ENTER: THE SET MENU

Set menus can be the perfect solution to your customers’ indecision woes; but this isn’t their only advantage. Customers are also attracted to set lunch or dinner menus because they come with a price promise, which is especially appealing in an economic downturn when diners are seeking the best value for money offerings.

SET MENU SUCCESS

As with all menu planning, a good set menu must be tailored to the restaurant’s market and individual restaurant conditions. Sydney Tower Restaurant in the Sydney CBD, for example, offers a fixed-price lunch and dinner buffet mid-week, which suits its business clientele. On Sundays, which are notoriously quiet, the revolving restaurant steps-up their offerings with a seafood buffet, $85 a head for adults, to entice customers up to the Centrepoint Tower.

Allegro Restaurant, at The Westin Melbourne, lures in its upmarket Sunday diners with live jazz music as part of their Lazy Sunday Jazz Lunch, which features welcome refreshment, entrée, platter dining and dessert for $85 per person.

Suburban restaurants attracting a more price-sensitive middle class market are making set menus more affordable. Arthur’s Restaurant of the Hills District in Sydney, known for its seafood, offers set dinner menus on busy Thursday and Friday night for a very reasonable $49.90. Set menus have featured on their dinner offering for the last two years. But besides being good value for money, head chef and owner Greg Holton says that the key to a successful set menu is – ironically – choice.

“If you’re doing a set menu, make absolutely sure that you have good balance between meat, chicken and fish dishes,” he says. “You should be offering enough choice to light eaters and people who prefer heavier meals. Also lately if you include gluten-free option – you will have a winner.”

HIDDEN PROFITS

While set menus themselves are popular sellers, Holton says the biggest profits to be gained from set menus are in reducing labour costs.

“[Profits are found] mostly in controlling labour cost on busy Thursday and Friday nights,” he says. “More people buying set dinners let us employ less people on these busy nights.”

On Saturdays, when wages are higher, Holton raises the set menu price by $5. “Because the set menu is a real value already, I have to pass [the cost] on to the customer this time,” he says.

Set menu dishes at Arthur’s also appear on the a la carte menu, which Holton says is a good tip for helping manage costs, since both menus use the same produce.

LUNCHTIME

With the overall drop in numbers of people dining out (the BRW’s January 2009 consumer survey reported 58% of diners have cut down eating out) lunchtime dining has felt the biggest impact.

Giovanni Pilu, chef and owner of Pilu at Freshwater in Manly, conceded in a recent interview for the Manly Daily that while he was managing to fill his restaurant in the evenings, he is only “breaking even” at lunch.

Bluestone Restaurant Bar in Melbourne is taking the set lunch one step further by offering an ultra-healthy option. Their Fresh Express Lunch ($29) is a calorie-controlled two-course meal, which has been analysed by renowned nutritionist and accredited practicing sport dietician Chloe Fast.

Located in the heart of Melbourne, the restaurant attracts a large, busy, time-pressed business crowd. Bluestone guarantees customers will be in and out within the hour – perfect for lunch hour dining and for corporate clients who eat out frequently and are trying to watch their waistline.

Executive chef Martin Walker says the lunching concept has helped boost customer intake.

Fresh Express Lunch menu provides a full nutrition breakdown of each course: its calorie count, fat quantity and what percentage these make up of one’s recommended daily intake.

The menu features high quality items like spicy char-grilled quail and pan-seared ocean trout. “The secret is,” says Martin, “to have a simple menu with some great elements in it.”

Everyone enjoys having control over what they are getting, but what everyone enjoys more is great food.

In part two of ways to improve your kitchen’s bottom line we introduce

Menu engineering is the process of methodically selecting, costing, pricing and evaluating each of your menu items.

The concept was developed in the early 1980s as a way of evaluating the performance of individual menu items according to their sales volume and contribution margin.

It provides the chef or manager with information about a menu item’s profitability, as well as its popularity, so that proactive planning, recipe design and customer pricing decisions can be made.

The concept has become much more popular now that it’s widely available as computer spreadsheet programs. Menu engineering has become the generic term for menu cost/margin/volume portfolio analysis

Be aware that menu engineering is not a substitute for proper purchasing, food rotation, standard recipes or any other basic kitchen controls that might negatively impact on your costs. What it is, is a method of evaluating the contribution to your bottom line dollars of every item on your menu.

Basically, menu engineering allows chefs or managers to recognize the items you really want to sell!

contribution margins

While the food cost percentage (an item’s ingredient cost divided by its menu price) is most commonly used for assessing effective cost controls, the contribution margin (an item’s menu price less its food cost) is the basis of menu engineering.

A simple question should make the distinction clear. If you could sell one more item before your restaurant closed today, would it be a sirloin steak for $20 that costs you $8, or a plate of pasta primavera for $10 that costs you $2? While the food cost percentage of the pasta is 20% versus 40% for the steak, that steak will contribute $12 to your gross revenue compared to $8 for the pasta. I’ll take the $12, thank you very much!

The contribution margin is based on the dollars you take to the bank.

accounting for the popularity of menu items

While a menu item’s contribution margin
tells us how many dollars each individual
sale of the item contributes to the cash register, you need to know how popular it is to determine the total dollars it contributes
to the restaurant’s revenue.

A popular item with a high contribution margin is a ‘star’ while an unpopular item with a low contribution margin is clearly a ‘dog’. Menu engineering takes each menu item’s contribution margin and its popularity into account to determine which category it falls into.  Is it a star, a workhorse, a challenge or a dog?

If an item is both profitable and popular then it’s a star. It it’s profitable but relatively unpopular, it’s a challenge. A menu item that’s relatively unprofitable but popular is a workhorse. And you don’t want any dogs – they’re the items that are unprofitable and unpopular!

So you’ve identified your stars, challenges, workhorses and the dogs – now what?

Well, you can:

• leave the menu item as it is;

• adjust selling prices (increase or decrease);

• decrease item food cost (modify recipe,
reduce portion size or purchase price);

• redesign the menu;

• promote the item through personal selling;

• renovate the dish (a new presentation for
example);

• replace the item; or

• eliminate it.

The risk with menu engineering is to focus on promoting only the high contribution margin dishes. These items tend to have higher food costs and are the most highly priced items on the menu. Given that most commercial restaurants are competing in a price sensitive market and times are getting tougher, if you focus only on high contribution margin dishes you risk losing customers.

Smart foodservice operators won’t just load their menu with stars. They will include other less high-yielding dishes based on other criteria, because these items can still improve profitability. For example, workhorses. Although workhorses generate only a moderate profit per unit sale, their high popularity allows a healthy contribution to the restaurant’s gross profit margin.

Challenges, although relatively unpopular, are profitable, and may add to the appeal of the establishment. Even dogs can be renamed as children’s items, deliberately priced low to attract family sales. Industry experience, management expertise and professional judgment come into play in engineering your menu to get the best of all categories.

Another problem with basic menu engineering principles is that it assumes that the only variable costs are food costs. Other non-material expenses, such as labour and energy associated with producing and selling menu items, are considered ‘fixed costs’ that are the same from item to item. Obviously not true! Compare the labour costs of producing a risotto to a steak, for example.

Customer trends, changing preferences, guests’ expectations, competition posed by present and potential entries to the market – all these will shift demand for a particular product. You can’t just evaluate and engineer your menu once.  It needs to be a regular process. Twice a year is recommended.

design for results

Menu design is another aspect of your business, which is often overlooked.

Your menu is the one piece of printed advertisement for the restaurant, which
every adult guest will read. However, research shows the average menu reading time is only 109 seconds – less than two minutes. Obviously, they’re not going to read every line in this time. So, given this brief selling opportunity, you need to direct customer’s attention to your most profitable dishes.

grab the customer’s attention

Attention getters include the item’s placement on the menu, a distinctive typeface, descriptive copy, colour variations and illustrations and graphics.

Most menus are in one of three basic formats: the single-page menu card; the single-fold double-panel; and the double-fold, three-page ‘gate-fold’ menu.

Using laser light tracking to follow the patron’s eye movement, researchers have found the ‘sweet spot’ on each of the formats. On the single-page, the eye tends to focus on the area immediately above an imaginary line dividing the menu in half horizontally.

The principal area of a three-panel menu is similar, with the focus on the central panel. However, when the customer opens a two-page spread, they pay more attention to the top righthand area above an imaginary diagonal line dividing the menu from the left upper corner to the right lower corner. The diagrams below illustrate the ‘sweet spots’ or gaze locations of each menu format.

No need to tell you which dishes you should put in this primary advertising space!

There’s a strategy you can use to improve your bottom line dollars when positioning dishes under categories such as appetizers. List them in the order in which they are profitable, rather than from the most expensive to the least expensive or vice versa. The most profitable menu item should be either the first or last item of the colum. This is because people often remember best what catches their attention first or last. As a marketing principle, this is known as ‘primacy and regency’.

Naturally, when the menu item is more likely to be recalled, it’s more likely to be ordered by the guest. Avoid using descriptions not usually associated with food, such as ‘majestic, exotic, sensuous’; adjectives such as ‘beautiful, excellent, delicious’; and the old clichés ‘cooked to perfection’ or ‘melts in your mouth’.  Poor copy does nothing to enhance your well-prepared food!

Be visually exciting. When the menu item is illustrated with a picture of the actual plating, or is in a different colour and boxed with an ornamental border it’s pretty much a guarantee of increased sales. This is the way to get your stars to really shine!

purchasing efficiency

Improving your purchasing efficiency is often just a matter of making the time to re-evaluate your existing suppliers against other available suppliers. If you have settled into a comfortable relationship you are probably paying too much for too little. Look around, especially at the moment when suppliers are lean and hungry.

What you should expect from your supplier:

Reliable product supply at agreed quality levels.

Products provided at consistent prices.

Early notification about changes in product availability.

Providing products with a shelf life
and a portion size that will suit their operation.

Responsive order processing and deliveries to cater for changes in demand.

Order sizes and frequency of delivery that minimises stock and wastage.

Information technology support that reduces paperwork.

It is important to buy a product with a fixed price and a known supply window. This allows organisation of menu offerings with protection from unexpected changes.

reducing produce wastage

Reducing wastage is all about stock reconciliation — comparing what you’ve used with what you’ve sold on either a weekly or a monthly basis, then tracking back to eliminate problems. This requires proper stock counting, which in turn requires systematic, secure and organised storage.

Most bistro operators benefit greatly from value-added products.  This includes products that are ready to use, packed in meal portions and have a shelf life that reduces re-ordering but maintains quality. Innovations that make it easier or faster to combine ingredients to make the meal or beverage are reducing your labour cost as well.

Specialist fresh food distributors offer focus on quality, convenience and service frequency.

Profit in today’s economy requires a systematic approach, a deeper understanding of hospitality economics, and a willingness to abandon the old ways of doing things.

Betty may resemble other Thai restaurants, except for one thing – reading the menu is guaranteed to be part of the fun. Bored of the Thai language names which may mean very little to some customers, Bangkok Betty adopted a more original approach by whimsically naming all their dishes. And it works. Ordering and discussing with friends about whether we should get one or two serves of ‘Betty’s Magic Wand’ (otherwise known as skewered prawns) certainly provides a more interesting debate than the typical ‘massaman curry vs. green curry’ back and forth.

Let’s face it, there’s no other place where you could order: ‘Razzle Dazzle, Chilli and Basil’, ‘Betty Loves Bling’ (dumplings), ‘A Fling With Betty’ (deep fried ling fillets), and ‘Betty Bites Back’ (spicy seafood salad) – with a straight face and not get laughed at! But that’s part of the appeal. It’s different; and when you’re competing against so many restaurants that are doing much of the same, different can be good. Even if it’s really different!

Sure, it’s not for everyone. Thai restaurants have notoriously been given a bit of poetic licence when coming up with names, as anyone who has seen a ‘Thaitanic’ or ‘Thai Me Up’ restaurant will agree; and it’s easy to imagine this creativeness transferring across to . But it’s not just for Thai restaurants, either. There’s no reason anyone can’t be a bit funky with menus every so often, maybe rebranding a special, or a dish which needs to be moved. It can be a way to show a sense of humour, or have an inside joke with foodies or regulars. We guarantee it’ll make calling out orders much more interesting.

Like many hospitality businesses we deal with, you are probably wrestling with rising, or out-of-control food costs at present.

It seems to be almost universal, judging from the desperate phone calls that are coming in to my business; together with some of the disturbing figures I’m seeing on profit and loss statements. It’s also interesting how few of the chefs and managers who attend our training courses really understand the issues they have to manage in order to bring food costs under tight control.
It all starts with menu construction. How do you go about constructing your dishes? Do you let your chef go to town designing dishes and then apply a margin on top of your cost prices? For a start we would recommend that you tackle the problem from the opposite direction. Set your target pricing before you design a menu, in accordance with your marketing aims, then design your menus and beverage lists to deliver a margin within the target pricing.
The penalty for tackling it the other way is that if your purchasing or food production is not efficient and you start with high costs, by the time you put a standard margin on the top of your inflated costs you can easily price yourself out of your market and negatively affect customer perception. Many businesses seem to do this and severely damage their customers’ view of value for money.
I am assuming of course that you have accurate food costings to work with in the first place. It still frustrates me how many hospitality operators, particularly in larger businesses, don’t insist that their chefs cost things properly and allow them to ‘wing it’ hoping that the figures will come out well at the end of the month (or, in some cases the end of the year!). I’ll grant you that you may be able to get away with this approach in a smaller kitchen where the owner is the chef, but trying this approach with a higher volume business can be an act of pure folly. If you specialise in one of the more costly food concepts like steak, game or seafood you really need to be careful.
A common trap comes from not costing specific dish components properly. Take the example of a proper reduction sauce, for instance — by the time a chef has rendered down a whole herd of cows or battery of chickens to something that looks like vegemite using a gas burner resembling an F111 engine, the resultant substance can be a tad expensive. We’ve seen plenty of examples of seat-of-the-pants costings allocating 50c for sauces when the real cost is as high as $4 per serve. This would be ok perhaps if you were charging $45 for a main course, but at most hotel or pub prices this can’t be justified.
The other trap comes with the costing of recipes with ingredients that have wildly varying prices depending on the time of year you buy them. Take something as innocuous as the humble strawberry — a local punnet might cost you $1.50. Three months later a similar looking punnet, this one flown in from sunny California, Outer Mongolia or somewhere equally as distant, might cost as much as $7.00. These little costing errors can all add up to a steady haemorrhage of your hard earned dollars if you are putting out large numbers of meals.
Assuming that your costings are correct, the next issue you need to consider is the potential losses you can sustain in the receipt, storage and production of your menu. Short delivery, incorrect pricing, theft, spoilage, wastage, non-use of standard recipes, over-portioning, staff consumption and freebies are all going to inflate your food cost percentages, sometimes substantially.
Another issue that will cause a problem in food cost management is right out of most chef’s control — it’s a simple issue; do you pay your suppliers on time? If you don’t, they are going to charge you more in order to maintain their margins. I’m a supplier, and I’m not a bank — like most suppliers I’m going to quote the best terms to those customers who pay on time and don’t erode my margin by making me carry their debts and cause me to allocate time and effort to debt collection. A well-trained chef should have no hesitation in having a ‘full and frank’ discussion with their accounts department if bills are not paid according to terms.
These are the things in any larger business that justify a comprehensive control system, based on strict, accurate monthly stocktaking. We don’t think much of stock control systems based on purchases, they don’t give you the information necessary to track down the source of a lot of common problems. An article analysing all the nuances of internal stock control would be about 15,000 words long, so you’ll have to be content with generalities at this point.
We’ve also come to recognise the very important role front-of-house plays in the control of food and beverage costs. All the good work done by a chef can be undone by waiting staff who don’t know the margins on the things they sell. Consider the resulting food cost percentages from a waiter who regularly suggests the scallop entree, the eye fillet or the bouillabaisse compared with a waiter who suggests the pumpkin soup, the pasta or the risotto. Another, similar issue that will inflate your food costs is the particular featuring of high cost menu items on your menu boards, particularly if you use pictures of those items.
Most of the front-of-house staff we deal with admit to being blissfully unaware of the profit margins on the items they sell, as do many chefs. There seems to be a general reluctance to share this information with waiting staff even if it is available in the kitchen. The simplest way to deal with this problem is to include some sort of discrete visual ‘code’ on your menus and wine lists that tell your staff which items to push and which not to push.
The sale of more ‘add-on’ items also has the capacity to substantially lower your food costs. A clever menu will have a range of high margin add-ons and ‘bits’ that the waiting staff can sell. Consider the food cost on a soup, salad, a side dish of mashed potato, condiments or a sorbet dessert and this may become clearer.
What I had in mind when I started this article was to illustrate the point that the control of food and beverage costs is not just a problem for your chef; food cost control must be a cooperative effort between both the front and back-of-house, and the accounts department in any hospitality business. I suspect that there are a lot of stressed chefs out there who are struggling to control their costs when they are only a part of the problem.

Tony Eldred,
Eldred Hospitality

BISTRO, May 2010