Paramount’s Spicy Chicken Manakeesh just made today’s weekly lunch pick of the week in Toronto Life.

Make sure to check out Paramount at one of their four locations for a tasty meal that won’t break the bank.

Blumont Bistro has opened its doors on the 2nd floor of the Student Center at York University.

Congrats Jeremy, Bradly and Alero to a fantastic launch and bringing delicious and healthy options to students!

The Mad Italian serves up delicious traditional Italian Gelato. But what to do in the cold winter months when looking to warm up a little? Owner Eli Turk  has brought the answer to both his Bayview and College Street locations with “Zazzu” Pizza Cones. Check out the video in Toronto Life and the article in today’s Toronto Star.

Check out the Oyster Boy Crew on the cover of the September issue of the Foodservice and Hospitality Magazine with a featured article inside. Looking good crew!

Make sure to check in their Facebook page to get updates on the latest Oyster shipments coming in.

Williams Landing had their grand opening party last week and what a success, over 500 people filtered through the LEED certified space over the course of the night.

CONGRATS to the TEAM! Make sure to check out their tasty dishes and amazing patio space.

Williams Landing can be found at 120 Lynn Williams Street in Liberty Village.

Edible at the Market has opened with tremendous success on Granville Island.  Congratulations Eric!!

Your [The Fifteen Group's] reputation as an industry leader was proven true at every turn and I could not have imagined going through this project without your team. We look forward to continuing our work with you and your team in the coming years.
— Eric Pateman, Edible at the Market

Burger Cellar just got a stellar review in Metro News Today!

What is Menu Engineering and why is it important?

Menu Engineering is the process of adjusting your menu’s content and price structure to maximize profitability.  The food menu accounts for about 60-70% of sales in a typical restaurant. It is what the guest is looking at when they decide if they are going to eat at your establishment, and it is what mostly decides your profitability when they do come in your restaurant – guests pay for food that you have bought from suppliers and the difference is your profit.

Recipe Building

The most important step to Menu Engineering is costing out your menu. This means building recipes for every menu item and figuring out all associated costs. Do you know the actual cost of the product that you are selling?  When you buy a car at a car dealership, the dealer knows exactly how much he paid for the car that he is about to sell you. If you are to maximize the profitability of your menu, it cannot be done without first knowing your costs.  Having a menu fully costed is beneficial for 2 main reasons:

1. It allows you to strategically build your menu (for both content and price) from a profit maximization point of view.

2. It allows you to accurately control your product costs and minimize shrinkage, staff theft, misportioning, etc.

Menu Profit Maximization

There is an old-school mentality in the restaurant industry that your food cost should be 30% of sales.  This has led to many restaurateurs and Chefs taking the easy approach to menu pricing by tripling the cost of the product and adding a little.  As an example, an item that costs $5.00 to plate, tripling it ($15.00) and adding a bit, and selling it for $16.00 would be good.

Unfortunately this is a flawed approach to Menu Engineering that has been passed along through generations.  The proper way to maximize your menu profitability is by focusing on the margin (selling price minus the cost of the dish) as opposed to the percent cost of sales.

With the Fifteen Group proper Menu Engineering focuses on the relationship between different food items and the margin that you make on each item.  Once a menu has been costed, we plot it on a QuaM graph (Quantity / Margin). We do a separate graph for each menu category, appetizers, entrees, and desserts. The graph is a scatter graph and plots a point for each item with the quantity sold of that item on the vertical axis and the margin that the item produces on the horizontal axis.  In the example at right, the Filet of Sole has a margin of $8.50 and we sold 260 of them for that month. The green lines on the graph are the averages for the axis and they split the graph into four quadrants.

STARS above average margin and popular item

DOGS below average margin and not popular

OPPORTUNITIES very popular but below average margin

???? Great margin but not popular

This graph is the key to maximizing menu profitability – and you will see that there is no mention of percent cost on the graph.  When you look at this graph, from a purely profit point of view, the Filet of Sole is a liability.  Even though the food cost is 20% of sales, the fact is we only make $8.40 profit versus the average of all other items of $10.20. For profit maximization point-of-view, if you took Filet of Sole off of the menu, you would immediately make more money (On average, you would make and extra $1.80 off of those 260 guests which equates to an extra $468 profit / month).

The goal with Menu Engineering is to get all like items grouped closer to the cross of the averages and to push the average margin line further to the right. As general rules of thumb, the following are characteristics for each quadrant:

STARS

- do not change

- these items are making you money and selling well

OPPORTUNITIES

- these items are the biggest opportunity for profit increase

- usually, these items are not price sensitive.

DOGS

- items that should be taken off the menu, such as the chicken dinner.

- often, vegetarian items will show up in this category (but are often needed on a menu)

?????

- Often, these items are overpriced (and often have below average sales)

- Sometimes there is the opportunity to lower the price which should drive sales higher, especially if the current price produces a margin above $10.  For example, if the 12oz. Prime Rib is priced at $20.95 was lowered to $19.95 which resulted in higher sales volume; it would still produce an above-average profit margin.  The lower price might also “steal” sales away from lower-margin items.  In this particular example, we struggled with what to do with the Fish and Chips, a very popular item but with a far below average margin. After much debate, we actually decided to take it off of the menu (as we felt a $4.00 price increase was too dramatic for guests to see visually). The theory was that those guests would now order either the Salmon dish or the Pecan Halibut dish (both currently in the ????? category). Plan B was to review it again in a month and if we didn’t see things going how we planned (and there was a negative feedback from the guests) that we would put Fish and Chips back on the menu at a $2.00 price increase and then increase it again in another 6 months.

Fortunately, there was no negative feedback and what we had hoped for happened almost exactly the way we thought – the Salmon and the Halibut both shot up into the Star category and that one decision made the restaurant an extra $26,000 profit a year – no price increase to the menu, just a wise decision made with useful information.

It should be noted that this graph is not the end-all-and-be-all. There are many other factors that go into decisions that affect your menu – how much prep labour an item takes, how quickly it can be produced on the line, how much beer to patrons drink who order that item, etc., etc. All factors need to be taken into account, but it is safe to say that you cannot possibly maximize your menu’s profitability without knowing the cost and margins of your items and looking at those relationships to sales volumes.

If you want to learn how The Fifteen Group helped our client earn an extra $26,000 profit per year, with no price increases …

contact us today!

The Mercatto group opened its fourth location this past weekend in the Toronto Eaton Center to an overwhelming and positive response. Hat’s Off to their  Executive Chef Rob Rossi who not only executed a delicious menu, but will be featured in Top Chef Canada as a contestant this Spring.

We have been using their services for over two years and are extremely pleased with the benefits being provided to us.
— Jack Scarangella, Mercatto, Owner / Operator

Una Pizza + Wine took home two awards at Calgary’s Best Restaurants 2011: Avenue’s 8th Annual Awards. Una won BEST new restaurant as well as BEST pizza. Congrats!