Search results

1 – 10 of over 7000
To view the access options for this content please click here
Article

Paul Morrison

Profiles the development of menu‐engineering models and, in particular, the movement supporting the quantification of all costs associated with the production of a menu

Abstract

Profiles the development of menu‐engineering models and, in particular, the movement supporting the quantification of all costs associated with the production of a menu item. Reports the findings of a study of upscale restaurant menu planners. While all menu planners adopted elements of menu engineering when planning menus, most rejected the opportunity to factor in non‐material direct costs as a major component of determining menu content and prices. In particular, individual dish labour cost was not considered an important menu‐planning criterion. Dishes which attracted low sales, but which planners felt added interest to the menu, were included on the menu. This supports the view of most advocates of quantitative menu analysis that the profitability of individual dishes on the menu is only one of several important criteria when designing the menu.

Details

International Journal of Contemporary Hospitality Management, vol. 8 no. 4
Type: Research Article
ISSN: 0959-6119

Keywords

To view the access options for this content please click here
Article

Rossano Linassi, Anete Alberton and Sidnei Vieira Marinho

This paper aims to examine whether using menu engineering (ME) together with activity-based costing (ABC) for menu analysis provides new insights into true menu

Abstract

Purpose

This paper aims to examine whether using menu engineering (ME) together with activity-based costing (ABC) for menu analysis provides new insights into true menu profitability. The traditional ME approach only uses food costs to determine the contribution margin (CM) of individual menu items. This combined approach uses both food and traceable operating costs to estimate CMs more accurately.

Design/methodology/approach

An improved ME model was developed and tested in an oriental restaurant in Brazil. Direct observation of restaurant activities allowed most costs to be traced (not simply allocated) to individual menu items.

Findings

The results revealed small differences in the rankings between the traditional approach and ABC/ME, demonstrating that the integration of ABC with ME made it to possible to identify increased food-costs and lower CMs for all groups of menu items. The results also show that ABC methods are applicable to an oriental-style restaurant.

Research limitations/implications

Just one restaurant and only 80 per cent of the menu were examined in this study. Future research should apply the model used here to other restaurant types located in different geographical areas to validate the approach.

Practical implications

The results suggest that ME can be improved upon by first assessing variable costs using ABC methods.

Originality/value

This paper combines two different analytic techniques (ME and ABC) into a new approach that reveals the true picture of profit and loss for a menu from a restaurant in Brazil.

Details

International Journal of Contemporary Hospitality Management, vol. 28 no. 7
Type: Research Article
ISSN: 0959-6119

Keywords

To view the access options for this content please click here
Article

Carola Raab and Karl Mayer

This research paper aims to examine whether using menu engineering (ME) together with activity‐based costing (ABC) for menu analysis gives new insights about true menu

Abstract

Purpose

This research paper aims to examine whether using menu engineering (ME) together with activity‐based costing (ABC) for menu analysis gives new insights about true menu profitability. The traditional ME approach only uses food cost to determine the contribution margin of individual menu items. This combined approach uses both food and traceable operating costs to estimate contribution margins more accurately.

Design/methodology/approach

An improved menu engineering model was developed and tested in a buffet restaurant in Hong Kong. Direct observation of restaurant activities allowed most costs to be traced (not simply allocated) to individual menu items.

Findings

The results found that only three of 20 dinner menu entrées were profitable. This unique insight would not have been possible using traditional ME methods alone. The results also showed that ABC methods are applicable to a buffet‐style restaurant.

Research limitations/implications

Only a single restaurant and only the dinner menu were examined in this study. Future research should apply the model used herein to other restaurant types located in different geographical areas in an effort in order to validate the approach.

Practical implications

The paper suggests that ME can be improved upon by first assessing variable costs using ABC methods. Thus, the extra effort required to apply ABC in a restaurant appears to be worthwhile.

Originality/value

The paper combines two disparate analytic techniques (ME and ABC) in a new approach that reveals a menu's true profit and loss picture. The paper also makes several modifications to the traditional ME approach.

Details

International Journal of Contemporary Hospitality Management, vol. 19 no. 1
Type: Research Article
ISSN: 0959-6119

Keywords

To view the access options for this content please click here
Article

Jim Taylor, Dennis Reynolds and Denise M. Brown

The purpose of this paper is to develop a multi‐dimensional, holistic model that: avoids the variable interdependency found in earlier tools; and integrates multiple…

Abstract

Purpose

The purpose of this paper is to develop a multi‐dimensional, holistic model that: avoids the variable interdependency found in earlier tools; and integrates multiple factors that characterize menu item costs more accurately by considering more than gross profit.

Design/methodology/approach

Using data gathered during a three‐month period from three same‐brand units of a full‐service chain restaurant firm, the paper applies data‐envelopment analysis (DEA), a non‐parametric approach that accounts for both controllable (discretionary) and uncontrollable (non‐discretionary) variables, producing a single relative‐to‐best index based on an efficiency rating calculated on a 0 to 1 scale.

Findings

The findings suggest that the DEA‐equipped model, which is not constrained by the limitations of traditional matrix approaches, supports a more robust approach by incorporating more cost determinants than traditional menu engineering approaches.

Research limitations/implications

The paper consists of only a single restaurant concept and the evaluation results are purely theoretical. Future research should include the application of the menu analysis recommendations to an actual menu to determine the effectiveness of the model on actual operation profitability.

Practical implications

The research suggests that DEA is an effective tool in the evaluation of a restaurant menu by evaluating individual menu items based on attributes of labor and profitability factors.

Originality/value

The paper shows that by combining DEA with traditional menu analysis methodologies, a more efficient menu analysis tool may be utilized to evaluate menu items without the arbitrary allocation of non‐food costs.

Details

International Journal of Contemporary Hospitality Management, vol. 21 no. 2
Type: Research Article
ISSN: 0959-6119

Keywords

To view the access options for this content please click here
Article

Amel Ben Hadj Salem‐Mhamdia and Bahia Bejar Ghadhab

The purpose of this study is to show how using value management (VM) together with activity based costing (ABC) for menu analysis helps managers to estimate contribution…

Abstract

Purpose

The purpose of this study is to show how using value management (VM) together with activity based costing (ABC) for menu analysis helps managers to estimate contribution margins more precisely and to analyze customer satisfaction. This new approach is considered an appropriate tool for guiding and directing the process of making decisions.

Design/methodology/approach

In this research a case study is employed to examine whether the application of the ABC/VM approach can improve the decision‐making process in a Tunisian à la carte restaurant. Data were collected over the period of a month using direct observations of restaurant activities to calculate profitability, and a questionnaire was administered to determine customer satisfaction.

Findings

The results show that six of 11 menu items were profitable. The results also show that managers should analyze profitability and customer point of view simultaneously in order to inform the decision‐making process.

Research limitations/implications

Only a single à la carte‐style restaurant and the dinner menu was examined in this study. Future research should apply the model to other restaurant types in order to validate the model.

Practical implications

The paper suggests that using activity based costing with value management can enhance the quality of the decision‐making process. It demonstrates to managers how they can reduce their costs and improve resource allocation, taking into consideration customer needs and satisfaction.

Originality/value

The paper combines two analytic techniques (VM and ABC) that reveal a menu's true profit and loss picture and a menu item's value.

Details

International Journal of Contemporary Hospitality Management, vol. 24 no. 2
Type: Research Article
ISSN: 0959-6119

Keywords

To view the access options for this content please click here
Article

Stephen M. LeBruto, Robert A. Ashley and William Quain

Managing food service operations to achieve a specific food cost percentage has long been a fundamental principle of the restaurant business. Management bonuses and other…

Abstract

Managing food service operations to achieve a specific food cost percentage has long been a fundamental principle of the restaurant business. Management bonuses and other rewards are often based on achieving these predetermined goals. Available tools such as menu engineering and contribution margin, although sound in theory, are not frequently used. Demonstrates the use of menu engineering and contribution margin concepts in terms of customers served. Concludes that the goal of any restaurant should be to apply marketing techniques based on menu engineering and contribution margin concepts in order to achieve the highest possible financial results.

Details

International Journal of Contemporary Hospitality Management, vol. 9 no. 4
Type: Research Article
ISSN: 0959-6119

Keywords

To view the access options for this content please click here
Book part

Charles N. Noussair, Damjan Pfajfar and Janos Zsiros

We design experimental economies based on a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. We apply shocks to tastes, productivity, and interest rate…

Abstract

We design experimental economies based on a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. We apply shocks to tastes, productivity, and interest rate policy, and measure the persistence of these shocks. We find that, in a setting where goods are perfect substitutes, there is little persistence of output shocks compared to treatments with monopolistic competition, which perform similarly irrespective of whether or not menu costs are present. Discretionary central banking is associated with greater persistence than automated instrumental rules.

Details

Experiments in Macroeconomics
Type: Book
ISBN: 978-1-78441-195-4

Keywords

To view the access options for this content please click here
Article

Joseph P. McGarrity

The purpose of this paper is to examine how firms respond to adverse supply shocks.

Abstract

Purpose

The purpose of this paper is to examine how firms respond to adverse supply shocks.

Design/methodology/approach

This paper examines a supply shock within the framework of Mankiw's Menu Cost Model.

Findings

The analysis in this paper illustrates that the type of adverse shock is important. An immediate increase in the money supply may work well in response to a negative aggregate demand shock, but be counter‐productive in response to a negative supply shock. This paper finds that output will decrease when the Federal Reserve increases the money supply in response to an adverse supply shock.

Practical implications

The implication is that when the Federal Reserve first spots a negative supply shock (such as an increase in oil prices), it should not immediately respond with an increase in the money supply. Doing so might cause a recession.

Originality/value

When there is a negative supply shock, conventional wisdom holds that an increase in money supply can offset the decrease in output that would occur without a policy response. That is, increases in money supply have the exact opposite influence that most economists often suppose.

Details

Humanomics, vol. 25 no. 4
Type: Research Article
ISSN: 0828-8666

Keywords

To view the access options for this content please click here
Article

Sandeep Munjal and Sanjay Sharma

In the Indian context with an extended phase of high food inflation impacting the hospitality sector, there is a need for coping mechanisms to protect the business bottom…

Abstract

Purpose

In the Indian context with an extended phase of high food inflation impacting the hospitality sector, there is a need for coping mechanisms to protect the business bottom line and maintain revenue growth. This need is even more pronounced within the budget restaurant segment. There is limited research that identifies the approach and innovative practices that food and beverage profit centers (hotels and restaurants) can deploy to handle the impact of the identified macroeconomic variable. The purpose of this paper is to probe the general approach and innovation that the budget segment may have used to survive the impact of a sustained increase in prices of food products and related raw materials.

Design/methodology/approach

A qualitative approach is adopted for this investigation, through a mix of in‐person or telephone interviews with operating managers (F&B manager, restaurant manager and chefs). The feedback from these sources provides an understanding of the responses of the budget segment to the stated issue of inflation in food products. The qualitative approach generates a spectrum of responses that helps to document some of the best practices that yielded good results, allowing the broader segment to emulate the same.

Findings

The research helps owners and operators to draw from innovative practices and approaches used to deliver improved fiscal performance in terms of managing food cost, without adversely impacting customer experience and overall business profitability.

Research limitations/implications

There was a possibility that no clear indicators would emerge from the feedback, nonetheless the experiences that are documented through this research open doors for further research into innovative practices in managing food and beverage costs for improved profitability.

Practical implications

The budget food and beverage sector in the Indian context has been dealing with high inflation of 14 ‐ 18 per cent on the supply side. A mix of strategic choices including passing the additional cost to end users, compromises in the form of diluting product quality or quantity (portion size) or unique process changes are also possible responses.

Originality/value

This paper lists best practices and also evaluates if there is any commonality emerging from the segment in terms of the “right approach” to manage food cost under prevailing inflationary conditions.

Details

Worldwide Hospitality and Tourism Themes, vol. 4 no. 5
Type: Research Article
ISSN: 1755-4217

Keywords

To view the access options for this content please click here
Case study

Debjit Roy, Mukund Raut, Sanchit Agrawal and Shubham Agrawal

Takshshila, the owner of Sandwichworkz, a trendy restaurant in Ahmedabad, India, is worried about the diminishing profitability of her restaurant. Recent promotional…

Abstract

Takshshila, the owner of Sandwichworkz, a trendy restaurant in Ahmedabad, India, is worried about the diminishing profitability of her restaurant. Recent promotional offers have increased the footfall, but not profitability. To address this issue, she knew she had to optimize and redesign their menu. She also realizes that to properly address this issue, they would beed to take into account factors such as popularity of each menu item and their per unit profitability. She contacts Nick, a restaurant consultant who further dwells into calculating the costs involved in making each item, to determine the per unit profitability. He proposed plotting the popularity vs. popularity graph (as per Kasavana Smith model) and making qyadrant specific re-enginering decisions. Post his analysis using this menu re-engineering tool, he calls Takshshila with his recommendations. During the call, they come across a new costing methodology which may affect his recommendations. Which methodology should Nick use? Should Takshshila invest in capturing data for the new methodology?

Details

Indian Institute of Management Ahmedabad, vol. no.
Type: Case Study
ISSN: 2633-3260
Published by: Indian Institute of Management Ahmedabad

Keywords

1 – 10 of over 7000