UNIT-3

MENU PRICING
Introduction
A primary objective of food and beverage establishments is the selling in its widest
sense of the product : food and/or beverages. This is irrespective of whatever
sector of the market one examines,whether it is an industrial resturent ,a steak bar,
a hospital dinning room or a carvary resturent. The comman and major aid is the
menu , in all of its many forms. Once customers are on the premises of a catring
establishment one of the main sales tolls is some form of a menu. The other aspects
which are also sales tolls ara the facilities provided, the degree of comfdart and
dcor the quality of the staff and the standard of the food and beverages available.
The menu should be an extension of the thre policies-marketing, financial and
catering.
The marketing policy is reflected in the menu by such things as the
requierements of the sector of the market that is being aimed at and the
interpretation by the establishment of the needs of that market. The financial policy
is reflected in the menu by trhe pricing and cost structure and the catering policy,by
the size and type of the menu,and by the quality of the food and beverages offersd
{all being related to the specific needs of the identified customer}.
The main aim of a food menu or beverage list is to inform customers in a clear
way of what is availble to them. As a sales tool it often will,by the use of wellplanned and presented advertising technques,direct the customer as to what to buy.
In oyher words,by the means of a wll-planned and presented menu it is possible to
plan for a profit,or as in the case of the non commerical sector,to aid in controlling
the costs while at the same time fully satisfying customer requierements. With the
careful yet effective application of design,layout,typography and graphics,a menu
can complement the atmosphere and type of service,and with the correct of
lunguage and location of items,will result in a reliable and useful sales are ignorance
and fear by the customer. A good menu sets out consciously to assit customers by
gaining their confidence and setting them at ease.

Basic menu criteria

There are a number of basic factors to be considered to ensue that a menu is to be
an effective sales tool.
General presentation
General presentation is very important as it identifies the image and personality of
that particular unit or a cocktail bar. The following points should be taken into
consideration.

1. The menu should be attractive. The first impression of the menu should be
that it looks intersting and inviting and that the customers will really want to
read it.
2. It should be clean. Although this appears to be obvious it is something that is
frequently ignored by cateres. If it is intended that a particular menu is to be
offred frequently it is well worth considering having them either plastic
coated so that they can be regularly wiped clean;or printed on inexpensive
paper or card and regularly replaced or contained within a presentable and
durable cover.
3. It should be easy to read. It is usual to use different sizes of typeface for such
things as headings and the items appering under thm. How typeface styles
are used can help customers to make their choice of food and beverage items
more easily. The use of attractive graphics, colour and black space can also
help with aiding customers to mak their selection by directing and attracting
their eye.what is not required is that a menu should resemble a page from a
railway or bus timetable with its mass of infprmationproduced in an
unattractive style which besides failing in so many other ways would also be
annoying to the customer.
4. It should complement the occasion. It is necessary that the general
presentation of the menu is not only in keeping with the dcor of the room
but also suitable and complementary to the occasion. Obvious example are a
restaurant within a holiday camp, a kosher wedding, a state banquet and
bistro, where a diffeent style and presentation are necessary for each.
5. It should reflect current awareness. The menu should take into consideration
the current trends in eating habits, so as to be fully aware of customer
requirements.
6. Design. By the careful use of graphics, typogrephy and colour the menu can
not only be interesting but can direct the customers eye to specific items
that the caterer wishes to sell. The design of a menu can assist in achieving
the uniqueness of a particular food and beverage operation.
MENU CONTENT
The importance of this cannot be stressed too strongly if budgeted
sales or costs are to be achived.the content can be examined under the following
headings:
1 LANGUAGE. the language used must be in keeping with the type of operation. If
a foreign language is being used it must be used accurately.As mentioned before,it
is essential to keep customers at ease when making their selection and therfore
frequantly it will be necessary to provide a simple but accurate translation of the
menu items to aid sales. A descriptive flamboyant type language is also often used
on menus for themed establishments.it Is necessary that customers should clearly
understandwhat the items are,and be left guessing.
2 ACCURACY. A very basic requirement for all menus is that when seen by
customers they are accurate as far as pricing and availability are concerned,with
the correct spelling and description of dishes and drinks. It is all too common to be

presented with a menu or wine list to which untidy alterations have been made in
handwritting.this is not only annoying to customers but also at times leaves them
with the fear that they may be being cheated by the carterer.most,if not only,of
these problems can be alleviated if more carefull proof reading of the menus is done
before they areprinted and more care is taken when pricingitems.in addition,it is not
uncommon to find that the actual dishes when presented to customers do not
match up to the name of the dish as on the menu,either because the catereris not
all that concerned with accuracy,or is of the openion that poetic licence is fully
permisible. However,the knowledgeable customeris not likely to return to this type
of restaurant again.
3 PRICING.
The correct pricing of all food menus and resturant lists is very
important to the success of an operation. It is essential that in total all necessary
costs are covered; that the prices are attractive to the particular segment of the
market that thae operation is in;and that the prices are competitive in relation to
the level of quality of food and drink and service offered.
There are various factors which can affectthe pricing strategy operated-such things
as the size and type of operation,the location,theprofit required,the level of
competition and the sector of the industry.in addition,the caterer would have to take
into account suchthings as the type of menu or beverage list that is being
priced,wheather or not loss leaders or special offers to attract customers,and the
volume of business being done or forecast for each selling outlet.
4
sales mix.the term sales mix refers to the composition of the total sales as
between the main components such as food and beverages,and also within a
component such as food,to item such as appetizers and soups,fish andmeat,sweet
dishes,etc. it is very important that the caterer when designing a menu or beverage
list considers the importance of the actual or potensial sales mix of items that the
customers will choose.it is essential that the sales mix is satisfactory or it will be
difficult for caterers to either cover their total food or beverage costs or to make the
necessary total profit. When the sales mix of items chosen is unsatisfactory it may
mean that the customers or special offers; or that they are only choosing from those
items which have a high food or beverage cost and a low gross profit; or that the
overall average spend by customers is lower than expected or forecasted. It is
necessary,therefore, that the average spend by customers is carefully monitored
each day and that a sales history of all items sold is also prepared and anaiysed.
Action to corr4ect an unsatisfactory sales mix could be a new and carefully
constructed and priced menu or beverage list;a more carefully designed menu
directing the customers in their choice of items by the use of
colour,graphics,space,etc. and/or by a short retraining programme on selling for
the service personnel.
SIZE AND FORM
The size and shape of a menu can add to and complement the uniqueness of the
facility.a food or beverage menu must be easy for the customer to handle and in no
way confusing to read. The various forms that the menu can take are unlimeted,
from a menu chalked up on a blackboard,to a large illuminated display board with

photographs,coventional menu cards,tent cards,placemants,menus printed in the

shapw of a fan or even handprintd onto silk handkarchiefs as mementoes for the
guests at a banquet.
Types of food menu
Although there are many types of eating estblishments offering many types
of meal experiences, there are basically only two types of food menus. The
table dhote;and the a la carte. From these two types of menus there are in
practice many adaptations of each.
Table d hote menus
The table d hote menu is identified by:
1. Being a restricted menu.
2. Offering a small number of courses, usually three or four.
3. A limited choice within each course
4. A fixed selling price.
5. All the dishes being ready at a set time.
This type of menu usually contains the popular type dishes and is easier
to control, the set price being fixed for for whatever the customer
chooses, or being set depending on the main dish chosen. It is common
practice in manyrestaurants for a table dhote menu to be offered to a
customer together with an a la carte menu.
Table dhote menus can be offered for breakfast,lunch and
dinners. Their many adaptations are used for:
1. Banquet. A banquet menu is a fixed menu at a set price offering
usually no choice whatsoever to the customers, unl;ess the client
informs the caterer in advance that certain guests require,say, a
vegetarian or kosher type meal, and is available to all guests at a
predetermined time.
2. Buffets. Buffet type meals very considerably depending on the
occasion, and the price paid,prepared are proportioned to a small size
so that the customer may consume it without the use of any cutlery, to
the exotic fork buffets where hot and cold food is available and where
many large dishes will be carved and portioned for the individual
guest. Buffets are frequently prepared for such occasions as wedding
receptions, press receptions,presentations and conferences. Buffets
can be classified as aform of table dhote menu as they offer a
restricted menu, a limited choice of only what is on the buffet, a
predetermined setprice and all the dishes are available at a set time.
3. Coffe houses. A coffe house menu is a more recent form of table dhote
menu which is commonly used toay in hotels and restaurants. This
type of menu is characterized by:

(a)
(b)
(c)
(d)

(e)

Being a set menu offered often for twelve to eighteen hours of the
day.
Being reasonably priced, with often each dish or section of the
menu individually priced.
Offering a range and choice of items that are suitable for snacks,
light meals, lunch or dinner.
Offering a limited range of foods that are either already cooked, are
of the convenience type food category and requie little preparation
time, or are simple and quick to cook, for example omelettes,
hamburgers, etc.
A simplified form of service being offered,for example plate
service,counter service etc.
In some establishment the coffee shop menu way be replaced for
two to three hours with a special breakfast menu offering a
restricted choice when there is a need to serve a very large number
of people in the shortest possible time.

4
cyclical menus. These are a series of table dhote menus,for
example for three weeks,which are repeated again and again for a setperiod of ,for
examples,four months.these are often used in hospitals and industrial catering as
an aid to establishing a pattern of customer demand for a menu item and as a result
assist purchasing.preparation of items,and staffing requirements.

A la carte menus
the term a la carte means from the card.in this menu everything from appertizer
to desert is priced separatel.it provides a choice of items,each of which is prepared
seperately.
The main features of on an a la carte menu are:1.
2.
3.
4.
5.
6.

It gives a list of all the dishes that may be prepared by an operation.

This menu is usually a large one compared to table dhote menu.
It offers a great choice.
All the dishes that are prepared are listed under the course headings.
All dishes are prepared to order.
An a la carte menu is comparitively more expensive than a table d hote
menu.
7. These menus contain the exotic and high cost seasoned foods.
8. A certain waiting time is allowed for each dish.
9. Being usually a larger menu than a table dhote menu and offering a greater
choice.
10. Listing under the course headings all of the dishes that may be prepared by
the establishment.
11. All dishes being prepared to order.

12. Each dish being separately priced.

13. Usually being more expansive than a table dhote menu.
In some of the restaurants,a part of an a lacarte menu may contain a
plat dujour,speciality of the house section,which contains one or two mains
dishes, separately priced.these dishes are alredy prepared and change daily
or remain for a certain period of time.The dishes concerned are normally
main courses.this menu is casually supported by a table dhote menu and in
some cases by a limited a la carte menu.
All a la carte menus are difficult to control than table dhote menu
specially because of their size and the unknown demand of each item from
the customer.this type of menu is offered on its own in a first class/deluxe
class restaurant,or in conjunction with a form of a table d hote or carte du
jour menu in a small food and beverage establishment. The dishes may be
changed according to season but each item will remain individually priced.
Approximate wairing times for dishes on a la carte menu
DISH

APPROX.

TIME
Special hors doeuvre

10 mts.

Soup

5 mts.

Eggs

10 mts.

Fish(fried/grilled)
Grilled salmon
Lobster mornay/thermidor
Liver
Rump/fillet steaks according to order
Chateaubriand

10 mts.
10 mts.
20 mts.
10 mts.
15 mts.
15 mts.

Roast chicken

25 mts.

Chicken cocotte

40 mts.

Lamb cutlets

10 mts.

Lamb chops

13 mts.

The fixing of selling price on the a la carte menu is simple as each dish is
individually priced.the cost of one portion of every dish offered on the menu is
obtained from the unit cost card and the minimum menu price at a given gross
profit margin is noted.
The selling price s fixed for every dish after taking the following points into
account:1
2
3

price fluctuations due to market trends.

price fluctuations due to seasonal variation.
price fluctuations due to customers spending power.

A LA CARTE BREAK-FAST MENU

Many hotels offer an a la carte break-fast menu,from which the customer may
A LA CARTE AND TABLE D HOTE
Select his break-fast according to his choice and taste.A average serving of one
commercial break-fast is costed on a multiple cost sheet and the total cost is used
as the basis for the calculation of the menu price. Other items may be offered on
the menu,which may be costed on a unit cost card and the menu price is fixed
individually.

Food and bevarage control in buffets

Banqueting cost and special functions
Special functions in a hoel are part and parcel of food and beverage sales. These
are the additional soures of revenue for the establishment. Banqueting is profitable
but at the same time very competitive as well.
Banquting may be defined as a special party arranged for some specific number of
persons on a particular date. Special functions may include :1.
2.
3.
4.
5.

Banquets
Wedding parties
Receptions
Special parties
Conferences

6. Conventions
7. Other special functions.
Since banquet is one full function complete in itself, it is a much larger unit than a
single dish. The actual cost of the banquet can easily be established and leaving
less to be estimated as a percentage of sales. The method of calculating of cost of
food for a banquet is the same is used in dish costing. Other elements such as
additional labour, other direct expenses such as cost of menu, floral decorations,
band hire etc. can be estimated based on experience. General overheads and net
profit is calculated on the basis of percentage of sales.
To cover the food cost, additional labour overheads and make a reasonable
percentage of net profit, calculation is made of the amount to be charged per cover.
Banquet/ special function require special staff, the cost of which can easily be
calculated. Many items, existing staff is also utilized for such occasions. In such
cases, calculaton of direct labour cost will involve apportionment of wages of
existing staff between normal duties and the special functions. The direct labour
cost should be calculated exactly and for indirect labour an estimated percentage
could be added. The steps followed to calculate charge per cover for a banquet are:1. Costing of standard menus and range of prices on multiple costing sheets for
every type of functions.
2. Selection of menus offered to the client and calculate the cost of each dish
obtained from the unit cost card.
3. Caculate the total cost of one cover and multiply it by the number of guest to
catered for.
4. Special functions require extra labour for large number of guests and
concentration of service for over a start period. Include the wages of
additional labour in the cost.
5. Add a certain percentage of the charge in the cost to cover the cost of
overheads.
6. On the basis of managements s pricing policy, add net profit percentage to
get the selling price per cover.

Calculation of the potential food cost

The potential food cost is the cost of the food under perfect and ideal conditions.
The potential food cost of an operation is the principal and most effective
method of evaluating the actual food cost. Any variance higher then 1 per cent
between the potential and actual costs should be investigated. The potential
food cost may be calculated in a variety of ways, but because of time it is
usually costed per menu for each selling out-let twise a year or more frequently
if the menu changes. This means that the potential figures will differ between
selling outlets, where the prices of items may very
The calculation are in three main steps.
1. For each individual menu item multiply the number of portions actually sold
durning a sample week as determined by the restaurant sales analysis, by

the potential food cost per portion to obtain the total potential cost of food
sold for that week.
2. Multiply the same portions actually sold, as above, by the menu selling
prices, and arrive at the potential total sales.
3. Divide the potential total food cost by the potential total food sales and arrive
at a figure which, when expressed as a percentage, is the potential food cost
percentage.
To be able to do the above calculations it would be necessary to have the following
information to hand:
1

A detailed sales analysis of all items sold in the various outlets,together

with their selling
prices.
Standard recipe cards of all the menu items costed out.
Summary of potential food cost obtained from the standard recipe cards.
Average market price for the main ingredients taken from invoices,food
marketing reports or food cost indices reports.
It is not unusual for there to be a difference between the actual and the
potensial food cost figures. Usually the actual cost of the food sold is higher
than the potensial for such reasons as food being a perishable
commodity,the difficulty of being exact when forecasting food production
requirements and that a small amount of waste is almost unavoidable.Any
large differences to established standards, or pilfering or sheer
carelessness resulting in an excessive amount of waste. As stated earlier,
andy variance in excess of 1 percent should be investigated.

2
3
4

Food control checklist

It would not be possible to state in a book what corrective action should be
taken when standards are not being met as the operating and trading
conditions would vary from one establishment to another. It is
possible,however,to produce a control checlist,similar to the one elow, to
act as an aide-memoire when trying to identify the reasons for any
variance in standards,the checklist being a sumary of the control produces
which should be used.Any control procedures not being used would be a
week link in the chain of control.
1
2

Menu
suitable for present market segment.
Takes into account current trends in customer eating habis.

An extract from a summary of potential food costs for a coffee shop for a specific
period of time explanation of columns.
1-4 information obtained from standard recipe forms.
5
6
7
8

from curren menu.

Column 4 divided by column 5,expressed as a percentage.
From coffee shop sales analysis.
Column 4 multiplied by column 7.

9
10
11
3
4

1
2
3
4
5
6
7
8
9

This would seldom be calculated.the final actual total food cost figure would
be taken from the food cost report for the period.
Column 5 multiplied by column 7.
This would seldom be calculated for each individual item.the final total
sales figure would be taken from the food cost report for the period.
menu is intreesting,imaginative, changes during the year, takes into
account the major food seasons,assists grealy in selling.
Accurately priced,competitive,takes into account the labour content in the
production and service of dishes.
Food control procedures
check and marry up all delivery notes,credit notes,invoices and goods
received report.
Check arithmetic to all paper work.
Check correct discounts are being allowed.
Check delivery notes to bin cards\ledgars.
Maintain certain charges and credits for period inventory.
At set periods complete a full in ventory of all chargeable containers.
At set periods complete a full stocktake of all food stores and food held in
the kitchens and compare to ledgers.
Prepare a stocktaking report and stocktake variance report.
Maintain up to date food control reports.

The major reasons for food cost (and gross profit) varience from the established
standard for a unit include the following:
1. Inaccurate arthmetic to paperwork. This also include the paperwork. This also
includes the paperwork of suppliers.
2. Inefficient stocktaking.
3. Poor revenue control. Lack of systematic procedures and practices.
4. Poor menu. Unrelated to market conditions and requirements, lack of sales
analysis and up-dating of menu.
5. Poor purchasing, resulting in higher food costs, overstocking and wastage.
6. Poor receiving, inferior goods being accepted, short weight of goods being
signed for.
7. Poor storing, poor, rotation of stock resulting in wastage, poor security.

Beverage controlling
Introduction
The objectives of beverage control are similar to those of food control are
similar to those of food control. In simple terms it is to determine and report
on the actual and the potential sales and costs for each beverage outlet and
to take corrective action where necessary.
As mentioned earlier in the book, beverage control is simple than food
control for many reasons including:
1. There are fewer number of beverage items to handle than food.
2. Beverages are purchased in standard unit sizes of known stanard
qualities.
3. Beverages are not as highly perishable as foods.

It is important however, that strict control of beverages is maintained at all

times for such reasons as:
1. The danger of bar staff appointing themselves as unofficial partners, e.g.
a barmen paying no overheads and no wages yet, if bringing in bottles of
spirits and selling them and pocketing the money, is devoiding the unit of
that of that amount of sales and profit.
2. It is easier for bar staff to steal money than it is for foodstaff.
3. Beverages are more tempting than food to many staff.
4. Beverages are, in the main, more expensive, and contribute more to profit
than food items.

Calculation of beverage cost

There are several basic terms which need to be explained with reference to
the calculation of beverage costs:
1. Beverage cost. This refers to the cost of the beverages incurred in
preparing the drinks served.
2. Beverages cost percentage. This refers to the cost of beverages sold
as a percentage of sales of beverages.
3. Gross profit or beverage gross profit. The excess of sales over the cost
of the beverage expressed as a percentage or in financial terms.
4. Potential beverage cost (or sales). The beverage cost (or sales) under
perfect conditions; this may be expressed as a percentage or in
financial terms

Methods of beverage control

There are many different methods in use today to control costs, the
various methods depending on the size of the operation, the volume of
business, owner or managed operation, etc., and the level of
sophistication of control required. Each of the different in use could be
classified under one of the following six basic types of beverage control
systems. Whatever method is adopted, it would be of little value unless
the previous steps of control had been efficiently implemented and
enforced, that is, the control of purchasing, receiving, storing and issuing;
production planning recipes, standard portion sizes and inventory.

Par stock or bottle control system

This is a simple yet effective method of beverage control and is
particularly useful for the smaller type operation where there are few fulltime control staff. The following points should be noticed.
1. The level of par stock is established for each bar, that is, to establish
for each beverage the number of bottles required for a busy day plus a
small safety factor. This number is determined to be the stock level to
be held in the bar at the beginning of the service each day. To simplify

the system only full bottles are counted, partial bottles are not
counted.
2. The number and type of empty bottles are noted each day, this being
the amount and type to be requisitioned for the day.
3. The potential sales are based on the quantities issued at selling price
and are compared to actual revenue received.
4. Adjustments to be made to be made to the initial selling price if many
mixed drinks are sold. This may only be necessary if the difference
between the potential and actual sales figures gives cause for
investigation.

Food cost &Gross profit

Food cost
Recepie costing is a method to detemine a profit on food products. To obtain the
maximum profit, all food service operations need to know their expenses. The four
major expenses related to recipe costing are:1.
2.
3.
4.

food cost
labour cost
overhead
profit

once a recipe has been estalished, it needs to be recorded in a format that is

easy to use in costing out recipes. This format contains the following
information:1. Recepie name
2. Recepie identification
3. Portion size
4. Yield or number of portions
5. Ingredients
6. Waste percentage
7. Edible portion
8. As purchased
9. Unit purchase price
10.Conversion measure
11.Ingredient cost
12.Sub-total: recepie cost
13.Q factor 1%
14.Total recipe cost
15.Portion cost
16.Desired overall food cost
17.Preliminary selling price based on food cost percentage
18.Actual selling price
19.Actual food cost percentage

20.Additional cost.

ABC HOTEL : RECEPIE COSTING FORM

Recepie name:- _______________
Portion size:- _________________
Yield/portion:- _______________
Ingredients waste edible product amount
price ingredient cost

as purchange amount

conversion measure

unit purchase

Round streak
Salt
Pepper
Paprika
Flour
Choped onion
Sour cream
Boiling water
Chopped parsley

WASTE PERCENTAGE
Most recipes include ingredants that are one hundred per cent edible
having no waste. Some fresh food products----poultry,fish,sea food,beef,fruits
and roduce have a certain percentage of wastage.The chef must calculate the
amount of wastge a product has so as to be acccurate in the amount of food
product to be purchased.

EDABLE PRODUCT AMOUNT(EP)

The amountof the ingredient in the recipe excluding the waste from the
ingredient is called Edible Product Amount.

AS PURCHASED AMOUNT(AP)
It is the amount of the ingrdient in the recipe that includes the waste
product.This is the amount what is to be purchased from the purveyor.To find out
how much should be purchased (AP amount),the chef must use the following
formula:AP=EPX100/100%-W%
Where,

AP = As purchased amount

EP = Edible product amount

W% = Waste percentage
Suppose,

EP = 1,500 gm.
W% = 2%
AP=1,500X100/100-2 = 150000/98 = 1531 gms.

CONVERSION MEASURE
When there are two different units measurement being used one has
to be converted in to the sme unit of measurement as the other.AP amount is
generally given in grams while the EP price is expressed in kilogram.The men
planner must find out the same unit of measurement.

UNIT PRICE
The price paid to the purvey or for an ingredient is called its unit price.

INGREDIENT COST
The total cost of the ingrdients being used in the recipe by multiplying
the conversion measurement factor and the unit price.

SUB-TOTAL OF THE RECIPE COST

The total of all the ingrdient costs added together is called the total
cost.

Q FACTOR 1%
Q Factor is the price the chef must charge to cover the cost of all
ingrdients that are too small to calculate---such as dash,or a pinch of an ingredient.
This amount becomes difficult to cost out.This amount varies from time to time;
therefore,to recover the cost of the ingredient a percentage factor is used.The
percentage amount of 1% is based on the following:1. Most recipes do not have more than three Q factors in them.
2. The cost of three Q factor ingrdiets do not add up to 1% of the sub-total of
the recipe. More than 1% of the recipe sub-total could be used if the
ingredient is expnsive such as saffron.
The monetry valiue of the Q factor is calculated by multiplying 1% by th recipe
sub-total

TOTAL RECIPE COST

The amount calculated by adding the Q factor of 1% to the subtotal of the recipe is called as total recipe cost.

Portion cost (pc)

The portion cost is calculated by dividing the total recipe cost by the total
number of portion the recipe yields.

Additional items
When the food items is to be sold as a a la carte item, the portion cost of
any additional food items are added to the original portion cost and the entire plate
cost is marketed-up for a preliminary selling price. When the customer is given a
choice of vegetables or starches, the menu planner must add to the entiree the
highest priced vegetable or starch.

Desired overall food cost percentage

This percentage is established by determining what management would like its food
cot to be at the end of the year.
Preiliminary selling price
The selling price is the price at which the food items should be sold to
maintain a profit. It is caculated by dividing the ortion cost by the food cot
percentage.
Zctual selling price
The amount at which the product will be soldf on the menu, is known as
actual selling price. The price will differ from actual preliminary selling price that the
customer is willing to pay for the product.
The factors that influence the actual selling price are:1.
2.
3.
4.

Direct competitors price for the food product,

Demand or popularity of the food product,
Availability of the food product, and
What the custome is willing to pay for the product.

Actual food cost percentage

This is the new food cost percentage on the product after adjusting the
preliminary on the product after adjusting the preliminary selling price. The main
objective in costing out recipes is to accurately calculate the cost of the food and
to mark-up the portion cost price to pay for the labour cost and overhead cost
and to make a profit sometimes the preliminary selling price is to be adjusted to
an actual selling price, which means lowering the profit margin being made on
the food product. To compansate for the lower profit margin, the difference
should be spread out the most throughout the menu. This is known as balancing
the menu. Menus have high food cost items and a certain number of low food
cost items. Every food and beverage operation would like to have first low food
item in the menu for better profit. Low food cost items are not always what the

majority of customers would like by offering some high food cost items on the
menu, customers keep patronising the restaurants. You menu must maintain a
good balance to make up the profit margin on the high food cost items.

The Recipe Manual

Each food and beverage establishment maintains a manual which consists
of the recipes of special types of dishes. It contains the recipes of stocks, sauces
and all mixed dishes. The main object of the recipe. Manual is to provide
measure of the standards to be maintained by the establishment. It assists the
management and the executive chef in effective day-to-day cost and portion
control of various dishes being produced
This manual is reviewed periodically and necessary alterations are made
and new recipes are added on a regular basis. The manual is used by the food
and beverage department for the preparation of food and beverage items.
The manual is usually divided into two sections as pewr the menu items. Each
recipe given in the manual is based on current portion yield obtainable for the
size of the establishment. In large food and beverage establishments recipes are
worked out to yield 100 portions; while for small and speciality restaurant these
recipes are based on 4,6,8,10,12,or 24 portion yield per recipe.

Food cost of a dish

The costing of a dish requires reasonable accuracy. The most simplest
method of calculating cost of the food is to list the ingredients of the dish with
their individual prices. The price so calculated is added up.
The basic points to be considered in calculated is added up.

1. Standard recipe
The ingredients to be used in preparation must be the same at every
time the dish is prepared. In other words , use of standard recipe is
recommended.

2. Portion control
Use of same quantity of ingredients must constantly produce the same
number of served portion of the dish. One will require to adhere to a system
of portion control.

3. Labour cost
You will find that many employees are directly involved in varying
degrees in the oreparation and service of a dish. If you start calculating the exact
value of labour cost, frustrating and time consuming process.

Overheads
It is difficult to calculate the actual overheads. Never calcuate the overhead
cost in term of how much. The best method is to find out what percentage of
change to the customer will be needed to cover overheads. The change to customer
is referred to as sales price and the proportions of sales is expressed as percentage.

Net profit
Then net profit is the difference between the cost of food sold and the sale price
of the dish. A certain percentage of sales price is estimated as net profit.
GROSS PROFIT
Gross profit is the amount left out sales when only the cost of goods have been
deducted.in other words,it is the excess of sales over the cost of materials.in the
food and beverage operation,gross profit is also referred to as kitchen profit or bar
profit,depending on wheather it is the gross profit on food operation or beverage
operation.
Gross profit may be expressed as follows:Gross profit =

labour cost+overhead cost +Net profit

Or

Gross profit = sales-cost of material

Or
Kitchen profit = food sales-food cost
Or
Bar cost

= bar sales_ bar cost

The diagrammatic presentation of gross profit is given in below diagram

40%

40%

Material costs
bar cost

food cost

60%

60%

40%

60%

Gross profit
sales

Food cost
profit

kitchen profit

labour cost

bar

over heads
%

net
%

The rate of grgross profit expressed as a percentage of sals. It is important for a

food and beverage unit to establish gp percentage in order to know what should be
the selling price of a small unit sales,such as one portion of dish,or a meal,in order
to conver lavour cost,overheads and net profit.
Determine what gross profit percentage is required to cover labour cost,overheads
and the requied net profit, that is, what portion of sales these amount to find out
the amount of food cost of the dish/meal/portion. Since food cost and gross profit
equal total sales their percentage of sales together equal total sales their
percentage of sales together equal to 100% of sales now, divide the amount of food
cost by the food cost percentage and multiply by 100 in order to find out the selling
price. In other words,
Selling price= Food costx100/ Food cost percentage
Suppose, a gross profit of 60% of sales is required to cover labour overhead and
profit, then food cost must be 40% of sales. The value of food cost can be exactly
calculated, and from this the required selling price to give a 60% gross profit can be
found by applying the following formula:-

Selling price=food cost x 100/40

A great deal of time of effort requires to be spent on planning and costing the menu
and wine list, setting up purchase agreements, designing goods-in and storage
systems, agreeing cooking and service methods, and installing accounting system.
Now, you are going to control the food and liquor operation from the time the goods
are specified and purchased until the time the resulting turnover goes into the bank
account.
A continuous check is required on each aspect of the cycle. The diagnostic
chart given in should be used immediately if there is evidence of poor gross profits.
It would be advisable to, if you could use it on an ongoing basis for prevention
rather than cure.
Some of the checks and remedies outlined are applicable to liquor control as well
as food control as well as food control. There is also a simple control check whch

can be used to see that you are getting the right return from the bar
operations.
The opening stock value; add the deliveries; take a way closing
you are left with the consuption. Value the consumption at selling price
VAT compare this figure with the cash take excluding VAT. The two figures
the same. If they are not, something is worng.

and wine
stock and
excluding
should be

This check can be carried out on a line-by-line basis if a price look-up electronic
register is used.
This simple control check does not work for food because somany commodities
are used in a large number of differednt dishes. This is not the case with beverages.
Some modification may have to be made if the bar has a large cocktails menu. In
some ways this resembles the food menu.
Gross profit
Goods are sold and the rice at which they are bought. It is referred to as kitchen
profit. In a food and beverage output the selling price of a dish is Rs.108. the food
cost of the dish is Rs. 39.60. calculating gross profit as a percentage.
Sol:-

CALCULATION OF GROSS PROFIT

Gross profit = sales-food cost
= 108.00-39.60= Rs. 68.40
Gross profit percentage=gross profit/selling pricex100
=68.40/108=63.33%

Menu planning tips from the experts

Locations
Times
Prices
Quality
Specific food items

Quality standards:
flavor, texture, color, shape, flair,
consistency, palatability, visual appeal,
aromatic apparel, temperature
Nutritional concerns:
low-fat, high-fiber diets, vegetarian
Commercial
financial restraints

profit objectives
Institutional
minimizing costs
operational budget
Number of Employees
Required Skills
Training Programs

Standard recipe
Availability of the ingredients required during the life span of the menu
Seasonal ingredients
Cost
Miscellaneous cost (flight charges, storage)
Variety and complexity increases, number of personnel increases
Production staff
Service staff
Back-of-house staff

Menu Design
First impression is always important, the entire menu should complement the
operation
Theme
Interior Decor
Design (Merchandising)
Creativity
Material
Color

SpaceMenu Styles
A table d'hte (a complete meal for one price)
A la Carte (items are listed and priced separately)
Combination (combination of the table d'hte and a la carte pricing styles)
Fixed menus: a single menus for several months
Cycle menus: designed to provide variety for guests who eat at an operation
frequently - or even daily

Types Of Menus
Breakfast
(offers fruits, juices, eggs, cereals, pancakes, waffles, and breakfast meats)
Lunch
(features sandwiches, soups, salads, specials; usually lighter than dinner
menu items)
Dinner

(more elaborate, steaks, roasts, chicken, sea food and pasta; wines, cocktails,
etc..)

Types Of Menus Specialty

Childrens
Senior citizens
Alcoholic beverage
Dessert
Room service
Take-out
Banquet
California Menu
(breakfast, lunch and dinner menu items on one menu)
Ethnic

Menu Balance
Business balance
- balance between food cost, menu prices, popularity of items, financial and
marketing considerations
Aesthetic balance
- colors, textures, flavors of food
Nutritional balance

Menu Pricing
COMPETITION AND PRICING:
Know competitors menus, selling prices, and guest preferences
Lower your prices
Raise your prices
Elasticity of demand:
Elastic: price change creates a larger % in the quantity demanded (pricessensitive)
Inelastic: the % change in quantity demanded is less than the % change in
price

BASIC OPERATING ACTIVITIES: CONTROL POINTS

As a new restaurant, one of the toughest things is creating and changing your
menu. The menu is what brings customers in and pays the bills and it is crucial to
balance room for trial and error with the perfect array of dishes. If you are creating a
menu (or about to change your existing one) and need some help getting it right,
consider the following tips from some Silver Chef customers who have seen
success.
Start with your environment
The first and one of the most crucial steps to menu planning is to think about the
location of your restaurant, caf or eatery. What are people looking for in your area?
What is currently popular and where are there niches? What are the socioeconomic
considerations in the area? Conrad Hector from Duck Duck Moose says "you want to
be opulent without alienating clientele you want something different and
interesting that attracts people from all walks of life". Are you surrounded by fish
and chip shops? Perhaps look at some fresh, gourmet eats for your menu. Find
something your audience will find exciting and enticing. David McBey from Middle
Green Sports believes honing in on your audience is also essential, "take a holistic
approach to your menu and consider the location and type of clientele and how this
fits with your menu".
Stick to a theme
Try to match your menu choices to the feel of your restaurant. Every restaurant has
a style, theme, and atmosphere that are important to match to your menu. While
there is room for flexibility, a cohesive menu is important and you don't want to

confuse or deter potential clientele. Although it is good to be different, everyone

likes the classics so try to find a balance between the two. Remember, your
customers have a lot of control as to your success pleasing them is just as
important as doing what you love!
Start flexible and change often
Your first menu shouldn't be your last! Make sure what you create, even if it seems
perfect, has room for change. You want to be able to alter things that don't work
and try new things to see if they could be successful. Regularly changing your menu
is not only a great way to find out what works and what doesn't, but also a way to
build excitement for your guests. Duck Duck Moose changes their menu monthly,
while Tooborac Hotel has seasonal menus. Try to find a regular schedule for change
and stick to it. When it comes time to change the menu, remember that you don't
have to change everything keep the best and mix up the rest!
Keep it small
No one likes a big menu with lots to choose from. Research has found that more
choice causes indecisiveness and could even result in a guest leaving. While you
may think lots of choice is great, it can make it confusing and frustrating for the
customer which, ultimately, results in a decline in profitability. A simple, small menu
is easier for everyone. Your guests will like it, you won't have to buy as many
different kinds of produce and your chefs will be able to focus on quality over
quantity.
Use specials to test menu items
Specials are a great way to test and learn for a restaurant. They give you the
opportunity to see what clients like without making them a permanent addition.
David says this is a great way to make smart choices on your menu and make the
most profit, "rather than throwing away or not taking the risk on menu items, put
them on a special to find out what you should keep and what needs changing the
next time you refresh the menu." James Carlin from Tooborac Hotel believes specials
are also a great tactic in the lead up to a menu change, "they can be used to trial
items so when you do change it up, you know it will work".
Have a signature dish
A special dish that showcases your chef's talents and your restaurant's style, your
signature dish should be the golden egg on the menu. It is what draws people to
your establishment and what they walk away talking about. It should be the star,
but remember to make all your dishes worthy of remembering. Rather than a rose
among thorns, make it the jewel in the crown.
Price your menu accordingly
There are many factors that come into play when pricing menu items. Try to
consider all of the things that could affect your profit margin and make sure these
are covered. Staff pay and produce barely scrape the surface! Public holidays,
equipment, utilities, rent, produce and prep, breakage, staff pay and any incidentals
are all outgoing costs. You may need to do a bit of trial and error to figure out how
to cover them all. Consider price points and look at your competitors and clientele
and remember you may need to mix up the menu when it comes to cost. Not all
dishes will equal profit some will be in the positive, some won't reach it. By
balancing this you should be able to maintain your overall food cost goals.
Make your menu attractive and engaging

The design on your menu can have as much impact as the dishes do! Where you
place things, the shape and feel of the menu and what kind of colours and visuals
you include all affect how a guest uses it. Conrad recommends placing importance
on the size of the menu and where dishes are placed. Smaller menus are a tick and
items at the start and end of the menu are usually the most memorable. David
believes A4 books are great, particularly for pubs and similar venues, as they are
easy to read and hold and can be stood up on tables.
Choose the right ingredients
Your ingredients can vary based on your location and clientele, but there are a few
key pointers to maximising profit and minimising wastage. James recommends
reducing wastage by having dishes with several of the same ingredients, "crossing
over produce reduces waste and cost. Less waste, less prep and less equipment all
equals better profits, as well as better prices and service for the customer". Conrad
said that using less red meat helps keep costs down for Duck Duck Moose,
"reducing protein reduces costs. To make up for this we have specials every
weekend with red meat and other more expensive produce". Remember there are
different techniques for different establishments, so find something that works for
your menu, customers and style while keeping costs low.
Running a restaurant can be overwhelming but it can also be extremely rewarding.
Get it right the first time with these tips and if you want more download The Quick
Guide to Boosting Restaurant Profit. Filled with tips and tricks to put your restaurant
on the front foot, Silver Chef's guide takes profitable planning a step further and
covers the entire restaurant.