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Menu Engineering Using Activity-Based Costing: An Exploratory Study Using a Profit Factor Comparison Approach

Journal of Hospitality & Tourism Research , Volume 34 (2): 204 – May 1, 2010

Details

Publisher
Sage Publications
Copyright
Copyright © 2010 by SAGE Publications
ISSN
1096-3480
eISSN
1096-3480
D.O.I.
10.1177/1096348009349823
Publisher site
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Menu Engineering Using Activity-Based Costing: An Exploratory Study Using a Profit Factor Comparison Approach

Abstract

Traditional cost accounting systems have been replaced in the manufacturing sector by activity-based costing (ABC) systems. Now in wide use by manufacturing firms, ABC has made few inroads in the services and hospitality sector, including the restaurant industry. Several recent studies have begun to reverse this trend by applying ABC to restaurants. This study extends those works by creating an ABC menu engineering (ME) analysis, and comparing the results with traditional ME results. Four hypotheses were constructed that tested the relationships between the restaurant manager’s perceptions, traditional ME methods, and ABC-based ME. The results suggest that ABC-based ME may be a feasible alternative for examining menu profitability.
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