Online Companion: Successful Restaurant Management, From Vision to Execution

Menu Item Costing

Figure 8-2

Menu Item Costing was described in chapter 1 with figure 1-1, Menu Pricing Methods. This spreadsheet is used in chapter 8 to analyze, review and update a menu. Please refer to Chapter 1 to describe the use of this spreadsheet.

Charting Sales to Profit

Figure 8-3

This spreadsheet assists in analyzing the relative strength of a menu item. This relative strength takes into account the following factors:

1. Number sold - this indicates the popularity of a menu item.
2. Category menu mix - this indicates the popularity of an item in its specific category (appetizer, sandwich, entrée, etc.).
3. Profit Contribution per item - This indicates the profit contribution, expressed in dollars, of the individual item. This is more important than the food cost as it represents the actual dollar amount contributed to gross profit.
4. Profit Contribution - This is the total profit contributed by all of a specific item sold.
5. Menu Mix Percentage - This column indicates the strength of sales of a specific menu item relative to its category.
6. Contribution Margin Category - This column indicates where this item falls in contributing to gross profit relative to other menu items in a category. Low would indicate that the profit contribution of a specific menu item is below acceptable levels for that category.
7. Sales Item Category - This column indicates the strength of sales of a specific menu item. "HIGH", would indicate that that the item sells above the average when compared to menu items in its category.

To use this spreadsheet:

STEP 1 - In column A, enter all of the menu items in a specific category (Appetizers, Salads, Entrees, etc.). The categories should match how the menu is written.
STEP 2 - In column B, enter the number of menu items sold for the menu item in during a specific period.
STEP 3 - In column C enter the menu price of an item.
IMPORTANT NOTE: If no entry is made in column A, Item Name, a zero must be entered manually in columns B, C, and F. If these zeros are not entered, the spreadsheet will not calculate properly.

How to interpret the Contribution Margin Category and the Sales Item Category: