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Thursday, January 05, 2006

Market Price Menu Items

Imagine you are on the New Jersey shore in 1997. It's slightly past the peak summer season. Our restaurant specializes in crabs. They are sold by each, half dozen, dozen and all you can eat. These crabs are available by size.

We're at the loading dock and we've just received 5 bushels of live crabs. Carefully selecting the best crabs and accurately pricing them is the key to this simple menu. The cost per bushel is $55. Now the fun begins. What did we get for our $275?

Three workers grab the bushels and take them to a room with a clean floor and two tables. They pour the crabs on the floor and watch as the crabs run in all directions. The crabs are grabbed and placed in bus pans marked MEDIUM, LARGE, JUMBO and X-JUMBO. The crabs in the medium pan average 4 to 6 ounces; large crabs run between 6 and 8 ounces; jumbos are 8 to 10 and the rare x-jumbos are over 10 ounces.

Our primary focus is on menu pricing and we need to get top dollar for the larger crabs. The medium crabs will be offered in the popular all you can eat menu option. Large crabs and jumbo crabs are mostly ordered by dozen or half dozen. The x-jumbos are purchased individually.

It is time to find out the proper prices for today's menu. We begin by counting the crabs in each of the bus pans. Today's catch yielded 130 Medium, 185 Large, 56 Jumbo and 14 Extra Jumbo. With the smaller crabs, customers work less on the claw meat and order more crabs. They eat more bushels. Savvy Maryland, Delaware and New Jersey patrons demand larger crabs.

My client prefers a pricing method which assigns the midpoint weight to each crab in the bus pan (5 for medium, 7 for large, etc.). We got 2,603 ounces for our $275. The menu prices will use the 10.56 cents per ounce and our goal is a 35% food cost.

We'll sell the Jumbo crabs for $16 a half dozen. A dozen Large crabs we'll price at $25. The popular $19.95 all you can eat special will yield a 39.7% food cost (average patron eats 15 medium crabs).

Pricing the menu accurately is essential with live crabs. Cost per bushel, weight of graded contents, and competition impact the decision. This restaurant takes the time to price the menu and they have prospered in an intense competitive environment.

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