1.

Abstract
As the most effective management tool, the menu is not only be profitable but also cost-
effective. This is the biggest challenge towards almost managers operating in the food and
beverage field (Krause, 2007). It is very important that this problem be taken into consideration
to give businesses an increase in popularity. Moreover, it is a good management that could be
regarded as the firm’s competitive advantages, appealing to the potential customers.

2. Introduction
In the hospitality industry, a menu is one of the most essential tools for a firm to communicate
with the customers. It shows the customers the products that a firm sells. Each product that listed
in the menu is expected to have a high profit and popularity. Menu engineering is of great
significance in enhancing the management of businesses and associating management of
menus with costing approaches.

3. Discussion
Part A: Menu Engineering
Menu engineering is a fundamental tool of management for assessing and boosting the
profitability of businesses and it is defined as “a collection of techniques and schemes that
promote the process of making decisions in regards of marketing and operating the menu”
(Jones, 1994).

Menu engineering requires culinary professionals to categorize all items in the menu into one of
four categories on the profitability and popularity basis, including Stars, Puzzles, Plough Horses,
and Dogs.

Stars: Stars are both high in popularity and in contribution margin. Stars could be the best sellers
or signature items.
Plough Horses: Plough horses are high in popularity but low in contribution margin. Items in this
category sell well, but do not contribute remarkably to the firm’s revenue.
Puzzles: Puzzles are low in popularity but high in contribution margin. This kind of products and
services are difficult to sell but gains a high profit margin.
Dogs: Dogs are low in popularity and low in contribution margin. These items are too unpopular
to sell and produce insignificant profit.
Menu engineering is an effective tool that benefit most businesses within the hospitality industry,
particularly restaurants. While menu engineering is often known as traditional menus like paper
sheets, online menus are applicable. If the items have differing levels of profitability and
popularity, menu engineering may generate better revenue for the firm.

The prime objective of menu engineering is to promote the sales of targeted items, which are
considered the most profitable, and to facilitate the process of decisions making about whether
an item needs removing from the menu or not. Therefore, businesses must determine the cost of
each item on the menu. The costs of each product should include food cost, both wasted and lost
amount during the production. After an item’s cost and price have been calculated, the
determination of profitability is depended on the contribution margin. The contribution margin is
inferred when the menu price minus the cost of each item. Menu engineering concentrates on
expanding the contribution margin of each customer’s order.

A menu is a powerful marketing tools. It tends to put the items on the menu smartly so they meet
the consumer’s psychology and buying habits. Menu engineering assists managers in arranging
their most profitable products in the eye-catching positions. Locating the products and services
on the menu is vital as it helps increase their popularity and profitability. The customers’ eyes
usually move first to the upper center of the menu (Pauli, 1999).
This concept of menu engineering needs management in order to be kept in an appropriate
direction, which leads to a potential profit contribution margin ratio. In addition, analysing to
make a menu perfect helps businesses set themselves apart from their competitors in the field.
While this approach of menu engineering is closely related to food items, the same method can
be applied to beverages and other retail items. For example, in many cases, house wine often
contributes little to the cash gross profit, although having the highest gross profit percentage
contribution.

Part B: Cost control

The major goal of stock control is to ensure that a firm does not keep redundant stock, leading to
further costs (Ogbo, A. I., & Ukpere, W. I. (2014). Therefore, optimum stock level helps keep
the cost as low as possible. Stock control has a positive and negative influence on a firm by
decrease in cost, rise in profitability, reduction in waste.
Stock supervision is a management method which any organizations should follow. It is essential
for any professionals to adopt this management.
Par level is the lowest quantity of stock needed to meet customers’ demand while keeping a firm
remain stable in case of unexpected demand. When the stock is below the estimated par level, an
order should be made with the aim of restocking the items. Pars help keep the enterprises
running at an optimal level.

There are four reasons why it is imperative to have accurate stock par levels. First, It helps
businesses know the overall health of their operation. Good stock management practices find out
small errors before they turn into troubles. Secondly, it assists in making cost-saving decisions. It
is especially correct in the cases that a wrong decision can lead to unnecessary costs. Thirdly, it
contributes to a low rate of overstocking or understocking. To remain profitable, a firm have to
make sure that the ingredient levels are on calculated par every day. Finally, taking control of
waste is also important for enterprises to identify and cut waste.

Effective stock management by a firm will reduce costs, boost efficiency and meet fluctuations
in customers’ demand. Therefore, the firm has a competitive advantage compared to their
competitors. Moreover, customers would be satisfied as products and services will be available
on demand.
4. Conclusions
This study has shown that adopting a menu engineering approach has significant benefits for
hospitality enterprises’ management. It will not only help the enterprises understand the profit
contribution for each of the menu items, it also provides them with an invaluable tool for
analyzing the menu items and how it impacts the profitability and popularity. It is vital for
culinary professionals to make decisions about whether to keep or remove dishes from their
menu; whether to increase or lower a menu item’s price, change portion sizes or ingredients; and
how to identify the most profitable items to promote their sales.
5. Recommendations
In the wake of COVID-19, hospitality businesses are facing financial hardship. As a result,
culinary professionals need to find creative ways to boost profitability. With proper menu
engineering and by controlling food costs, companies are believed to operate efficiently and
successfully. Menus are the priority consideration for increasing the profitability of your
business. If operators commit to approaching menu engineering properly, they can add two – five
per cent of sales to their bottom line (Hopkins, 2020). Designing a well-engineered menu
requires huge time and effort but it pays off in higher profits, more satisfied customers and a
more successful business.
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