The Concept of Menu Engineering - Assignment Example

"Revenue Management" Introduction: Revenue management tells about the techniques and ideas to increase the profit of a business. The managers use different strategies to make their business more profitable. They follow different methods to increase the demand of their product or service. In restaurants, managers take different steps to maintain a better outlook of their restaurant. They make necessary changes in the interior as well as exterior of the restaurant. Revenue management directs the managers to give proper guidance to the staff regarding their behavior and performance to serve the customer. This article will further explain about menu engineering. Question 1: How does the restaurant industry compare / contrast with airlines and hotels in terms of capacity and price management (500 words) Ans: For different industries to flourish in terms of profitability it is necessary for them to allocate their resources properly. The airlines and restaurant industry tend to keep a check over the prices and capacity offered by them. However there is a difference between how both these industries manage their price allocation and the management of capacity. In terms of airlines customers have to pay for the number of seats that they take. In other words they pay for the capacity they take. For e.g. if a customer has booked 2 seats he will pay for both the seats. This is also the case with the hotels as the customers pay for the number of rooms that they book i.e. the capacity they take. However in terms of the restaurant industry capacity is not charged for. Although in different circumstances the customer are forced to pay for the capacity. This is very unusual in the restaurant industry. But for a restaurant to increase its profitability it is necessary that they maintain a regular booking schedule. This schedule should be properly maintained and should help the customers in booking the seats in a restaurant. This can prove to be very beneficial for the customers and the restaurant as customers would be satisfied with the service they are getting by the restaurant. And on the other hand this booking schedule would help the restaurant to improve its image in front of the customers. But it can also be said that the capacity management is interlinked in these three industries. Each of the industry is conscious about providing customers with maximum satisfaction regarding the issue of capacity. All these industries maintain a booking schedule for this purpose. The customers in these industries require seats according to their own convenience. For e.g. customers require seats in a particular plane on a particular time and same is the case with the customers who visit a restaurant as they book seats according to their own convenience. On the other hand it is also necessary for these industries to keep a control over their management of prices. It can be said that the industry of airlines and restaurant have similarities regarding the management of prices. This is because both the industries aim to maximize their profits and therefore manage their prices accordingly. The seats offered by the airlines are charged according to the level of comfort in them. Many different airlines have varying prices for their seats due to the difference in the comfort level. Prices also differ because of the service timings that the airlines provide. For e.g. some airlines charge higher as their service time is lesser than those of other airlines. Similarly the restaurants charge for the quality of the food they offer. They maintain a balance of price for different commodities they offer. For e.g. the price of some specialties offered by the restaurants are charged higher than the other commodities. At the same time the price differs in different restaurants also because of the services that they provide. Thus it can be concluded that for both these industries to prosper it is necessary that they keep a strong command over the management of capacity and prices. Question 2: In what way does menu engineering equate to revenue management in the restaurant industry In which way does it not do so (500 words) Ans: For a restaurant to flourish it has to keep in mind all the factors that can affect its profitability. The services and goods sold by the restaurant should be presented in a uniform and proper manner. These goods and services should be promoted so that the customers get attracted to the restaurant. However one important aspect which is not being addressed properly by the restaurants these days is the proper management of the menu. The menus in some restaurants are not properly designed and are a negative factor for the restaurants. They affect the profitability of the restaurant in two ways. Firstly if the menu is not designed properly the customer gets unsatisfied and does not visit the restaurant again. Secondly the restaurant suffers losses if its main specialty is not promoted in the menu. Here the promotion of the restaurant's specialty means that the food which is quite famous should be demonstrated in the menu in such a way that the customers are tempted to try it. Thus it is necessary that the menu in the restaurants is designed appropriately and flawlessly. Menus should be designed in such a way that they help the customers to select their desired choice of food in a timely manner. As it is famously said that the first impression is the last impression, here also the menu gives a first impression to the customer about the restaurant, thus promoting the restaurant. Menus should be developed in such a way that they increase the restaurant's profitability. The dishes which are the specialties of the restaurant should be portrayed the best in the menu. This is because the design of the menu helps to promote the dish. The dish should be portrayed in such a way that the customer gets attracted to it automatically. And to categorize the profit margins of the dishes three matrixes are designed by Miller, Kasanava and Smith and Pavesic which should be used by the restaurants to analyze the dishes. These matrixes help to tell the restaurant management about the popular dishes and about the dishes which need to be promoted. They also tell the management if one dish is not giving profits and if it should be removed or not. The results derived by these matrixes would help the management to design a menu of the standards. This menu would possibly promote the dishes which are the specialties and would also promote those dishes which are neglected by the customers but have the potential to be liked by everyone. These matrixes would guide the hotel management to design the menu of a sort which is liked by everyone. The dishes which need to be promoted get an attractive heading and name. However it is not only the menu which paves the way of prosperity for the restaurants. It cannot be determined only by these matrixes if some dishes are unpopular or the reason why they are unpopular. This is illustrated by different kinds of restaurants in the world which are quite successful but don't have a proper menu designed. Thus it can be concluded that though menu engineering does play a major role in building the revenue of the restaurant industry but on the other hand it is also not necessary for the menu to play a role in increasing the profitability of the restaurants. Question 3: Is menu engineering an appropriate way to approach revenue management in restaurant of the kind found on Borholm (1000 words) Ans: The restaurants found in the Danish origin are lacking the basic requirements which a restaurant should have. The restaurants here don't pay particular attention to the basic needs of the customers. They don't emphasize on particular items or factors which can help in improving the image of their restaurant. But in terms of increasing the revenue many researchers have concluded that such factors should be considered in order to maximize the profits of the restaurants. One such factor which is largely emphasized by the researchers is of the menu engineering. Menus should be designed in such a way that the customers are satisfied with it. Similarly a research was conducted in the town of Borholm to find out the role of menu in the revenue management. The restaurants analyzed in Borholm showed that they did not change their style of menu unless there was a change in the seasons. Thus further research was conducted to find out the performance of different dishes offered by the restaurants. The dishes were categorized on the basis of the three matrixes mentioned above. After they were categorized it was concluded as to which items should be promoted heavily and which items should be removed. The categorization would also help the restaurant management to decide as to how much the price of a particular dish should be increased or decreased. The menus are developed in these restaurants according to the seasonal changes. This is because the restaurant is made on an island and the main source of its income is seafood. Thus it depends on the seasons to determine what kind of seafood the restaurant would get. The maintaining of menu is an important perspective in stabilizing and enhancing the performance of a restaurant but in this situation the menu engineering cannot be that effective as it should be. This is because it is analyzed that the restaurants which were found in Borholm were there since five years and they did not emphasize on the factor of menu engineering. This clearly illustrated that if the restaurants could survive in all these years than they would also survive in the future. The development of a perfect menu in the restaurants find in Borholm is difficult as the seasonal changes are very frequent in the industry of restaurants found there. Furthermore the matrixes which are used to determine the popularity of dishes do not give a specific conclusion. However they provide the restaurant management with an idea of the overall sales of the dishes. But on the other hand if the restaurants emphasize on the management of menu in Borholm they may get a chance to maximize their revenue. The dishes which are already popular amongst customers should be advertised more rigorously by the restaurant management so that the profit margin is increased. The rates of popular dishes should be raised so as to find if it raises their profits or not. The proper management of menus in these restaurants would help the customers to select the food of their own choice in less span of time. This would help the restaurant to satisfy the needs of the customers as customers prefer saving their time than selecting the items of food. If the menu is designed according to the demands of the customers and dishes the revenue would be maximized for the restaurants. But on the contrary the restaurants need to analyze the whole market structure of the dishes that they sell. The less popular dishes would be portrayed in such a way in the menu that the customers get attracted to it automatically. However in the case of Borholm this technique wouldn't work as the dishes which are less popular are due to the fact of cultural differences and restrictions. But on an overall view of the market structure found in Borholm it can be said that menu engineering would pave the way of prosperity for the restaurants. As Borholm is a tourist place many visitors from abroad prefer having menus which are attractive. They select dishes according to the specifications in the menu. This shows that menu would play an important role in maintain the revenue in Borholm. The menu could be designed by the restaurants in such a way that the dishes which are not providing the restaurant with revenue should be promoted. They should be given new names and specifications by the restaurant management. This would tempt the customers to go for the newly added dishes and would thus increase the opportunities for the restaurants found in Borholm. However if this opportunity also fails the item can be removed from the list of dishes offered by the restaurant. However the dish which was not successful could be replaced by other new dishes in the menu. Similarly the dishes which are not that profitable but have the potential to increase the profitability should also be promoted by the menu. These dishes should be re designed in the menu. They should be made more prominent in the menu so the customer is able to view it as an important dish. If the sale of dishes even then does not increase then special offers should be offered by the restaurant management. The menu should be designed in such a way that it would tempt the customer to try the special offer. Thus it can be concluded that though the menu design is an important factor in influencing the revenue management in Borholm still it is very difficult to examine the market demand of dishes. But an estimate of the popularity of the dishes can be derived and the menu can be designed accordingly. Conclusion: Menu engineering plays a vital role in making the restaurant business profitable. The exterior and interior of a restaurant leaves the first impression on the customer then the environment of the restaurant, behavior of the staff and design of the menu. Sometimes badly designed menu acts as a loss for the restaurant. So it is beneficial for the restaurant business to increase value of their product and increase the number of customers. Proper menu engineering may lead to positive responses from the customer. Bibliography: Atkinson, H. and Jones. P. (1994) 'Menu engineering: managing the foodservice micro-marketing mix', Journal of restaurant and Foodservice Marketing, 1(1). 37-55. Bayou, M. E. and Bennett. L. B. (1992) 'Profitability analysis for table-service restaurant', Cornell Hotel and Restaurant Administration Quarterly, 32(2), 49-55. Smith, B. C,. Leimkuhler, J. F. and Darrow, R. M. (1992) 'Yield management at American Airlines', Interfaces, 22(1), 8-31 Pavesic, D. V. (1985), 'Prime numbers: finding your menu's strenghts', Cornell Hotel and Restaurant Administration Quarterly, 26(3), 70-7. Nagle, T. and Holden, R (1994) The Strategy and Tactics of pricing; A guide of Profitable Decision-Making, London: Prentice-Hall. Miller. J. E (1980) Menu Pricing and Strategy. New York: Van Nostrand Reinhold. Miller. J. E. and Pavesic, D. V. (1996) Menu Pricing and Strategy. 4th edn. Canada: John Wiley and sons. Desinano, P., Minuti, M. S. and Schiaffella, E. (2000) 'Controlling the Yield management process in the hospitality business', Paper resented at the Fifth International Yield and Reveneu Management Conference, Assisi, Italy, September. Donaghy, K., McMahon-Beattie, U., Yeoman, I. and Ingold, A. (1998) 'The realism of yield management'. Progress in Tourism and Hospitality Research, 4(3), 187-95 Read More