Menu Development, Planning, and Design: Costing, Pricing Analysis

This report provides a detailed analysis of menu development, planning, and design, emphasizing key considerations for costing and pricing in the restaurant industry. It examines various factors influencing menu pricing, including restaurant costs, business environment policies, economic climate, and customer requirements. The report includes a cost statement, calculates food cost percentage, total contribution margin, and break-even point. It further analyzes different approaches to menu costing and pricing, such as demand-driven pricing and traditional methods like cost-plus markup. The report concludes by recommending the use of key performance indicators (KPIs) to measure menu success and suggests focusing on balance, creativity, and imagination in menu design to meet business objectives. Desklib offers a platform to explore more solved assignments and resources related to menu development and restaurant management.

Menu Development, Planning and Design

TASK B
Key considerations which need to be taken into account when costing and pricing menus
There are various aspects which need to be considered while pricing and costing of menu. These may
include:
Meeting the cost and expenses of the restaurant:
 There are various costs associated with the restaurant which may have an impact towards the
prising of menu. This means that important point to be noted is to make coverage the cost of
expenses with an earning of sufficient revenue. The cost may include the rent and utilities,
marketing cost, labour cost as well as the cost of the food (Whitelock and Ensaff, 2018). These cost
need to be considered while pricing the menu and designing the menu. It is very important that the
restaurant would cover these cost so that it can earn sufficient revenue towards its sold items.
Policies of business environment and their impact:
 This is highly important that the restaurant would comply with the environment policies and thus
frame its pricing accordingly. Minimisation of impact towards the environment and thus reduction
of waste is one of the major aspect that need to be considered by the restaurant while determining
the prices of menu (Malhi and et.al., 2020). Taking of appropriate energy efficiency measures like
the reduction of the use of waste or the use of energy would be included in this.

Economic climate:
 This may include the factor which are related with the price change as well as the
aspect of inflation. This may also include the cost of inflation under which the prices of
the product or the raw material continuously raise (De and et.al., 2018). This aspect
also plays an important role in respect to costing and pricing of menu because with a
rise in cost the menu items would be costly which would be cover up with the with
adequate costing and pricing.
Customer requirement:
 The pricing and costing of menu will also be depended upon the current trend as well
as the requirement of the customers. This is because if the menu item would be
overrated then this will lead to impact the sales of the product which make it important
to have consideration of this factor.

Producing accurately costed and pricing menus to meet a range of customer
requirements

Food Cost percentage Total Food Cost / Total Sales 66.04%
Total Contribution Margin Total Sales - Total Food Cost 692.86
Average Contribution Margin/Customer Contribution margin / Quantity Sold 2.64
Contribution margin/ menu item Total Sales-Total Food Cost/Quantity Sold 2.64
Maximum sold Items
Items Revenues
Backed Spring roll 200
Bruschetta 154
Bangers and Mash 160
Beans on toast 161
Fruit hat 108
Dark chocolate pie 200
Total 983
48.19%

Cost Statement Amount Labour Cost
Revenues 2040 Chefs 245.18
Materials 808.284 Waiters 75.44
Labor cost 377.1992 Workers 56.58
Energy Cost 161.6568 Total 377.20
Total 1347.14 0.660362745
Energy Cost
Gross profit 692.86 Heating 56.58
Lighting 40.41
Fixed Cost 300 Water 16.17
Marketing 250 Insulation 32.33
Profit 142.86 Others 0.00
Total 161.66
Cost to Profit Margin Ratio Sales – COGS / Sales
Cost to Profit Margin Ratio = 2040 – 1347.14 / 2040
33.96%
Break Even Point
BEP = Fixed Cost / Contribution Margin
883.30

Analysing approaches to menu costing and pricing and using effective methods to
accurately cost and price menus to maximize profitability
Demand driven pricing method:
 Here demand and supply play an important role in the determination of prices. This
means with the prevailing of high demand the prices of the product can raise to be high
(Ganji, Shah and Coutroubis, 2018).
Evaluation of current profitability:
 The evaluation of current profitability with the aspect of current menu item and
determine the prices accordingly is followed in this approach. Here the high revenue
item will be cost high (Dopson and Hayes, 2019).

Method for costing and pricing of menu
Traditional pricing:
 Under this the pricing will be made on the basis of competition, following up of leader,
intuition and as per the wish of owner.
Cost plus mark-up pricing:
 Under this the mark up or the additional price will be added over the cost of product
which will give profit to restaurant (Jadhav, 2021).

KPI in reference to measuring success and recommendation:
 Setting up of KPI is an important factor in respect to measuring the success of product
or the menu. The KPI in respect to the concerned menu include three aspects i.e.
Balance, Creativity and Imagination.
 The item or the menu which meet all the three criteria would ensure success in terms of
getting popular among customers. With this evaluation criterion the menu will be
passed and operate in market.
 In order to meet the issues in regard to the menu and attain the business objective the
following recommendation need to be focussed:

REFERENCES
Books and journals
 Whitelock, E. and Ensaff, H., 2018. On your own: older adults’ food choice and dietary
habits. Nutrients. 10(4). p.413.
 Malhi, Y and et.al., 2020. Climate change and ecosystems: Threats, opportunities and solutions. Philosophical
Transactions of the Royal Society B. 375(1794). p.20190104.
 De Menna, and et.al., 2018. Life cycle costing of food waste: A review of methodological approaches. Waste
Management. 73. pp.1-13.
 Ganji, E.N., Shah, S. and Coutroubis, A., 2018. An examination of product development approaches within
demand driven chains. Asia Pacific Journal of Marketing and Logistics.
 Dopson, L.R. and Hayes, D.K., 2019. Food and beverage cost control. John Wiley & Sons.
 Brown, Z.Y. and MacKay, A., 2021. Competition in pricing algorithms (No. w28860). National Bureau of
Economic Research.
 Jadhav, M., 2021. Merchandising of menus.
 Chaudhuri, and et.al., 2018. Decision-making in cold chain logistics using data analytics: a literature
review. The International Journal of Logistics Management.