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

This presentation provides an overview of menu development planning and design, emphasizing key considerations for costing and pricing. It covers direct costs (portion size, raw materials), indirect costs (labor, demand), and other expenses (infrastructure, location). It also addresses volatile food costs and competitive pricing. The presentation explores approaches to menu costing and pricing, including pricing by competition, demand analysis, raw food cost, and portion cost. Finally, it discusses key performance indicators (KPIs) such as customer feedback and sales data to measure menu effectiveness, enabling managers to optimize their menu design and pricing strategies for increased profitability and customer satisfaction. Desklib provides solved assignments for students.

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.