How to Optimize a Restaurant MenuThe Pricing Mechanism and Optimal Food Cost

There is a simple classical formula for cross-selling that defines optimal margin:

Optimal Margin = 2 × X1 + 1 × X2 + 1 × Y1 + 1 × Y2

Where:

• X1 – cold appetizer, hot appetizer, salad, or soup

• X2 – main hot dish

• Y1 – soft drink

• Y2 – tea or coffee

This means: if your server sells an appetizer plus a soup plus a main course plus a drink plus a hot beverage — or a salad plus a hot appetizer plus a main course plus a drink plus a hot beverage — you have achieved the optimal margin.

Menu Optimization — How?

How do you reduce food cost? How do you prepare high-cuisine dishes for a symbolic price?

Cross-selling is designed to promote main dishes with an established optimal markup coefficient and to sell additional items with the maximum markup coefficient. These items include cold appetizers, salads, hot appetizers, side dishes, and soups.

The Essence of the North American Approach

The combined margin of an appetizer and a soup should be greater than the margin on the main dish. In other words, selling the main dish with the maximum markup (overselling) leads to the guest refusing to purchase other items.

The server is focused on ensuring that two X1 positions are sold — that is, appetizer+salad, appetizer+soup, or salad+soup. For this to happen, these items must be as attractive as possible to the guest — original recipes, unusual dishes, bright and creative presentation.

The combined margin on all dishes should be below 100%. This is the critical threshold below which a restaurant cannot fall. This rule applies to restaurants with an average check of up to $30.

The French Classical School

The French classical school is represented by dishes based on mono-products, on which the main margin is formed.

In contrast to the American school, the highest markup is formed not on appetizers and soups, but on hot dishes, wine, and cheeses. The margin on hot dishes and wine reaches 300–400%. The margin on desserts reaches 350%.

Menu of the Famous Classical Restaurant Chartier (Paris)

Starters / Entries:

• Vegetable soup — €2.20

• Shrimp with avocado sauce — €3.30

• Vinaigrette with baby carrots — €1.80

• Celery remoulade — €2.50

• Leek vinaigrette — €3.50

• Tomato salad — €1.90

• Endive salad with Roquefort — €5.50

• Foie gras — €6.80

• Dry hams and sausages — €3.70

• Pâté — €3.70

• Herring fillet with apples and butter — €3.70

• Sardines in oil — €2.20

• 6 snails — €6.50

• 12 snails — €13.00

Fish:

• Skate wing with capers in butter — €10.40

• Royal sea bream baked with Vierge sauce — €13.00

• Trout with almonds — €10.00

Meat:

• Beef tartare with garlic fries — €11.80

• Roasted chicken with Provencal herbs — €8.70

• Grilled giblets — €11.40

• Lamb ribs — €10.80

• Spaghetti "Côte-de-Voie" — €11.50

• Tongue in veal sauce — €9.80

• Alsatian sauerkraut — €10.70

• Pork sauté with olives — €8.80

• Duck confit with potatoes and parsley — €9.70

• Roast beef with Roquefort — €11.00

• Spaghetti Bolognese — €8.60

Side Dishes:

• English baked apples — €2.50

• French fries with goose fat — €2.50

• Spaghetti — €2.50

• Vegetarian plate — €6.50

• Provencal mushrooms — €2.50

• Green beans English style — €2.50

Cheeses:

• Bleu d'Auvergne — €2.60

• Camembert — €2.50

• Cottage cheese — €1.90

• Goat cheese — €2.60

Desserts:

• Rum baba with whipped cream — €4.50

• Apple puree with caramel — €2.20

• Chestnuts with whipped cream — €3.20

• Prunes in wine with vanilla ice cream — €3.80

• Profiteroles with hot chocolate — €3.90

• Green apple sorbet — €3.80

The Spanish Classical School

Many Spanish restaurants offer guests comprehensive gourmet menus — 3–4 courses, a glass of wine, and coffee for prices ranging from €60 to €100.

Cold appetizers and salads in an average Spanish restaurant cost from €1.5 to €15. Hot dishes of fish, meat, poultry, seafood, as well as pasta and rice dishes, cost from €18 to €40. Pastries and desserts cost from €1 to €7. Tapas — from €1 to €4. Wines — from €4 to €10 per glass. Tea and coffee — from €3 to €7.

The Spanish Model

The Spanish model assumes a markup of 300–400% on salads, cold appetizers, and hot dishes. Taking into account the climatic and geographical factors, Spain works with vegetables and seafood year-round at roughly the same average market price. Although food products in Spain cost almost 2.5 times more than, for example, in the United States, restaurateurs maintain relatively low prices that stimulate domestic demand.

Comprehensive offerings in the premium restaurant segment are the most effective solution for attracting an additional guest audience. Each such menu includes up to 10–15 options of 3–4 courses. Every menu has prices at stepwise affordability levels. In any restaurant, you can order 2–3 types of tapas (served on a plate like sushi — sets of 4–6 tapas), a light salad, coffee, and dessert, spending about €20–25. For €60, you can get a full gastronomic lunch with a glass of wine. At the same time, the portion size of one dish does not exceed 120–180 grams.

Seasonal Food Cost Management

In many northern regions, the seasonal factor is practically absent. Introducing seasonal dishes or a seasonal menu is most rationally done in late spring — early summer.

The seasonal factor in food cost management should be implemented through the production of seasonal preserves. The storage of preserves can be solved by using external storage space — from one's own empty garage to auxiliary premises at a country house.

The purpose of seasonal preserves is not only to minimize costs but also to ensure product quality. Contrary to the stereotype about the advisability of preserving mushrooms, berries, and vegetables, other preservation methods are also used.

In late summer and early autumn, it is advisable to preserve:

• Canned pâtés from goose, duck, pork, and beef liver

• Goose, duck, turkey, and game — boiled-smoked and boiled

• Ready-made vegetable mixtures — soup bases

• Concentrated mixtures of aromatic seasonings and herbs

• Dried mushrooms, vegetables, and fruits for confectionery

• Jams, conserves, marmalades, and fruit pastes

• Meat sausages in natural casings (intestines)

• Pickled watermelons and melons

• Classic pickles (cucumbers, tomatoes, peppers, garlic, etc.)

The Chef's Responsibilities

The chef must:

• Continuously monitor prices on perishable chilled and frozen products

• Conduct tastings of new products from suppliers, attend specialized presentations and master classes

• Carry out laboratory development of new dishes using economical ingredients on a weekly basis

• Organize monthly price monitoring for main types of raw materials and make decisions during the season about the advisability of certain preserves based on price trend analysis

• Differentiate purchases in terms of price-quality ratio and method of acquisition — door-to-door delivery versus self-pickup from suppliers and farms

Full Cost Calculation Methodology

Every dish (product, sales item) must undergo comprehensive marketing and financial-economic analysis, including:

• Markup coefficient on the dish

• Sales volume in the reporting period (dish rating by ABC analysis)

• Labor costs for preparing the dish (number of man-hours and machine-hours, useful equipment load). For example: work of 2 cooks, preparation time — 1 hour 15 minutes, of which 35 minutes in a combi-oven, two GN 1/1 sheets in a six-level combi-oven

• Material cost of the dish

• Other production costs per unit of output

Full Cost = Material Cost + LFC + CUF + OH

Where:

• LFC — Labor Force Coefficient

• CUF — Capacity Utilization Factor

• OH — Overhead expenses

Working with Portion Sizing

Sizing Method is a technology for determining the optimal portion size of dishes on your menu.

There are two main approaches:

1. Promoting large-format dishes for two or more persons

2. Promoting small-format dishes with the expectation of selling several different dishes with the same markup

In 2010, in the United States, more than 100 fast-food chains introduced menu items weighing from 50 to 80 grams. This strategy brought success, and in many casual restaurants, it appears in comprehensive menu offerings. The low cost of a dish prompts the guest, driven by curiosity, to order several interesting and original dishes instead of just one.

Large-Size Dishes

Large-format dishes are designed to:

• Provide a high markup on a large-format dish with a sufficiently high price for two or more guests

• Compel the guest to purchase a half portion (for example, of soup) but with the same markup coefficient as the full dish

• Demonstrate to a group of guests the value proposition of a large dish. In practice, such "special offers" generate maximum margin. This involves a certain misdirection — the guest logically assumes that the larger the dish, the cheaper it is per unit. This is not actually the case.

A dish for multiple guests is "modeled" according to the following scheme:

• 10% by weight — premium product

• 40% by weight — high-price-category product

• 50% — low-price-category products

Example: 10% lamb rack, 40% — beef liver in caul fat, chicken wings, kebab, home-fried sausage, meat rolls, 50% — pickles, grilled vegetables, potatoes.

Business Lunch, Buffet, and Brunch Menus

Any restaurant offering that includes unlimited guest access to hot-holding counters, salad bars, or serving lines must follow these rules:

• Meat dishes are represented only by portioned poultry dishes and minced meat dishes

• Salads are represented primarily by dishes consisting of boiled vegetables, preserved vegetables, and various sauces

• Soups are represented by three types: vegetable-based creams, rich meat broths with grains, and fish broths with grains

• A wide variety of baked goods — traditional yeast and fresh-yeast dough, European puff pastry — and confectionery from sponge and shortcrust pastry (cookies, muffins, cupcakes, etc.)

It is recommended to work with combined dishes of meat, fish, vegetables, and mushrooms, such as:

• Meat rolls with fillings

• Portioned pâtés

• Tapas, vol-au-vents with salads and vegetable caviar, mousses on meat broths

• Sandwiches with various fillings

• Layered meat products from dough, vegetables, and meat, served on leaves

• Boiled-smoked products from minced meat masses and vegetables, boiled or baked in sleeves or foil

Dishes with low food cost will be examined in detail in the following seminar topics.

It is advisable to exclude purchased finished products and semi-finished goods from special event menus.

It is important to ensure that finished products are served at a temperature of no less than 65°C. The only optimal technical solution for achieving this parameter is the use of holding cabinets and chafing dishes with burners.

It is advisable to use products that are portioned and decorated in small portions. Beautiful individual presentation of small portions leaves a better impression on the guest. Preparing and decorating such dishes is more labor-intensive, but economically far more profitable than laying out a finished dish — for example, a meat dish — in gastronorm containers in a hot-holding unit.

Example: Displaying ready-made club sandwiches with chicken or tuna is far more profitable than separately displaying tuna, buns, lettuce leaves, sliced tomatoes, and grilled chicken breast. A guest will almost always take more individually than in the form of a ready-made "assembled" dish.

Minimizing Write-Offs

One of the most effective ways to minimize write-offs in a restaurant is the production of high-degree semi-finished products:

• Chilled vegetable and meat mixtures packed in HDPE bags with perforation for cooking soups. Such ready-made mixtures should be frozen in blast freezers and used to cook broths by placing the bags with ingredients directly into the cooking vessel

• Frozen semi-finished products of varying degrees of readiness: bread and rolls, pastries from fresh-yeast and puff pastry, marinated meat and fish preparations in vacuum bags

• Chilled products in vacuum bags: peeled vegetables, berries, fruits, meat and fish products

It is also advisable to structure the menu so that the original product is used as efficiently and waste-free as possible.

Example: A broiler chicken is used to produce chicken Kyiv, broths, Buffalo wings, giblet stew, chicken pâté, and so on.

In the United States, specialized software products are used to compose a restaurant's menu as efficiently as possible, minimizing losses.

Purchasing raw materials as close to their original state as possible — a large cut, whole poultry or large fish, or half a lamb carcass for a banquet — allows significant savings in achieving the desired food cost. At the same time, it is necessary to introduce menu items that ensure near-100% utilization of raw materials:

The concept of gastronomic use of meat products — every piece, every part of beef, pork, or poultry is used strictly according to its purpose, including the so-called "soup set," which is used for boiling bone broths.

Gastronomic butchery of meat — the preparation of portioned and minced semi-finished products for specific culinary processing methods used in preparing specific dishes.

Examples of Using 96% of a Beef Carcass for Various Dishes:

Tenderloin:

• Base of tenderloin — Chateaubriand

• Top of tenderloin — filet mignon, medallions, steaks, stroganoff, mock tenderloin

• All types of meat cuts are used for grilling over open or closed flame

Roast Beef:

• Round roast beef, rib medallions, sirloin, entrecôte, rump steak, club steak — grilled on hot surfaces

Thin Sirloin:

• Bone-in steaks — grilled after marinating in wine and balsamic vinegar

Cutlets and Chops:

• Mock chop — beef chop, veal chop, lamb chop, beef short ribs

Rump (meat for roasting):

• Steak, schnitzel, beef stroganoff, thigh rolls (filled with mushrooms, ham, lard, minced meat), larded meat, roast, soup rolls, roast rolls

Tenderons (brisket wrapped around the rib):

• Soup bones, fricassee, stew, shashlik, minced products — beefsteaks, hamburgers, beefburgers, fillings for stuffing

Offal:

• Kidney stew, kidney soups, heart, spleen

• Thymus (sweetbreads)

• Tongue dishes

• Heart and lung dishes

• Offal sausages and blood sausages

• Liver sausage with brains

• Smoked offal and giblets

• Pâtés

• Smoked delicacies

• 
  

Selecting New Suppliers and Price Monitoring

In an environment of heightened competition, food suppliers are ready to make significant concessions regarding payment terms.

Price monitoring in the market should be conducted by restaurant management personally. Raw material price monitoring should be carried out at least once a month. Tracking price trends for raw materials is necessary, among other things, to adjust restaurant pricing.

In the process of searching for suppliers, attention should be paid to farms and private producers when purchasing beef, pork, lamb, vegetables, berries, and mushrooms.

With each of the main suppliers, it is advisable to have a personal meeting and explain the restaurant's position regarding kickbacks and bonuses. Today, a common practice is the legal receipt of kickbacks with funds transferred to the restaurant's cash register.

Thematic Menus and Special Offers

What types of special offers actually "work"?

• Offers of ethnic authentic cuisine — for example, a week of Spanish cuisine

• Offers of dishes consumed during religious holidays

• Offers for groups of 6, 10, or 15 persons

• Sale of an entrance ticket to a restaurant event with dinner included

• Special dinner menu for two (3–4 courses and a glass of wine)

• Birthday offers, offers in honor of a professional or industry day

• Promotional offers — "Week of Healthy and Dietary Eating"

Example of a Thematic Menu: Old Russian Cuisine

For the coming week, our restaurant invites you to discover forgotten ancient recipes of traditional cuisine.

In the special historical menu, you will find:

• Kulesh, buraki, galantir, koltuny, tripe, tails in sauce, salnik, archbishop's pie, botvinya, boiled whitefish, krupenik, lapshevnik, tykovnik, kutya, paskha, oblats, honey-spice cookies.

Example: Offer for 6–8 Persons — "Beer Dozen"

• Dark beer — 10 liters

• Light beer — 10 liters

• 10 beer snacks:

  • Buffalo chicken wings

  • Spicy chicken strips

  • Calamari rings and onion rings

  • Cheese nuggets

  • Garlic croutons

  • Meatballs

  • Sudjuk sausage

  • Bavaria sausages

  • Munich sausages

  • Liver in caul fat

• 10 sauces: Thousand Island, mustard, curry, barbecue, garlic, pesto, maple, chili, balsamic, cheese

Special Offer Strategy

A special offer should involve a product chosen for overselling. A beer offer should contain a 200–250% markup on beer and a 100% markup on snacks — or a 200–250% markup on snacks and a minimally acceptable markup on beer.

The special offer should be:

• Original and unlike competitors' offerings. It is recommended to use authentic foreign recipes — European, Asian, or Arabic cuisines

• Priced democratically, appealing to the guest's sense of value. Such offers should be positioned by the server as: "We have a very profitable and interesting offer, available only today"

• Sold under a legend. For example: "This is Mexican Cuisine Week in honor of [a celebrity's] birthday" for a casual restaurant, or "This is Spanish Cuisine Week with Salvador Dalí-style presentation" for a more upscale venue

The Purpose of Special Offers

Special offers are designed to:

• Attract new guests through advertising of the promotion or offer

• Bring in regular guests from the guest database who visit less frequently

• Promote dishes with low food cost and high markup — in a lower price segment than à la carte items — without lowering the restaurant's overall positioning

• Create informational reasons for publication in the media

• Conduct interesting promotions accompanying the menu offer and obtain new guest contacts

• Attract supplier partners to promote their products and reduce the food cost of the special offer

Conclusions

Menu items cannot and should not compete with each other, pushing the guest to buy less.

Correct pricing is the main key to increasing sales.

The chef's task is to minimize material food cost while stimulating interest in the restaurant's gastronomic offering.

Portion sizes should communicate the concept of "value."

Minimizing write-offs is ensured by the correct selection of dishes for your menu.

Special offers are designed to attract new guests and maintain interest in the establishment from returning guests.

Special offers allow the restaurant to adjust its pricing policy without changing its positioning or concept.