Lecture Food and beverage cost control, chapter 6 - Managing food and beverage pricing. This chapter presents the following content: Menu formats, menu specials, factors affecting menu pricing, assigning menu prices, special pricing situations, technology tools. | Chapter 6 Managing Food and Beverage Pricing Main Ideas Menu Formats Factors Affecting Menu Pricing Assigning Menu Prices Special Pricing Situations Technology Tools Menu Formats Menus – standard, daily or cycle. Menu “tip-ons,” - smaller menu segments clipped on to more permanent menus. The standard menu is fixed day after day. The daily menu changes every day. A cycle menu is a menu in effect for a specific time period. The length of the cycle refers to the length of time the menu is in effect. Daily or weekly menu specials provide variety, low-cost raw ingredients, carryover utilization, or test-market potential for new menu items. Factors Affecting Menu Pricing Total revenue is generated by the following formula: As price increases, the number of items sold will generally decrease. Price x Number Sold = Total Revenue Factors Affecting Menu Pricing Local competition Service levels Guest type – price sensitivity Product quality Portion size Ambience Meal Period Location Sales mix Factors Affecting Menu Pricing Sales mix refers to the specific menu items selected by guests. Sales mix will most heavily influence the menu pricing decision Price blending refers to the process of pricing products, with very different individual cost percentages, in groups with the intent of achieving a favorable overall cost situation. Assigning Menu Prices Product Cost Percentage/Pricing Factor Contribution Margin Assigning Menu Prices The formula for computing food cost percentage is as follows: This formula can be worded somewhat differently for a single menu item without changing its accuracy. Consider that: Cost of Food Sold Food Sales = Food Cost % Costs of a Specific Food Item Sold Food Sales of that Item = Food Cost % of That Item Assigning Menu Prices Product Cost Percentage The principles of algebra allow you to rearrange the formula as follows: Cost of a Specific Food Item Sold Food Cost % of That Item = Food Sales . | Chapter 6 Managing Food and Beverage Pricing Main Ideas Menu Formats Factors Affecting Menu Pricing Assigning Menu Prices Special Pricing Situations Technology Tools Menu Formats Menus – standard, daily or cycle. Menu “tip-ons,” - smaller menu segments clipped on to more permanent menus. The standard menu is fixed day after day. The daily menu changes every day. A cycle menu is a menu in effect for a specific time period. The length of the cycle refers to the length of time the menu is in effect. Daily or weekly menu specials provide variety, low-cost raw ingredients, carryover utilization, or test-market potential for new menu items. Factors Affecting Menu Pricing Total revenue is generated by the following formula: As price increases, the number of items sold will generally decrease. Price x Number Sold = Total Revenue Factors Affecting Menu Pricing Local competition Service levels Guest type – price sensitivity Product quality Portion size Ambience Meal .
