Over the years, several approaches to menu developping have been recommended. No matter which is adopted, the important point to remember is that there should be a balance between a menu too high in food cost, which results in giving food away, and too low in food cost, which rips off the customer.
Expect some items on the menu to yield a higher margin than others.
Professor Jack Miller developed one of the earlier approaches to menu developping. The winners were menu items that not only sold more but also were at a lower food-cost percentage.
In 1982 professors Michael Kasavana and Donald Smith proposed menu developping. In this approach, the best menu items—the stars—are those that have the highest contribution margin per unit and the highest sales.
In 1985 Professor David Pavesic proposed a combination of three variables: food-cost percentage, contribution margin, and sales volume. Under this method, the best items are called primes—those with a low food-cost percentage and a high contribution margin weighted by sales volume.
More recently, Professors Mohamed E. Bayou and Lee B. Bennett proposed an approach to menu analyses and developping whereby each item at each meal is analyzed.
Breakfast, lunch, and dinner items are analyzed to compute their measure of proﬁtability.
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