Setting the Table by Danny Meyer paper

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Managing Revenue Chapter 12

David K. Hayes | Allisha A. Miller | Jack D. Ninemeier

The Professional Restaurant Manager

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Analysis

• Total Revenue • Guest Check Average • Revenue Variance

Three important indicators of an operation’s revenue are:

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Analysis

Total Revenue Indicators

Day-part A segment of the day that represents a change in

menu and customer response patterns.

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Analysis

Total Revenue Indicators

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Analysis

Total Revenue Indicators

Revenue from source

Total revenue

Revenue source

contribution percentage

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Analysis

Guest Check Average Indicators

Total F&B revenue

Number of guests served

Guest check

average

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Analysis

Revenue Variance Indicators

Actual revenue

Forecasted revenue

Revenue difference (variance)

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Pricing Basics

Mark up pricing requires three steps:

Determine food costs for the item(s) being

priced.

Determine the mark-up.

Establish a base selling

price by multiplying the food cost by the mark-up.

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Pricing Basics

Two steps are used in contribution margin pricing:

Determine the average contribution margin per

guest.

Add the average contribution margin per

guest to the item's standard food cost.

(Nonfood costs) + profits

Number of expected

guests

Average contribution margin per

guest

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Engineering

The original menu engineering model altered the common definition of “popular.”

For example, if there are four equally popular

menu items, and 100 were sold, each would

achieve 25% of all sales.

100 sold ÷ 4 = 25 sold

Menu engineering defines a “popular” item

as one that sells only 70% of its expected sales percentage.

25 sold x 70% = 17.5 sold

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Engineering

The traditional names assigned by menu engineering for each classification are:

Plow horse Puzzle Dog Star

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Engineering

• Increasing price gradually and carefully • Relocating to lower profile sections on

the menu • Combining with lower food cost items

Action plan for Plow Horses:

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Engineering

• Repositioning to high profile areas • Highlighting items • Providing extensive menu descriptions • Renaming the item • Decreasing the item’s price

Action plan for Puzzles:

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Engineering

• Doing “nothing” • Placing in highly visible menu

locations • Carefully increasing selling prices

Action plan for Stars:

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Menu Analysis

Menu Engineering

• Remove from menu • Increase prices to equal that of Puzzles

Action plan for Dogs:

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Control

Importance of Revenue Control

When revenue collection systems are inadequate, cash shortages will continue:

– If the time and specific cause(s) of the shortage cannot be identified

– If the cause of a cash shortage cannot be traced to a single individual

– When “small” shortages are ignored

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Control

Revenue Control Systems

An Effective Revenue Control System Addresses:

1. Charging the Guest

2. Collecting Revenue

3. Protecting Revenue

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Control

Revenue Control Systems High-quality revenue control systems record:

The name of items purchased

The quantity of items purchased

The prices of items purchased

The sum of the costs of all items purchased

Calculation and payment of applicable taxes

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Control

Minimizing Guest Theft When accepting payment cards

Examine the card for signs of alteration.

Verify the card’s expiration date.

Compare the signature on the charge slip with the one on the card’s back.

Refuse to accept unsigned cards.

Ask for another form of picture identification.

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Control

Minimizing Employee Theft Attempts to defraud guests and the restaurant include:

Incorrect totals of legitimate purchases.

Charging for items not purchased.

Returning less than the correct amount of change.

Reducing check totals after the guest has paid.

Voiding sales after guest has paid in full.

Book Title Author name

The Professional Restaurant Manager, 1e David K. Hayes, Allisha A. Miller, and Jack D. Ninemeier

Revenue Control

Minimizing Employee Theft

Managers can use a pre-check/post-check system to help prevent employee theft.

Pre-check/post-check System A system that matches the quantity and value of orders placed by servers to the number of items

paid for by guests