Page 26 - GBC Spring 2020 ENG

DOGS
These are the opposite of stars – below average in both directions. Often, we will suggest removing these items from a menu and replacing them with items that might be more popular and produce profit margins in line with the average. Sometimes, you need to have items on your menu that may end up in the “dog” category. If you do need to have an item on your menu that isn’t as popular as others, we would suggest that you ensure the profit margin is in line with the rest of the items.
OPPORTUNITIES
This is, as the name suggests, the biggestareaofopportunityforprofit increases. These items are extremely popular to the guests but are below average in their profitability. Generally, these items can take price increases without an impact on guest popularity (often, they are above average in popularity because they are underpriced to begin with). The furtheruptheyareonthegraph,the moreopportunityforpriceincrease.
QUESTION MARKS (?????)
We call this category the question marks as they are the most challenging items to work with. They are great to have on the menu because they are above average profit margin items, but one would really love to sell more of them (as
they are currently below average in popularity). Sometimes, these items show up in this quadrant because they are overpriced, and may not sellasmuchbecauseofitshighprice. Often, you can greatly increase value in a menu (and overall profitability as well) by decreasing the selling price of these items.
As an example, if you have an item that is barely selling but is way above average profitability, you can drop the sale price of that item. If that price drop keeps it with above average profit margin but makes it more approachable, it might allow it to “steal” sales away from less profitable items. Items in this quadrant are also often ones that you might focus on driving sales with better descriptions on the menu, better menu positioning, as well as better staff training for selling them.
WHAT ABOUT PERCENT FOOD COST?
So, with all of this information, surely percent food cost must mean something. It does...but only after maximizing the menu profitability using the technique we have discussed. Once a menu is engineered, you can then establish whatyour“theoretical”percentfood cost is - based on your mix of sales (quantity sold), the recipe costings and sale prices, what your food cost percent should be (if no wastage,
shrinkage, etc.). Above is a look at what a simplified theoretical food cost for a menu might look like.
So, the theoretical food cost for this operation is 32.1%. That is the food cost target that they should be aiming for. And with operational mix of sales generally very consistent, they can shoot for this percent cost each week or each month. It doesn’t matter that it isn’t 30%. If the menu has been engineered for maximum profitability, then the percent cost is whatever the percent cost is. We have some clients with a theoretical food cost of 37% and that is perfectly fine.
Knowing the correct theoretical food cost is important as it gives the chef and/or management team a true target to shoot for. In the example above, if this restaurant held the chef accountable to a 30% food cost, he/she would never be able to attain it without cheating the guest on portions.
THE BOTTOM LINE
If you aren’t currently engineering your menu in the above fashion, don’t be alarmed – most other restaurants aren’t either. But, when we have engineered menus using these techniques, we generally add 2 to 4 % of sales to bottom line profit – and that is a whole lot in an industry where profit margin is hard to come by.
Golf Business Canada
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