HTM 2030 Lecture Notes - Lecture 13: Menu Cost, Contribution Margin

• School: University of Guelph
• Department: Hospitality and Tourism Management
• Course: HTM 2030
• Professor: William Murray

Document Summary

Chapter 11 menu engineering (cid:862)we take dollars, not per(cid:272)entages, to the (cid:271)ank(cid:863) Cost controls are extremely important: maintaining reasonable food cost percentages is critical, however, contribution margins in absolute terms are what allows an operation to earn profit. Preferences: selling items with high contribution margins, selling items that are popular. The evaluation of every item on a menu relative to: profitability (contribution margin, popularity (menu mix) Column b number of items sold (per month, multiple months) Column c menu mix (each item compared to total) Column f item contribution margin (sales price food (cid:272)ost(cid:895) lefto(cid:448)er is (cid:449)hat"s (cid:272)ontri(cid:271)uting. Column g menu cost (food cost x # items fold) Column i & j add (cid:449)hat"s a(cid:271)o(cid:448)e (cid:894)g & h(cid:895) Column l menu contribution (item x cost sold) Column k food cost and revenue (i/j) Column m total contribution margin above (l) Column o average contribution margin, average level of profitability (total cm/number sold) (m/n)