Menu Development and Analysis
Menu Development Process
By Mazalan Mifli, School of Business and Economics, Universiti Malaysia Sabah, Malaysia
Fourth International Conference "Tourism in Southeast Asia & Indo-China:  Development, Marketing and Sustainability" 

June 24-26, 2000 
The industry experts have long sought to establish the right 'pedigree' of menu analysis for foodservice operators and educational guidelines. Currently, there are plenty of theoretical alternative approaches to menu analysis available published in professional hospitality journals. Although all of these menu analysis approaches advocate different tactical solutions for analyzing the menu items, performance, they all share the same objective, which to improve (or to provide a solution for) the current menu items performance. However the question that poses a great dilemma for the foodservice operators is which approaches or methods are suitable for practical application? A recent research indicates that none of the theoretical approaches of menu analysis is totally embraced by the foodservice operators when a menu analysis is conducted. This paper is to ascertain how is the foodservice operators conduct their menu analysis and what criteria are they based on?

INTRODUCTION

Menu is one of the important aspects for the success of any foodservice establishment. Perhaps it is arguably the soul of the restaurant. Menu infers several interpretations for both the buyers and sellers. Khan (1991) suggests that "menus are statements" of the food and- beverage items provided by a foodservice establishment, primarily based on consumer needs and/or demands and designed to achieve organisational objectives" (p. 40). Mooney (1994) and Kreck (1984) note that menu can be interpreted as a list of product range that a restaurant offers and the same time it can be a piece of literature or display used to communicate the product range to the customer.  However, a recent study argues that "menus are more than the conventional function of a communications and selling tool but also a research and experimentation device that can be studied to increase restaurant profit" (Seaberg, 1991).

An interesting point is that the battle for pre-eminence menu offered to the consumers is an endless task faced by most foodservice operators. The model of new menu development advocated by Mooney (1994) which is illustrated in Figure 1, shows how critical it is to have thorough research and analysis of the various elements from the restaurant's objectives and strategies to the bureaucratic processes of menu planning, selection, design, pricing and analysis.

A matter of fact this process is actually an endless cycle of research and analysis because once a new menu is developed that menu is periodically reviewed for its effectiveness. Quite simply, the research process is crucial to find out what is going on in the market and the analysis process determines which dishes need further assessment. It is this periodical review known as menu analysis that determines the success of the menu performance.

In broad terms, menu analysis can be defined as a range of techniques and procedures that enable more effective decision making both with respect to marketing and operating the menu (Atkinson and Jones, 1994). Various tactical solutions to menu analysis have been sought in endless attempts by many restaurant operators to improve menu performance. One of the notable approaches that has gained enormous momentum both from the hospitality literature and educational curriculum is Boston's matrix technique (Morrison, 1996) also known as the 'portfolio analysis' or menu engineering'. Jones (1994) defines this approach as the "systematic evaluation of a menu's cost and/or sales  data for  the  purpose  of identifying opportunities for improved performance" (p. 205). One of the specific Boston's matrix techniques known as menu engineering made popular by Kasavana and Smith (1982) has taken a step further with the introduction of the computer software packages (Dougan, 1994; Kasavana, 1996, 1997 and 1998). However, the irony is many scholars and menu planners have criticized the imperfection of these matrix approaches including the Kasavana and Smith's menu engineering approach (Hayes and Huffman, 1985; Atkinson and Jones, 1994; Beran, 1995).

Subsequently more tactical solutions to menu analysis have emerged. The issue of non-material variable costs, which is claimed being ignored in the previous menu analysis approaches, becomes prevalent of its important in the works of Hayes and Huffman (1995), Bayou and Bennett (1992) and LeBruto et. al. (1995 and 1997) respectively. Other approaches such as the micro-marketing mix (Atkinson and Jones, 1994) and economic approach (Beran, 1995) have each advocated their own method of tactical solutions to menu analysis.
 

Figure 1. Model of New Menu Development
Marketing Objective >>> Service objectives and strategy <<< Environmental analysis
Internal sources >>> Idea generation and screening <<< Magazines / competitors /etc.
Budget development >>> Menu framework development
Dish cost development >>> Menu item screening <<< Market assessment
Yield testing >>> Menu item design and testing <<< Consumer taste panel
Opertional personel >>> Operational testing
Market testing <<< Consumers
launch new menu <<< Consumers
Menu analysis >>> Review menu effectiveness

Adapted from Mooney (1994) Planning and designing the menu, In Jones, P and Merricks, P., Eds., The Management of Foodservice Operations, London: Cassell, p.51

Although all these menu analysis approaches advocate different tactical solutions for analysing the menu items' performance, they all share the same objective, which to improve (or to provide a solution for) the current menu items performance. However, the question that poses a great dilemma for the foodservice operators is which approaches or methods are suitable for practical applications?

Recent research indicates that menu analysis is not purely on the "process of analysing costs and sales data in order to manipulate.. products on the menu [but understand] in-depth customers' need and perceptions" (Jones, 1994, p. 214).  Jones (1994) in his article entitled Menu Analysis highlights three main approaches.  One of the approaches he suggests is "based on intuition and experience  rather  than  detailed  quantitative analysis" (p. 206). Another recent survey conducted by HOTELS reveals that there are alternative approaches to menu analysis that can build revenue and keep repeat customers (Hensdill, 1998). According to this survey, the positioning and descriptions of the menu item on the menu can influence its popularity. In addition this survey also points out that creative menu design with the use of tasteful product pictures and the size of the menu are an integral part of menu planners' menu analysis.

To sum up, this summary reveals that there is no definite evidence of what actual/or dominant method(s) of menu analysis are adopted by menu planners in the global foodservice industry. The industry experts have long sought to establish the right "pedigree" of menu analysis for the foodservice operators and educational guidelines. In order to achieve this, further research is required to examine and understand how menu analysis is conducted by menu planners.

METHODOLOGY

In this research, a qualitative approach was undertaken to ascertain chain foodservice attitudes in the menu analysis decision-making. Although the acceptance of qualitative research methodology is less prevalent than the quantitative research (Maykut and Morehouse, 1994; Brotherton, 1999), it is argued that the choice of qualitative research would fulfil the needs of the purpose of this research project. Quite simply, the interest of this research is a phenomenological approach, an approach to understanding how menu analysis is conducted by foodservice operators rather than the use of a positivist approach, which is largely based on measurable variables and provable propositions (op. cit., 1994).

This qualitative research approach to inquiry also involved a case study approach, where people and setting were explored in-depth and described in a series of mini-case studies reports. It is believed that a series of mini case studies reports would enhance the body of knowledge in understanding the intended research objectives. Thus, personal interviews  were  deployed  to  explore  the phenomenon of interest from the foodservice operators with the use of a semi-structured questionnaire, which was composed based on the secondary research and piloted in predetermined sampling settings.

Undoubtedly, a large-scale population would make this qualitative case study research more valid and reliable. However, to conduct in-depth personal interviews in a large-scale survey would be too costly and time consuming. This to a large extent answers why a case study approach was adopted in this qualitative research. A list of twelve UK chains companies (See Table 1) with over 25 restaurants brands was compiled. The reason behind the selection of chain restaurants was as followed: Restaurants that have a chain affiliation are known to be more standardised and organised in their overall operations. Mass financial capabilities and diversification of divisions and departments provide huge advantage in making the operations more efficient and effective. Furthermore with the increased numbers of outlets, a need for better menu analysis methodology is surely crucial apart from being competitive in the market.
 

Table 1. Major UK Chain Restaurants, 1994-1995
Company
Key Brands
Outlets
Allied Domecq* Big Steak, Wacky Warehouse, Exchange 270
Bass* Toby, Harvester 278
Bright Reason PLC Pizzaland, Bella Pasta, Pizza Piazza 190
City Centr Rest. PLC Deep Pan Pizza, Garfunkels, Chiuita, Caffe Uno, UK Diner, Raja Mama's, Nachos 205
Granada Happy Eater, Little Chef, Welcome Break, Granada 400*
Grand Metropolitan Burger King  380
McDonald's McDonald's 650
Pelican Cafe Rouge, Dome 100
Pepsico KFC 367
Pizza Express Pizza Express 94
Scottish & Newcastle* Chef & Brewer, Old Orleans 1,600
Whitbread Beeffeater, T.G.I Friday's, Pizza Hut+, Brewer Fayne 875
+ Pizza Hut in the UK is a joint venture between Whitbread and Pepsico
* Restaurant operators within public house estates, including many outlets also serving food

Source: Davis, et.al., (1998) Food and Beverage Management, 3rd Ed. Oxford: Butterworth 
Heinemann, p. 239 (After Keynote 1996 Market Report: restaurants)

To a large extent, the variables that needed to be measured were quite complex and subjective because most of the different approaches to menu analysis advocated different criteria and each of them function differently.  Some of the menu analysis approaches have incorporated tangible and intangible elements to advocate their menu analysis techniques.   Because  of  this,   'statistical generalization' or enumerate frequencies' were considered   unsuitable,   instead   'analytical generalisation' or 'expand and generalise theories' was a more appropriate selection of measurement.

MENU ANALYSIS: QUANTITATIVE APPROACH

The findings show that the obvious equipment used by the chain operators to analyse the menu performance is the Electronic Point-of-Sale (EPOS). Almost all of these chain companies have an advance computer system, which is linked with the EPOS. Because of this the menu analysis is entirely conducted in the head office and such analysis from the EPOS at the restaurant outlets are no longer applicable.

Quantitative data analysis is predominantly the main method to assess the menu mix sales volume popularity)  and  gross  profit  profitability/ contribution margin). The findings imply that once the new menu is launched in the market, the first criterion used to review the menu effectiveness is the menu sales mix reports (quantitative data). Daily sales mix reports are accumulated for a period of one month to produce a monthly sales mix report. Every menu item sales volume and gross profit are analysed and the outcomes of what actions should be done for the menu items are decided in several ways.

However, this quantitative data analysis is not the sole determinant to decide what actions should be done to the menu items. Other criteria such as based on intuition, experience and company's financial policy are also taken into considerations for appropriate alternative approaches. This seems to confirm Jones's (1994) propositions where he argues that 'menu changes.. .are based on strategic decisions rather than simply on analyses of operating performance (and) the addition and removal of a new menu item is often based on competitive and market analysis" (p.. 213). Details of these alternative approaches are explained under sub-heading: alternative approaches to simple and complex menu analysis.

MENU ANALYSIS: QUALITATIVE APPROACH

Qualitative analysis approach is indeed equally important as the quantitative data analysis for the chain operators when a menu analysis is conducted, specifically deciding what actions should be done for the menu items. Endless research projects are carried out to analyse customer trends in food preferences and acceptances. These research projects are vital to supplement information for menu development so that improvement for new and current menu items in term of its value and nutritional acceptances, taste, ingredients and presentation can be enhanced.

The analysis of customer trends is obtained in many ways. The findings reveal that market analysis is the common method used to obtain the plausible answers of customer trends. Analysing the target  market  disposable  income  and  age population, competitors menu and awareness of current issues in food preferences and acceptances is the main areas of concern in the market analysis. Apart from this market analysis, travelling to Italy and French, which known of their gastronomic expertise is visited regularly to seek popular dishes that suitable for UK market, particularly in London market.

Based on intuition and experiences rather than relying detailed quantitative analysis are also played crucial part when a menu analysis is conducted. It should be remembered that most of these chain companies have been established for many years therefore, decision on how to analyse, amend and develop the menu items is largely based on previous experiences. Because of this, many of the chain operators analyse their menu items by advertised its on the black board menu, popular radio channels, and relevant magazines. Customer feedback such as complaints, suggestions and compliments about the menu items are crucial for the success of the menu efficiency.  Sometimes  low  popularity  and profitability of menu items may not cause by diminishing of customer demands but poor control of the food production is likely be the culprit. Because of this, mystery shoppers are assigned to analyse the menu performances in term of its quality, presentation, taste, and the waiting period after the order taken. The accumulative of this crucial information is indeed the 'source of aspirations' for the chain operators to act what amendments and developments should be done for the menu items.

THE FINDINGS OF HOW MENU ANALYSIS IS CONDUCTED

The findings appear to disclose that the prevalent methods of how menu analysis is conducted by chain operators are combination of qualitative and quantitative analyses. Because of the complexity of the menu analysis procedures, the author uses a diagram shown in Figure 3 to the present the findings so that understanding of how menu analysis is conducted can be enhanced. Figure 3 demonstrates how menu analysis is conducted using both the qualitative and quantitative analyses.   Each step of the menu analysis procedures is explained according to the given numbers shown in the Figure 3.

Figure 3 indicates that chain operators analyse their menu effectiveness after the menu is launched. These findings can be linked to Mooney's (1994) model of new menu development, where he argues that the review of menu effectiveness (menu analysis)  is performed after all the menu development processes are thoroughly analysed and implemented.


Figure 3 Menu Development and Analysis


The Review of Menu Effectiveness

Notably, quantitative data analysis is the dominant approach used by chain foodservice operators when analysing the menu mix. The use of sales mix reports generated by EPOS is the main source of inputs to analyse the menu mix performances. Sales volume popularity) and gross profit profitability / contribution margin) are the common criteria under investigation for every menu item. In addition, the use of gross profit percentage (GPP) is also found to be adopted.  Although different methods are used to measure menu effectiveness, some of the methodologies used by the chain operators to analyse the menu item popularity and profitability seem corroborated with the theoretical menu analysis approaches. Nevertheless, none of the theoretical methodologies of menu analysis are totally embraced by the chain operators.

Apart from using the quantitative data to analyse the menu performances, the use of mystery shoppers is also adopted to analyse the menu performances in term of its quality taste, value and overall  presentation.  Additionally,  periodical inspection of food production processes are also conducted by the chain operators for making sure all standard procedures are followed according to specification.  The finding implies that these analyses are indeed very essential so that the generation of the sales analysis produces more accurate and reliable information.

After the menu analysis is completed, the next stage is to determine whether the menu items should be modified or not. Based on the theoretical menu analysis approaches, clear guidelines of what solution should be done for the menu items are demonstrated. Unfortunately, there is no definite evidence emerged in the findings in term of which criteria used to decide whether the menu items should be modified or not.  Furthermore, the decision to ascertain which alternative approaches should be taken for the menu items is somehow varied from one chain operator to another.

For example, one of the chain operators is hardly relied on the sales analysis, instead the company's President experiences in products improvement (modification) is the main source for decision-making. Unlike, other chain operator, the menu items are analysed comprehensively and it involves more than one person/department. Yet, the decision to ascertain which alternative approaches should be taken for the menu items is still pending on the market research and customer trends. Thus, the decision making to decide which appropriate approaches to be done for the menu items is quite complex  and  it  involves  various  persons /departments. Nevertheless, regardless of which decision the chain operators decide to base on, several alternative approaches are highlighted based on the findings of the case studies, which can be the ideal solution. Detail explanations of each of these alternative approaches are presented below.

Alternative Approaches to Simple Menu Analysis

There are four alternative approaches, which fall under the 'simple menu analysis'. 

  1. Promotion, 
  2. Re-position, 
  3. Retention and 
  4. Elimination 
are the notable findings used by the chain operators when they decided not to do anything to the menu items regardless of what results obtained from the sales analysis. It should be remembered that in the theoretical menu analysis, especially the Boston's matrix approaches, any menu items that are categorised 'problem items' will be modified its composition in order to change the items to 'star' or 'prime' category. However, in reality this is no the case. From the analysis, it is found that the main reasons why the foodservice operators are declined to modify the menu items composition are because of the following criteria:
 
Menu Promotion (1)

Promotion is used to analyse further the menu effectiveness because experiences and marketing strategy indicated that lack of awareness from the public eyes may be the caused why the menu items are low in demand. This strategy is adopted because the result of low popularity obtained from the sales analysis may not be necessary due to loss of customer demands.  This strategy correlate with Bowen and Morris (1995) definition that highlights the advertising maxim, "unseen   is unsold". Sometimes the demand of the menu items is still alive but lack of public attentions can cause the faith of the menu items in jeopardy therefore, every precaution should be observed before the menu items undergo such modifications. Menu promotion involves both internally and externally. Black board menu and mini table standing menu, which highlights 'problem dishes' only, are the example of internal promotion. On the other hands, using popular radio channels, posters and fliers in busy places such as cinema, hybrid places, etc. is the notable findings in their external promotions.

Menu  Repositioning (2)

Changing the presentation and layout of the menu design is quite essential for boosting the menu sales. A matter of fact, this is one of the dominant approaches used to boost the sales of low popularity menu items by placing them at the strategic location known to be in the centre of the menu. These findings can be linked to the works of Miller (1980), where, according to him, menu items that most want to sell should be placed above the middle on a one-page menu. The analysis carried out on respondents' responses has revealed that placing the items at the wrong position can cause an adverse effect of its demand. Because of this, the result of the sales analysis to some extent can provoke incorrect decision on what solutions should be taken for the menu items. Additionally, proper choice of words uses to describe the dish ingredients and methods of cooking also played a part for improving the menu popularity.

Menu Retention (3)

Undoubtedly, successful menu performances in term of its popularity and profitability should be retained. There is nothing to do with these menu items except to maintain or/and improve its quality in order to increase the popularity. However, an interesting finding obtained is that any menu items, which are known as 'problem items', are still being retained in the menu. Nonetheless, the composition of these items is subjected to be reviewed and modification is likely to be implemented.

Subsequently, once these three options are finalised and implemented, the menu items will undergo to menu analysis again. In fact, the review of menu effectiveness is an ongoing process mainly because of the changes in customer demands. It is these changes in customer demand, which make the menu items to be reviewed periodically. Needless to say, the ultimate aim is to detect the 'shadow of customer demands' (which either be high or low) before it happened. Thus, the use of sales analysis to measure the menu effectiveness to correlate with the alternative approaches as to improve the item performance is insufficient. A matter of fact, using market analysis and customer feedback to detect customer trends and correlates with the alternative approaches as to improve the items performance is more convincing than the sales analysis. These findings probably answer the reason why the theoretical menu, which uses hard data to analysis menu item performance as to improve the item popularity and profitability, is problematic.

Menu Elimination (4)

There are several reasons why decision is made to eliminate the menu item. Menu items that are no longer popular properly due to menu fatigue and changes of customer preferences and acceptances such as healthy foods are the real caused why the menu items are eliminated. Limited supplies and escalating in product prices are also found to be the caused for menu items to have been eliminated. An interesting point emerges that decision making to eliminate menu items is predominantly based on qualitative analysis rather than from the sales analysis.

Introduce New Menu Items (5)

Decision to introduce new menu items is mainly because of customer demands. The most common sources referred by the chain foodservice operators when considering to add menu items into the menu are  company's  research  and  development department (R&D), market information from Mintel and Keynote reports and Henley Data, professional hospitality journals and customer feedback.  It should be remembered that the addition of menu items can only be materialised after thorough analysis from market demands. Moreover, current kitchen equipment and personal expertise about the new dishes are also due consideration in the internal analysis. Finally, the new menu items are launched in the market and the process of measuring the menu items effectiveness begins again.

Alternative Approaches to Complex Menu Analysis

There are five alternative approaches, which fall under the 'complex menu analysis'. 

  1. Presentation, 
  2. Re-price, 
  3. Re-costing, 
  4. Modify recipes and 
  5. Reposition 
are the notable alternative approaches used by the chain foodservice operators to modify the menu items composition. The finding reveals that most of the chain operators make the decision to modify the menu items based on the actual performance against the predetermined criteria and allow the menu items to be further developed as appropriate. In this case, menu items which fall below acceptable level are bound to be undergone such modifications. Unfortunately, details of the 'acceptable level' are somehow quite ambiguous. It appears that there is no definite time period when the menu must be changed or modified after the launched of the menu. Regardless of how frequents the menu items are modified, here are the alternative approaches adopted by chain operators as to improve the current menu items performance.
 
Menu Items Presentation (6)

The main references that are used to decide the modifications of the menu items presentation are mystery shoppers and the customers.  Customer feedback such as complaints and suggestions are essential  for  improving  the  menu  items presentation.  However, what form of research instrument are used to seek customer feedback is not mentioned. The author suggests that an "informal procedure" is likely to have been adopted where such feedback is reported on a random basis based on the recollection of staff experiences. Unlike the mystery shoppers, there are more formal and standardised, and independently performed by outside foodservice consultant. Depending on this feedback analysis, the presentation of the menu items may be modified either one or combination of these elements: taste, garnishing, saltiness, colour, texture, etc. Nevertheless, the use of chefs artistic expertise in food presentation also plays a part in decision making for menu items presentation.

Menu Re-pricing (7)

Usually, such decision to re-price the menu items is caused by several factors.  The finding indicates that inflation is the main caused why chain operators re-price the menu items. Another factor that contributed to menu re-pricing is because of over-pricing the menu items.  For example, one of the operators says that over-pricing the menu items could be the main reason why the demand of such items declined and not because of the deterioration of the foods quality or demand. When the selling price is changed to slightly low than the former one, the popularity of the menu items has increased by 5 percents. In addition, unavoidable factors such increase in distribution costs and liquor tax imposed by the Government also lead to re-pricing the menu items. Of course, other considerations such as company financial policy, food costs and pricing strategies are also contributed to the changing of the selling price. For instance, the psychological pricing method where by all the menu prices end with either 5 or 9 number, which can be associated with the theory of 'magic numbers or costless approaches' highlighted by Pavesic (1989) and Carvin & Norkus (1990) also found being used by these chain operators.

Menu Re-costing (8)

An obvious finding show that the cause of re-costing menu items is highly correlated with the change of the product specifications. Any changes on products purchase price from the suppliers therefore, leads to the change of the standard specifications. Notably, the standard specifications are designed by the menu planners which than becomes the control tools for menu recipes and portion size. Simply put, any modification on the items' presentation is indirectly caused its recipe specifications to change. Thus, any changes involve between these factors will lead to menu re-costing. Apart for that, the change of the item portion size also leads to menu re-costing. Above all, many chain operators have allocated a budgeted food costs by the Finance department for every chain's outlet for cost control purposes. Hence, any chains' outlets that are found to have been exceeding the budgeted food costs that outlets' menu items cost will  be  reviewed  and  menu  re-costing is subsequently followed.

Recipes modification (9)

Recipe modification is basically linked with the menu re-costing.

Menu Re-positioning (10)

Unlike the menu repositioning discussed earlier, this part discusses those menu items that involve several modifications from its name, recipe, selling price and presentation. The findings reveal that after the menu items undergo several modifications (depending on how many menu items are modified) new menu design is developed with high probability of changing the menu layout and general presentation of the menu card, since the former menu card is no longer applicable with the modifications being made. Thus, the applications of the menu repositioning discussed earlier are being used again. However, if only a small proportion of the menu items undergone such modifications than the menu items may go for promotion or repositioning.

Launch Revised Menu Item(s)

Subsequently, after the menu items undergone such modifications regardless of which alternative approach is used these revised menu items are reviewed  of its  effectiveness  again.  Similar procedures of menu analysis discussed above are applied and the processes of how menu analysis is conducted begin again.

CONCLUSION

The analysis of the case studies reveals that the common methodologies adopted by the chain operators when engaged in menu analysis are qualitative and quantitative analyses. However, the finding indicates that the quantitative analysis is insufficient to generate pertinent information for decision-making in improving the menu items performance.  Instead, the qualitative analysis is notably regarded as the 'source or guidelines' in decision-making. Subsequently, it is observed that the main focus of the menu analysis is to detect the trends of customer demands before it actual occurred. Thus, using the quantitative analysis for measuring the menu effectiveness as to improve the menu items performance is actually incomplete simply because there are other reasons that can cause the decline of the menu items sale, which can not be explained from the sales data.

REFERENCES

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Contact:
Professor Kaye Chon
Chair Professor & Head
Dept of Hotel and Tourism Management
The Hong Kong Polytechnic University
Hung Hom, Kowloon, Hong Kong
Telephone: +852-2766-6382
Fax: +852-2362-6422
Email: hmkchon@polyu.edu.hk



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