Exploring surplus-based menu analysis in Chinese-style fast food restaurants

This study assessed the performance of entrées in Chinese chain restaurants based on revised menu engineering that incorporated factors including labor costs and indirect operating expenses (IOEs) and variable return-to-scale (VRS) data envelopment analysis (DEA). We collected panel data on 20 entrées covering three-month periods that included both the peak and slump operating periods of the year for two same-brand chain restaurants. The empirical results indicated that revised menu engineering and output-oriented VRS-DEA may provide specific criteria for identifying entrées to be replaced and retained, respectively. The DEA further provided return-to-scale and output surplus analyses of each inefficient entrée for further improvement, which the menu engineering could not offer. The financial performance observed when using the VRS-DEA model is expected to be better than the performance observed when using a revised menu engineering model.