COSTING Chapter 3 Menu - the foundation of control
Terms in this set (16)
Control points—basic food service operating activities
1. Menu planning
Each control point is a miniature system with:
F. Internal processes
this system provides an Audit trail of control activities easier to identify and resolve problems.
This systems approach permits the manager to establish an audit retail of control activities to separate, identify, and take corrective actions to resolve problems. The manager can then undertake short-range and long-range planning to control future events, rather than waiting for crises to develop.
Operational areas affected by the menu:
Product control procedures.
Cost control procedures.
Nutritional content of meals.
other operation areas affected by the menu include
Layout and space requirements.
Revenue control procedures.
External factors that influence menu changes
Internal factors that influence menu:
Concept and theme
Subjective pricing methods: (Menu pricing methods that are not acceptable)
• Reasonable price method
• Highest price method
• Loss leader method
• Intuitive price method
Mark-up pricing methods
• Ingredients mark-up method (widely used method).
• Prime-ingredient mark-up method (used but not widely used).
• Mark-up with accompaniment costs method (another preferred and widely used method).
Mark-up by multiplier issues:
Impact of sales mix
Variations in labor and energy costs to produce items
Transfers to and from food department
Theft, over portioning, spoilage
Minor costs add up over time
contribution margin pricing method.
Contribution margin: selling price less food cost
Step 1—Determine the average contribution margin required per guest.
Step 2—Determine the base selling price by adding required average contribution margin per guest to item's standard food cost.
To Calculate a base selling price for menu items using the ratio pricing method
Step 1—Determine the ratio of food costs to all other costs plus profit requirements.
Step 2—Calculate the amount of non-food costs and profit required for a menu item.
Step 3—Determine base selling price by adding result of Step 2 to the standard food cost for the menu item.
To Calculate a base selling price for menu items using prime costs pricing methods.
Simple prime costs method.
Step 1—Determine the labor cost per guest by dividing labor costs by the number of expected guests.
Step 2—Determine the prime costs per guest by adding the labor cost per guest to the menu item's food cost.
Step 3—Determine the base selling price by dividing the prime costs per guest by the desired prime costs percentage .
Specific prime costs method
Describe important pricing considerations that affect the final selling price of menu items.
Value (price relative to quality).
Supply and demand.
Volume of business.
Elasticity of demand.
The menu engineering method for pricing food and beverage items is based on an item's
Popularity—ordered frequently by guests.
The menu engineering process uses information readily available to the food and beverage manager to classify menu items into four types
• Stars—highly popular and profitable.
• Plowhorses—not highly profitable but popular.
• Puzzles—profitable but not very popular.
• Dogs—not very profitable and not very popular.
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