Menu Engineering Report
Overview:
The Menu Engineering Report calculates and lists the popularity and profitability of each Sales Item based on the recipe cost, pricing, and quantity sold. This report helps analyze and evaluate the Sales Items on your menu. For example, a Sales Item that is high profit and popular is ranked as a "Star". A Sales Item that is low profit and not popular, is ranked as a "Dog". An example is shown below:
Things to know!
- This report will only be accessible and visible to users who are given access to this report function.
- The Menu Engineering Report lists the popularity and profitability of each Sales Item based on the recipe cost, pricing, and quantity sold.
- The Menu Engineering Report can be run for any desired Site, date range, Department, Category, Group, or all Sales Items.
- Menu Engineering is a menu evaluation and planning tool. The Boston Consulting Group laid down the basic foundation behind this process in the 1980s.
Report Parameters
To Run a Menu Engineering Report, use the Sidebar to navigate to the Menu Analytics menu option and then select the Menu Engineering Report from the submenu. Upon selection, a report parameters screen like the one below will display:
Site: This filter only displays if you are logged into your company (versus a specific Site). The drop-down enables a search and selection of your desired Site.
Begin Date: From the drop-down calendar, select a starting date range.
End Date: From the drop-down calendar, select an ending date range.
Price Type: Use the drop-down to select what price you want to use for the sales item on the report. "Average Price" will average the price for the Sales Item based on the retail price over the date range selected for the report. "Retail Price" will utilize the price for the most recent date it was imported from your POS. "Model Price" will use the price that you have entered for the Sales Item in your Recipe Item setup.
Recipe Department: If you want to run the report for a specific Recipe Department (an example might be the Food Department), you can use the drop-down to select your desired Department.
Recipe Category: If you want to run the report for a specific Category (an example might be Draft Beer), you can use the drop-down to select your desired Category.
Recipe Item Group: If you want to run the report for a specific Recipe Group (an example might be Sandwiches), you can use the drop-down to select your desired Group.
Theoretical Cost Method: Use the drop-down to indicate if you want to utilize the Effective Cost or Weighted Average cost for the report. Please click this link for an article about the Costing Methods - FAQs.
Run Report: Once you have selected your report parameters, click the Run Report button to list the report.
Menu Engineering Report:
Selecting to Run the Report will display a report similar to below:
Report Options: For a description of the toolbar provided at the top of the report, please see "Report Options" for help. Report Options link.
The Menu Engineering Report determines the popularity and profitability of each Sales Item based on recipe cost, pricing, and quantity sold. By establishing each Sales Item's popularity and profitability, a Sales Item can be categorized into the following classes:
- Star - High popularity and high profitability
- Workhorse - High popularity and low profitability
- Challenge - Low popularity and high profitability
- Dog - Low popularity and low profitability
Sales Item Popularity %: To determine the popularity of a Sales Item, the Popularity % is calculated. The Popularity % is the Sales Item's count divided by the Sales Item's Category count. In the above report example, the Popularity of 2 Sausage Links/Patty is 3.96% (11 divided by 278).
Sales Item Popularity Factor: A Sales Item's Popularity % is next compared to a Popularity index to establish its Popularity Factor. A High Popularity Factor means a Sales Item's Popularity is in the top 70% of its Sales Category. A Low Popularity Factor means a Sales Item's Popularity is in the bottom 30% of its Sales Category.
Sales Item Profitability: The Profitability of a Sales Item is its Average Price minus the Cost. The Profitability of the 2 Sausage Links/Patty in the report example above is $1.84 ($3.50 - 1.66).
Sales Item Profitability Factor: First average profitability is established for a Sales Item's Category. In the report example above, the average profitability for all the Sales Items in the Breakfast Sides Category is $1.27.
A Sales Item's Profitability Factor is considered High if its Profitability is greater than the Category average. A Sales Item's Profitability Factor is considered Low if its Profitability is lower than the Category average. In the report example above, 2 Sausage Links/Patty has a High Profitability Factor because $1.84 is greater than $1.27.
Menu Engineering Analysis: Menu Engineering is a menu evaluation and planning tool. The Boston Consulting Group laid down the basic foundation behind this process in the 1980s.
From a Menu evaluation perspective, Sales Items with high popularity and high profitability are good performers (Stars). Sales Items that have low profitability and low popularity are poor performers (Dogs).
A very popular Sales Item that has low profitability (Workhorse) is still contributing good total profit dollars (due to high volume), but perhaps the price could be raised. A Sales Item with high profitability, but low volume is considered a challenge or puzzle because even though it is a high-profit item, due to low volume it does not contribute a large amount to overall profits.
For more information on Menu Engineering, this link may be helpful More on Menu Engineering.
In the graphic above, "Horse" is the same as "Workhorse" in this report, and "Puzzle is the same as "Challenge" in this report.