We've looked at the basics of menu engineering to help guide you to make the most from your menu.
What is Menu Engineering?
Simply put it's a look at the profitability and popularity of each item on your menu and how these two factors influence what gets put on your menu, with the ultimate objective of increasing profitability per guest. It applies to digital menus, paper menus, specials menus, delivery menus, drinks menus… in fact every foodservice menu!
Increase your profit by 15%!
Yes you read that right, a restaurant that takes the time and effort to do the analysis and go through the steps outlined below can make 10-15% more profit from their menu.
Here are 5 steps to get you started with menu engineering;
1. Cost out every item on your menu
For every menu item find out all food costs associated with each item. For example this means costing out all ingredients that go into a dish, excluding labour, try to estimate it as accurately as possible. Also to be consistent make sure the person doing the costings is leading the menu engineering process.
2. Categorize menu items according to profit and popularity
The first step in doing this is to categorize or group each section of your menu so that means all the mains together, salads together, desserts and so forth. Be careful to ensure they don't overlap.
Profit calculation for each menu item is simply the difference between the menu price and food cost that you have calculated in step 1.
Popularity can be identified by the number of sales you made of that menu item. To make things easier you may want to look at a recent time period such as last month.
Once you have looked at the profit and popularity, you may also want to look at dish complexity and, with delivery being a key driver now and in the future, you may want to asses it suitability for delivery.
3. Ranking & Analysis
Once you have every menu item's profit calculation and popularity you can then start to plot them onto the following 'Star Dog Chart'. Do this for every individual menu item in each category, but also plot your categories onto the chart. You can compare categories, for example mains vs desserts, to decide the relative importance of each and look at ways to promote and draw attention to it on your menu and outside your menu via social media, your website or delivery aggregators.
What do each of these symbols mean practically?
- Stars; perfect as they are. Do not change these winning items on your menu!
- Horses; look at ways to reduce ingredients costs for these items, or assess the effect of increasing price; being careful it doesn't reduce sales.
- Dogs; can be removed from your menu with little fear of impacting your profit or sales. In their place think about new menu ideas or new versions of the menu items you are removing.
- Puzzle; these menu items need work to promote them. Getting more customers to try them through marketing and training your staff to recommend them. You may also want to look at assessing a price reduction to drive demand.
- Use descriptive menu titles for menu items in the puzzle quadrant; make them work harder.
- Don't make prices the most visible thing; dish name, description should be the draw.
- Use visual cues such as boxes & photographs for menu items you want to focus on but being careful not to over-use them otherwise will end up confusing the customer.
4. Menu Design Tips
For menu design templates along with ways to promote specials and limited time offers you might like the Marketing Studio…
5. Menu Testing
The last step in the process is testing your new proposed menu vs the current menu. Comparing sales and profit on the menu items that were changed and be sure to compare the same time periods. Also if you have multiple restaurant sites use the opportunity to test in a proportion of sites to compare current menu vs proposed menu.
Your menu is at the heart of your restaurant. Taking the time and effort to go through the above menu engineering tips will see your sales and profits flourish. Continually use menu tactics and engineering to build your business stronger.
We hope you found this article useful, we're here to help your business grow. Make sure to sign up to Restaurant Talk to keep you informed on innovative trends happening in the fabulous foodservice industry.