are going as smoke free in all over the world in 2006. This hotel gives the complementary parking services for the guests (Marriott, 2017).
Menu Engineering refers as both the popularity and profitability study of the menu items. Menu engineering describes the way of influencing the effective placement of several menu related items by these two factors (Cong, et al., 2013). The main goal of the menu engineering is to increase the profitability per guest. Menu engineering is generally introduced in the year 1970 by the group named Boston Consulting Group for helping the businesses segment and the products in the effective way which facilitates both the analysis and the decision making. Generally, very often, menu engineering is mentioned in the traditional paper of the restaurant menus, as the concepts are completely applicable to the menus which is posted online, specials written on the table tent, drinks menu and as well as several items which are written on the menu boards (Duffie & Beckman, 2013). Menu engineering can be easily applied in any industry which displays the product list or the service list that offers the choice of all customers. In a typical way, the main objective of menu engineering is to increase the profitability of the organization, via encountering the customer for buying according to the choice of the produces, in a subconscious way (Bird, 2013). There are several study fields that helps for contributing to the menu engineering the most, include
- Psychology includes perception, emotion and attention.
- Managerial Accounting includes analysis of unit cost and contribution.
- Strategy and marketing include promotion and pricing.
- Graphic Design includes layout and typography.
In addition, menu engineering is the step-by-step process by which the management can able for evaluating the present and as well as future design, menu pricing and the content decisions. The approach of the menu engineering needs the attention which can be completely focused on the critical elements include
- Demand of the customer– It describes the complete number of the served customers.
- Menu Mix (MM) – It refers as the customer preferences analysis in the selection of the menu item that is related to the elasticity of demand.
- Contribution Margin (CM) – It refers as the contribution margin or the gross profit analysis for the menu item that is completely related to the price elasticity (Feinstein & Parks, 2014).
4 Analysis of menu engineering using Kasavana and Smiths method and offer solutions
Menu engineering needs that the management focuses upon the elements which are the most critical in nature in a direct way, as it is completely affected by the pricing decisions that include (Reynolds, et al., 2013)
- Customer demand – It refers as the overall number of the customers who are served.
- Menu item which purchase patterns – It refers as the menu or the sales mix.
- Average contribution of the margin – It refers as the amount of the gross profit which is contributing to other profit and direct costs.
In the year of 1980 and 1987, Miller developed the matrix model which focused on cost of the food and the product mix at first for analyzing the profitability of the menu items. In 1982, Kasavana and Smith applied the analysis called Boston Consulting Group Portfolio Analysis, as the main base for the matrix approach of the menu engineering for the analysis of the menu. Experts stated that it refers as the analysis tool which helps for labeling the menu items within the group of competing menu via the use of its respective popularity and as well as the margin of the contribution for placing them in a basis category. The matrix of Kasavana and Smith is also referred as “menu engineering” (Kimes & Beard, 2013). This matrix helps for incorporating both the volume and the margin of contribution, that this helps for defining as the basis differences between the price of sales of the item and the food product’s cost that consumed for producing that item, more commonly it is referred to the present as the ‘gross profit. In addition, Kasavana and Smith considered both low cost of the food and the high gross profit as mutually exclusive. These two experts developed the matrix and the menu items which are divided in total four categories include Star, Puzzler, Plowhorses and Dogs. This attributes helps for taking the contribution margin on horizontal axis and as well as the volume on vertical axis. The matrix has four sections as it is shown below.
Picture1: Kasavana & Smith Matrix
|III Plowhorses||I Stars|
|IV Dogs||II Puzzles|
Source: (Ozdemir & Caliskan, 2014)
Here, Volume refers as the number of items which is sold, and as well as the contributing margin refers as the difference between selling price of the items and as well as its direct cost. That is calculated as (GOEL & CHEEMA, 2013)
“Contribution Margin= Selling Price – Food Cost”
Average margin of contribution, the x-axis in Kasavana and Smith model, was widely calculated by it take the margin of contribution which is total weighted, that refers as gross profit and as well as it divide the contribution margin by total number of the units sold.
The total weighted margin of contribution or the gross profit was widely calculated with the help of summing of total margin of contribution or gross profit for menu item and as well as it helps to divide the margin of contribution by total number of sold menu items. Total margin of contribution or gross profit for menu item is effectively calculated through multiplying each and every contribution margin of the menu item by sold units’ number. The several objectives in using the contribution margin for replacing the food cost, that were the shift in an emphasis from the raw costs to profitability potential of each menu items (GRUIA, 2015.).
This method is very much helpful and as well as useful to evaluate the menu but it have some certain limitations. The model is miserably failed for addressing the labor cost, and arguably the category of the greatest expense in the restaurant operations, because of this faulty assumption that describes that the labor is the differential cost. This matrix approach is completely variable interdependency. So it can be said that the menu analysis is not purely on the analyzing process of the costs and as well as the sales data in order for manipulating the products on the menu, but it have to be understandable in-depth that the need and perceptions of the customers. The differential costs are very difficult for obtaining inexpensively and accurately. In addition, costs of labor are not assigned in an easy way for each menu items (Fang & Hsu, 2014).
The effective solutions of these drawbacks of Kasavana and Smiths method are evaluating by adding or deleting some axis. It is not completely possible in aspects of menus for having all the items in the Star category which refers as the high in the margin contribution and as well as the popularity.
EPOS – Electronic Point of Sale refers as the computerized system to recode the sales in every retail shop (Howard, Aidala, Kirchner, & Vallone, 2015). It helps for enabling the sufficient sales records of services and goods to each customer. It may also refer as the time and as well as place where any retail transaction is fully completed. It is the electronic method of the retail checkout. In a usual manner, it is self-contained.
The Electronic Point of Sale (EPOS) data of the hotel is shown below:
|Menu Item||No. Sold||Item Food Cost||Item Sales Price||Total Item Cost||Total Item Sales|
|Pork steak with Wild Mushrooms||10||2.50||10.00||25||100|
|Blue Cheese Rump Steak||30||4.00||10.00||120||300|
|Scampi & Chips||39||2.00||8.00||78||312|
Total number of items sold= 300
Total item sales= 2350
Total food cost= 729.4
There more, these menu items are placed as follows
Plowhorses – Vegetarian Pasta, Lasagne, Cottage Pie
Star – Blue Cheese Rump Steak, Tournedos Rossini, Scampi & Chips
Dog – Sirloin Steak, Beef Bourguignon
Puzzle – Cod Mornay, Pork steak with Wild Mushrooms.
Menu is an integral part of each beverage and food outlet. It helps for creating an operation image in the mind of each guest. Menu engineering is widely used in food and beverage operation, as this gives several benefits and as well as pitfalls to the hospitality industry. Thus the menu engineering plays a critical role in successful restaurant operations. The initial goal of the menu engineering is for encouraging the targeted items’ purchase (Davis, Lockwood, Pantelidis, & Alcott, 2013).
There are several benefits of using the menu engineering in food and beverage operation in hotels especially in restaurants. In present days, menu engineering has become very much easier for managing, due to the advances of technology. There are several software packages are available for the menu engineering (Walker, 2016). Also it can be performed easily using the simple spreadsheet.
The benefits include
- Menu engineering helps for reducing the portion size. As this helps the size of each portion of the hotel services to be summarized.
- Menu engineering helps for revising the purchase specifications. As this helps the customer to find the right food or beverage items for them in systematic way.
- Menu engineering helps for reducing the complementary items of food. Sometimes, complementary food items do not liked by the customers, so the menu engineering creates a fresh menu of the food items without any complementary food items.
- Menu engineering helps for providing the la carte pricing as the alternative.
- Menu engineering helps for increasing the productivity of staffs. As the employees of the hospitality industry helps to create some innovating ideas for the menu of food and beverage items by using the menu engineering.
- Menu engineering helps for improving the operational control. Food and beverage operations of the hotel can be easily establish the control of each operation in the management through men engineering.
- Limited menu items helps to reduce an inventory, space requirements and expenditure for the equipments.
The chef of any hotels must require for being able for analyzing each performance of his or her dishes and both the section and performance of the menu. Furthermore, the management of the food service has been completely conditioned for viewing the profitability in a synonymous way with the cost of the percentages of goods, and the contribution margins, those are often omitted from the menu analysis. As the basis for the menu planning and as well as pricing, the menu engineering helps for providing the positive recommendations to copy with the economy in an inflation way (Goode, Asteriadou, Robbins, & Fryer, 2013).
Instead of these benefits, the menu engineering has some pitfalls, while it is used in food and beverage operation in hospitality industry (Arendt & Zannini, 2013).
The pitfalls include
- Menu engineering increases the demand of each customer. Because if the hotel serves each and every customers a good service, then every needs of each customers can easily increased day by day.
- Menu engineering enhances a utilization of preset assets. As menu engineering create a pre model of the services of hotels.
- Menu engineering creates a large menu items which can reduce the contribution margin. Large menu can confused the customers, so they can not be able to choose the right items for them.
- Sometimes, the complete craft of the menu engineering is complex for understanding, as it has many large steps, which can be skipped. The steps include
- Cost the menu
- Categorize the menu items according to the popularity and profit level.
- Design the menu
- Test new menu design.
- Cost the menu
Every restaurant industry has huge amount of low-hanging profit of engineering that are eagerly waiting for being picked, so the menu engineering sometimes be negated. There must have three parts of the menu engineering include
- Number of dishes that is sold
- The cost of the food
- Total amount of time for making the item sold
Menu engineering has some mathematical formula and as well as calculation which are difficult to understand for general people. Thus, menu engineering is not for every hotel. The Menu Engineering can easily assist the management in its ability for evaluating the content of the menu, pricing, and as well as the design decisions, additionally it is effectively capable to provide an important feedback. Furthermore, a primary focal point of the menu engineering is for increasing the total contribution margin of the menu by increasing the demand of the customer and improving the contribution margins of the menu item. Therefore, it can be said that the industry of the food service has been totally dependent upon the cost-multiplier formulas to determine the menu prices. As the menu engineering is completely depended on the mathematical formula (Dopson & Hayes, 2015).
From this complete report, the benefits and as well as the pitfalls of using the menu engineering in the food and beverage operation of the Marriott group of hotel are concluded. In addition, the brief overview of the Marriott hotels and the evaluation of menu engineering using the Kasavana and Smiths method are completely concluded. In this complete research report, the several advantages and as well as the disadvantages of the Kasavana and Smiths method is concluded. Furthermore, the mathematical evaluation of given EPOS data and the brief description of the menu engineering is concluded in this study report.
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