CLUE #2

USE MENU EXPLOSION!

Menu explosion, or recipe building, refers to the process of taking every item on the menu and "exploding" it into individual component parts.  The cost of each component part is determined by taking the case cost of the item and dividing it by the servings per case.  Each item's component cost is multiplied by the number of components used in the menu.  All component costs are added together to determine the item's final cost.

•  The true cost of each menu item must be known before a selling price can be determined for that item. Only then can the desired margin be attained.

Where is Marge?

"Going In" gross margin is the margin you should make based on product cost, determined by menu explosion, and the selling price of the item.

"Coming Out" gross margin is the margin you actually make after waste, discounts and shrink have been accounted for.

Menu explosion, or recipe building, should be performed for every item sold on the menu.  Check with your food supplier anytime you add an item to your menu.  Many suppliers have this information available.  In many cases you will need to calculate the item's component costs yourself.  Be sure to change the cost of each ingredient whenever the case cost of the item changes.  Adjustments to the selling price will then need to be made to achieve the desired margin goal.   

CLUE #1