Fordwich Arms: Menu Development, Costing, and Pricing Strategies

This report examines the critical aspects of menu development, planning, and design, with a specific focus on costing and pricing strategies within the restaurant industry, using Fordwich Arms as a case study. It delves into the impact of various costs, including energy, staff, and food, on overall revenue and profitability. The report highlights the influence of seasonal changes on menu costs and the importance of sustainable practices and environmental policies in menu costing. Furthermore, it addresses the effects of the current economic climate on menu pricing and provides a detailed breakdown of the menu costing process, including how to calculate food costs and determine menu prices. The report concludes with a menu analysis, including examples of menu items with their cost, portion size, and contribution margin, to provide a comprehensive understanding of menu planning and its role in ensuring profitability. The report also includes a conclusion and references relevant research papers.

Menu Development, Planning and design

Key consideration need to be taken into
account when costing and pricing menus.
Menu costing and pricing is important as it directly affects
the profitability of the organization. Costing and pricing
of menus is different in every restaurant because of its
operations and functions. The menu contain both low cost
and high cost dishes which helps in balancing the menu in
reaching the target dishes price. In reference to the
selected restaurant, they have taken certain consideration
while setting the prices of the menus.

Impact of costs and revenue from various
sources:
Money that is being generated by selling is termed as revenue
and it is earned within a period of time. Revenue is the left over
money from the operating cost and it is also known as total
revenue or turnover. The operating cost of a restaurant can be
breakdown into different categories such as rent and utilities,
labour costs, food costs and so on which is to be paid to the
providers.

1 Energy costs:
Energy costs includes lighting cost, water supplier,
insulation cost and so on which is to be paid by
Fordwich Arms. It should be attractive and feel
good to the customers. Fordwich Arms recently
changes their designs which makes the restaurant
more beautiful. As they use more lightings and
provide facilities to the customers, the costs also
increases which will create a direct impact on the
total revenue of the restaurant.
2 Staff costs:
Staff costs are the cost which are given to the staff as
their salaries. It includes their basic salary, bonuses,
payroll taxes and many more. Staff costs can be go high
if the employees are more in Fordwich Arms. The staff
that hired by the restaurant should be qualified and have
all the skills that are required to be in the restaurant.

Impact of season on menu costs:
The costs of food and beverages listed on the menu changes
according to the season. The revenue of the selected restaurant
can go up as well as low. They make sure to serve the dishes
with ingredients that are grown seasonally.

Importance:
Having seasonal food helps in supporting of local farming
as costs less transportation costs and less fuel is used and
also helps in building community where the people know
about their food is coming and who is growing. The
seasonal food are fresh and costs less when buying in bulk
and stored for future use. Many rich nutrients destroys
while transporting from different countries. It also helps in
maintaining the nutrients of the body as well as settle down
to the season weather and temperature.

Environment policy is regulated in an organisation in order to reduce the
impact on the environment and set various factors which helps in improving
the performance. The environment impact on the business can be minimized
by switching lights when not in use, saving water and many more. The
selected restaurant minimise the impact by addressing issues such as carbon
footprints, recycling, food wastages and so on.
Business environmental policies and impact the costing of menu:

Business environmental policies and impact the costing of menu:
(Cont.)
Restaurant can become environmental friendly by providing training to all the staff
members by educating about the minimal use of items that can harm the environment.
Also switching more towards sustainable products and customers. Restaurants have
designed menus that have list of dishes that are made up of sustainable products and
customers are also attracted towards this. Though the prices would be high but
customers are ready to pay for the sustainable dishes. Switching more towards
environmental friendly products, the costing is high for the restaurant but revenue
generated will be more because of the choice and willing to pay by the customers.

The current economic climate and the implication of menu
costing and pricing:
When the price of goods and services, the food and beverages department has to change the
menu to a new menu where the prices are fixed according to the latest costing of the products.
Due to reprinting of new menus, hiring of experts for setting the new price for the menus will
be costs high to the restaurant.

The food cost is calculated by using following steps:
2
3
4
5
1 Step 1- Dishes are break up into ingredients
Step 2- Cost of each dish will be calculated
Step 3- Finding the fixed cost per meal
Step 4- Finding the percentage of menu price from the food
Step 5- Calculate the target food cost