Online Companion: Successful Restaurant Management, From Vision to ExecutionChapter 1Menu Pricing Methods This worksheet allows managers to properly price a menu item so that item contributes an acceptable profit. This worksheet may be used for an initial menu or during a menu review and upgrade. The first step is to calculate the raw food cost of the menu item and place that cost in column B corresponding to that menu item. Next, assign a desired or existing menu price in column C corresponding to that menu item. Profit contribution and the food cost percentage will be calculated and will appear in columns D and E. Enter the desired food cost percentage in column F. The price that should be charged on the menu according to the mark-up method is calculated and appears in column G. As a review, the mark-up method of pricing an item simply takes raw food cost divided by the desired food cost percentage. The base cost method (column I) is calculated by multiplying the desired food cost percentage by the existing or desired menu price. This dollar amount is what the chef will have available to spend to develop that menu item. The average competition price is entered in column H corresponding to that menu item. This price can be determined easily by visiting the competition and comparing a similar item. By analyzing these three methods of pricing, management can enter a fair and profitable menu price in column J. Columns K and L will display the profit contribution and the food cost percentage.
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