According to a Gallop poll, a patron spends only 109 seconds on average studying a restaurant menu. That time involves scanning the menu, looking at descriptions, and checking prices before they decide whether to buy or not. To use the time to the best advantage, your restaurant's menu is necessarily concise and organized. To this end, a restaurant owner tends to do menu engineering tricks and analysis that we will address further here.
What is restaurant menu engineering?
The menu engineering process refers to assessing a restaurant’s menu pricing and performance by using restaurant data and food costs to decide which dishes to feature and their selling price. In other words, thanks to menu engineering, restaurant operators can categorize items depending on their profit and popularity levels.
Usually, you will see this menu engineering practice represented by the result - the menu engineering matrix. (Image: integratedinsight)
It is also important to address that menu engineering was derived from work implemented by the Boston Consulting Group in 1970 to support businesses in segmenting their products in a fashion that makes for decision-making. Professor Donald I. Smith of Michigan State University brought the idea to the restaurant industry about a decade later.
According to Menu Cover Depot, eateries that engineer their menus tend to observe a 10-15% increase in profits. Indeed, menu engineering efforts pay off when:
- Removing menu items with low profitability, which helps your restaurant's food costs
- Emphasizing your more profitable menu items
- Enabling regular menu analysis, which keeps all your menu items optimized.
The four menu engineering categories
1. Stars: High profitability and high popularity
If you categorize menu items here, this means they are inexpensive to make, and your dinners like them. You are recommended not to experiment with these dishes but keep them consistent and visible on your menu. Focus on promoting them as well.
2. Puzzles: High profitability and low popularity
Puzzles are high-margin menu items that are hard to sell. Try and learn why the menu item popularity is low - should they be more noticeably placed on your menu or better described? Else, it was probably that the menu price is relatively too high.
3. Plowhorses: Low profitability and high popularity
These items sold are popular, but their ingredients are on the more pricey side. You can make them more profitable items by reworking the recipe or pairing them with drinks that boast high profitability.
4. Dogs: Low profitability and low popularity
This menu item food cost is high and it is not much liked by your customers. It is occupying space on your menu for dishes that could increase sales. Just re-brand, re-invent, or remove these items.
- To measure menu profitability, check whether the total profit margin is low or high compared to the average profit margin for all menu items in a specific timeframe.
- To measure a menu item's popularity, check whether the total items sold are low or high compared to the average items sold for all menu items in a specific timeframe.
How to engineer your menu and boost profits
1. Select a time
To begin with, choose a timeframe for menu engineering analysis. For eateries switching up their menu subject to the produce seasonality, it is reasonable to do this when they create new seasonal items. Food service establishments that rarely adjust their menu may revisit it less frequently.
Remember that revisiting your menu involves revisiting its pricing. With food costs fluctuating, your menu prices necessarily reflect that.
2. Cost your menu
Food cost percentage and contribution margin are significant metrics for measuring menu item profitability.
- The formula for food cost percentages:
Menu item food cost ÷ Selling price = Food cost percentage
- Contribution margin is the difference between a menu item’s quoted price and its cost. The formula for calculating it is:
Menu price - Menu item food cost = Contribution margin
What is great is that most POS systems (point of sale) have that information available. Better yet, with POS solutions like One2, you can look at customer profiles and order tracking. This gives restaurants access to how much specific patrons spend and which menu items are best-selling. Understanding your menu’s menu performance using data fed by the POS software will empower you to build more popular and profitable menus.
3. Categorize menu items based on profitability and popularity
Generally, items fall into one of the menu engineering categories mentioned above. Once completed, the menu matrix gives you a better idea of which items take or do not take responsibility for your restaurant profits and which need reworking or removing from your restaurant menus.
Pro tip: The quantitative data from the menu matrix aside, you may find collecting qualitative data and feedback from your guests and servers significant. Consider sending a survey to your diners or members of your restaurant's loyalty and rewards program.
4. Work on your menu redesign
Use the data for your menu design. Here are key things to remember as you craft the restaurant menu:
- Understand menu psychology
- Write a great menu description as items sell more than 25% better when accompanied by a powerful menu description
For further information, you may be interested in reading these guides:
- 11 Simple & Creative Online Menu Design Ideas to Boost Sales
- Top 11 Best Ghost Kitchen Menu Ideas That Keep Your Customers Coming Back
- Top 6 Hacks to Create a Profitable Sports Bar Menu
- Pick the suitable menu configuration (i.e., one-panel menu, two-panel menu, three-panel menu, or many-panel menu)
- Highlight your stars and puzzles
- Make use of eye movement patterns
- Teach your employees which items to push. Then, they can better guide guests toward picking the most profitable menu items.
5. Measure the success of your new menu
After you have completed the menu design and it has been live for about one month, check your sales data to see whether the adjustments have brought financial success. Did you get more profits? Did you sell more of the stars and puzzles? Are the food cost percentages low that month compared to previous months?
Based on your findings, you may keep tweaking the old and testing the new menu. Repeating the menu engineering process will ultimately help with your better-informed decision-making about the menu, seasonal specials, etc.
Redefine your menu with One2 Menu
One2 Menu is a game changer as this instant contactless QR code menu creates a seamless kind of experience for customers - one that makes them gravitate towards your menu rather than just read it. With One2 Menu, you can also expand your customer base and minimize costs. Ready to learn more? Contact us today.
1. What is menu psychology?
Menu psychology involves studying how a restaurant menu can influence guests to spend more money.
2. What are some effective menu psychology tips?
- Choose the right color scheme
- Limit options per category to about 7 items.
- Make your menu scannable
- Humanize dishes or invoke nostalgia
- Include separate menus for desserts
3. Should I reprint menu cards whenever I make changes based on the menu engineering analysis?
Probably not. Menu cards are said to be 100 times dirtier than toilet seat liners. You may switch to QR code menus to enhance health safety measures.
4. How to make the most of my menu stars?
- Maintain quality
- Increase price
- Rethink menu placement
- Train workers to get descriptive when selling
- Reexamine vendor relations to decrease portion costs and thus get a higher contribution margin
5. How to transform plowhorses into stars?
- Raise price
- Decrease portion cost
- Train employees to offer premium accompaniments
- Build a low-cost combo option
- Lower visibility
- Renegotiate vendor price
6. How can I handle puzzles and improve their popularity?
- Reduce price
- Increase portion size
- Test menu placements
- Promote puzzle items actively