Menu Development, Planning and Design

This presentation discusses the key considerations for menu costing and pricing, including direct and indirect costs, volatile food costs, and competition. It also covers approaches to menu costing and pricing, such as pricing by competition, demand analysis, raw food cost, and portion cost. Additionally, it explores KPIs to measure the success and performance of a menu, including feedback from customers and the most sold item. This presentation is relevant for students studying menu development, planning and design in the food service industry.

Menu Development Planning and Design

TABLE OF CONTENTS
 INTRODUCTION
 MAIN BODY
 Key consideration need to be taken into account while costing and pricing menuResearch
methodology
 Approaches to menu costing and pricing
 KPIs to measure success and performance of menu
 CONCLUSION
 REFERENCES

INTRODUCTION
 Menu costs are a type incurred by firms when they prepared food items.
 This presentation is going to discuss some factors that need to be considered while pricing menu
such as: direct cost, indirect cost and others.
 Further, it will discuss some approaches of pricing menu as per the availability of resources and
type of business.

Key consideration need to be taken into account while costing and pricing menu
 There are number of factors that can affect costing and pricing of menu. Some factors that need to be
considered include:
 Direct cost: It includes cost that are associated with preparation of food such as portion size, purchasing of
raw materials, drip loss, food waste while storing and others.
 This cost directly affect the overall profit margin and costing of menus.
 Indirect cost: This refers those cost that can affect the preparation of meal and add value in food items.
 Some examples of indirect cost that need to be considered while costing menu include: labour cost,
demand cost and others.
 Other expenses that restaurant considers while costing menus include: infrastructure, location of
restaurant, ambiance, lighting and marketing efforts.

CONT...
 Volatile food cost: This cost are those that fluctuate in the market. Some items whose prices changes and get
fluctuate include; fruits, vegetables and meat. Companies need to maintain an account for the price
fluctuation.
 As per the current situation and weather conditions, restaurants can change their prices of food items.

CONT....
 Competition: Competitive pricing plays a vital role and manager need to price their food items as
per the pricing of competitors.
 If company wants to add high profit margin as compared to competitors then there should be some
specific reasons such as: usage of ingredients, varieties and others.
 Otherwise, it may affect their performance, and they may find problems in attracting customers.
 On the basis of above discussed factors, it can clearly be said that The Savoy restaurant can cost its
menus in an effective manner and can increase profit margin.
 By considering all these factors, it can increase customers retention rate and sales as well.

Approaches to menu costing and pricing
 There are 4 main approaches that can be used for menu costing and pricing such as:
 Pricing by competition: As per this approach, restaurants prices their menu by considering
prices of their competitors.
 Restaurant prices the same as their competitors and slightly lower in order to attract customers.
 When restaurants are new in the market then they must price their menu lower than their
competitors so that they can increase customers retention and attraction rate.

CONT.
 Pricing by demand analysis: This approach works on demand and supply. Demand of food
relies on number of factors such as: location, quality and others.
 For example: in developed areas, prices of same food item will be high and in developing
countries and areas, prices of same food item will be lower.
 If there is a local shop ion rural area then people can buy water bottle in only $5 but at airports,
prices of same food item, increases.
 So, on the basis of this, it can be said that manager needs to consider demand of food item and
location.

CONT…
 Pricing by raw food cost: It is the cost that is associated with purchasing of cost of
buying raw food.
 For making use of this approach, managers need to divide this cost by the desired food
cost percentage.
 It is important for employers to have knowledge about value and prices of each
ingredient, used in recipe.
 Considering cost of each ingredient such as: ketchup, oil, vegetables, sauce and others.

CONT....
 Pricing by portion cost: A standard portion cost refers the cost of serving one item as per
standard recipe.
 This cost can be calculated by dividing the purchase cost by the portion.
 On the basis of this, it can be said that this is the cost that is associated with direct purchasing
cost.
 It can affect overall pricing of food so, by using this approach, restaurants can set profit
margin accordingly.

KPIs to measure success and performance of menu
 After making use of number of approaches and setting prices, it is important for managers
to measure performance and knowing whether their set menus are effective or not.
 There are number of tools that can be used for measuring performance such as:
 Feedbacks from customers: It is one of the best ways of knowing effectiveness of menu
designing and menu costing.
 By taking feedbacks from customers, manager can know the food items that is being the
most preferred by them.
 They can ask some other questions regarding prices and quality. By analysing review
matrix, manager can identify all those factors that have made their menu designing and
menu pricing effective.

CONT…
 The most sold item: By making a list of the most sold food item, manager can measure
effectiveness and can identify reasons.
 On the basis of this evaluation, they can make changes in other food items and prices of
other food items.
 This measurement can be known as business report and financial key indicator.
 On the basis of this, it can be said that manager can make appropriate changes and can
attract customers.

Conclusion
 It has been summarized from the above presentation that menu costing and pricing plays vital
role as it enables managers in deciding profit margin.
 It has discussed different approaches by which prices of menu can be decided and customers
can be attracted as well.

REFERENCES
 Moberg, E., Walker Andersson, M., Säll, S., Hansson, P.A. and Röös, E., 2019. Determining
the climate impact of food for use in a climate tax—design of a consistent and transparent
model. The International Journal of Life Cycle Assessment, 24(9), pp.1715-
1728.Sciences, 7(9),
 Pereira, J.P., Natalya, E. and Slesarenko, I., 2020, February. The analysis of competency model
for a performance appraisal system in the management of food service industry.
In International Conference on Information Technology & Systems (pp. 162-171). Springer,
Cham.
 Truong, J. and et.al., 2022. What factors promote vaccine hesitancy or acceptance during
pandemics? A systematic review and thematic analysis. Health promotion international, 37(1),
p.daab105.exploratory factor analysis approach. Social
 Victor, V. and et.al., 2018. Factors influencing consumer behavior and prospective purchase
decisions in a dynamic pricing environment—An