Restaurant operators or other management-level professionals working in the restaurant industry should always look for new ways to increase profitability and improve their bottom line. Restaurant menu engineering can be an excellent way to do this.
Regularly adjusting your menu can help restaurateurs reduce food waste and keep customers returning by ensuring their favorite menu items are available.
But what is menu engineering, and how can it benefit your restaurant? Keep reading to learn everything you need to know about creating the perfect restaurant menu.
Menu engineering is a way for restaurant managers to tweak their menu’s contents and pricing structure based on detailed menu analysis. It’s a data-driven approach that can help improve a restaurant’s bottom line.
A profitable menu isn’t just made up of tasty food. It’s a combination of having the right menu items at prices that work for customers and being organized well to encourage customers to choose a specific item. Menu engineering uses metrics and elements of menu psychology to redesign a restaurant menu with each menu item’s profitability in mind, helping you improve your restaurant’s profit margins.
Two critical factors can help you analyze and optimize your menu: a menu item’s popularity (i.e., the number of times customers order it) and its profitability (i.e., the gross profit it generates).
By working out each dish’s popularity and profitability, you can ensure that customers are spending the right amount on dishes they like to eat.
The main benefit of menu engineering is that it can help you improve your bottom line and boost profits. By using these data-driven practices, you’ll better understand which menu items are popular and profitable, allowing you to strike the right balance between happy customers and a successful business.
Menu engineering can guide your decision-making when it’s time to tweak or redesign your menu. You can carefully analyze each menu item's performance before deciding on the portion size and selling price you set.
What’s more, by carefully considering each aspect of a dish before you add it to your permanent menu, you could reduce the amount of food waste coming out of your kitchen. Menu engineering can help ensure you aren’t purchasing unnecessary ingredients for unpopular items or putting too much food on a plate.
It can even help you streamline your restaurant operations. By lowering the number of low-profit items on your menu, you could reduce the number of ingredients you need to purchase. This is an easy way to simplify your inventory management.
If you want to use menu engineering to improve your restaurant’s profit margin, you’ll need to gather data on each menu item, including the selling price, item cost (including both ingredient and labor costs), and popularity. You can collect this data manually by compiling it into a worksheet or use your point-of-sale system (POS system) to help automate the process.
With this data at hand, you can broadly categorize each menu item into four categories:
Stars: These are high-popularity, high-profitability menu items — the best items on your menu in terms of customer satisfaction and profits. Menu engineering aims to increase the number of stars on your menu.
Plow horses: These are low-popularity items that have a high profit margin. Customers might not order them often, but their high selling prices mean you earn a good profit from them. Once you’ve identified your plow horses, you can work to increase their popularity with effective menu engineering techniques.
Puzzles: These are popular items that have low profit levels. You’ll want to limit the number of items in this category by reducing the food cost percentage or increasing the item’s menu price.
Dogs: Also known as duds, these are menu items with low contribution margins (profit generated from that specific item) and low popularity. Usually, these should be removed from your menu to make room for more profitable items.
Categorize every menu item into these groups, including appetizers, entrees, desserts, side dishes, and drinks. You’ll then have a clear idea of which high-margin items to prioritize on your new menu, and you can emulate these when it’s time to redesign your menu or develop new dishes with your chef.
The next stage of the menu engineering process is to use the data you’ve collected to optimize your menu design. Follow these six tips to improve your menu’s effectiveness further and boost your profits.
When working out how much each item costs to produce, remember to account for smaller elements of each dish, such as seasonings. A pinch of salt won’t cost much, but you still need to account for it when tallying up your pricing.
Don’t forget to account for the labor costs associated with each dish, too. If a dish takes a long time to make, the total cost may be more than you think to produce if you forget to consider your chefs’ wages.
Before you bring new menu items onto your permanent menu, run them as a chef’s special so you can gauge how popular they are, how big of a portion to serve, and how much to charge.
A menu of specials lets you test out new items and tweak them if they’re not quite right before you commit to having them on your menu all year.
How you describe a dish on your menu can significantly impact how likely a customer is to order it. Use enticing and descriptive language to highlight the flavors and quality of your dishes. Write descriptions that will make your guests feel hungry!
Even something as simple as the layout of your restaurant menu can impact profitability. A clean, easy-to-navigate menu is a good place to start, but you should also use strategic placement and formatting to draw attention to high-profit items. Try using boxes, bold-format fonts, and even different colors to see what works for your customers.
If you use a self-service device like KioskBuddy in your restaurant, consider listing your star items at the top to encourage customers to buy your high-profit items.
Research suggests that removing currency symbols like dollar signs from your menu can increase sales by encouraging diners to order more. In a study conducted by Cornell University, customers spent more money when presented with a restaurant menu that didn’t show currency symbols.
By removing the dollar signs from your prices, you could see an improvement in the amount of money your customers spend when they dine with you.
Menu engineering shouldn’t be a one-time effort but an ongoing process that requires regular analysis. Monitoring the performance of your menu items, keeping track of food costs and customer preferences, and making data-driven decisions can help you stay ahead of the competition and maximize your restaurant profits.
Look at each menu item's success over a given period. Your POS system can provide accurate sales data to help you see how successful a particular dish is. Remove any new dogs and try to turn any plow horses or puzzles into stars.
If you're a restaurant owner looking to boost profitability, consider implementing menu engineering principles in your menu design and strategy. With careful analysis, strategic changes, and continuous monitoring, you can create a profitable menu that your customer will love.
Self-service devices like KioskBuddy let you quickly adjust your menu and place top-performing dishes at the top. It’s quick and easy to set up, meaning you can be up and running in no time.