In many ways, the menu may be the single most important factor driving production and purchasing decisions in any restaurant. Sure, customers come for the food. But the menu is what maximizes the value a restaurant gets from each customer.
This is where menu engineering comes in.
Rather than relying on seat-of-your-pants guesswork, menu engineering takes an empirical approach to designing menus and segmenting dishes based on their popularity and profitability. The goal is simple - to get customers to purchase the most profitable items.
One study revealed that diners read menus like a book (i.e., from left to right, and down each page), taking their time but not fixating on a specific area. However, they were found to skip two particular sour spots - the section with salads and information about the restaurant. Generally speaking, most guests will follow a similar trend when reviewing restaurant menus.
Menu engineering lets you hijack these behaviors by taking into account three factors-
- Popularity of items
- Pricing of items
- Profit margins
Menu engineering also helps reduce food costs and waste by promoting items that favor the cross-utilization of ingredients. The result is the same- the restaurant maximizes profitability and clamps down on losses.
The concept of menu engineering is based on the Growth Share Matrix - a portfolio management framework developed by the Boston Consulting Group that helps companies decide how to prioritize their businesses.
When applied to menu engineering, the matrix helps restaurant owners identify which items to focus on after placing them under four categories.
These are highly popular and highly profitable items on the menu. As the adage goes, If it ain't broke don't fix it. Continue to promote these items and make sure they are visible to your customers.
2. Question marks
Question marks are menu items with high-profit margins but low sales volumes. In other words, they're cheap to make but they're not selling well.
These menu items can be moved to another section of the menu to improve their visibility or highlighted with visual elements to draw the reader's attention. For example, placing items in boxes communicates that they are bestsellers or products the restaurant is especially proud of.
3. Cash cows
Every restaurant has a cash cow - a menu item that's a hit with customers but is frustratingly expensive to make. Like your star items, cash cows are best left alone as far as menu design goes. To increase their profitability, restaurant operators have a few options-
- Raise prices - This is a risky move that can alienate customers if done haphazardly.
- Reduce ingredient costs - This can be done by using cheaper substitutes or negotiating better deals with suppliers.
- Control portion sizes - Strict portion control is key to keeping food costs on a tight leash and reducing food waste. Weigh ingredients and leverage cross-utilization whenever possible.
- Raise prices on complementary items - You can raise the price of a bottle of wine to offset the production cost of an item it's usually paired with, like a filet mignon.
Items with low profitability and low popularity are often the result of restaurants that have bloated menus. For some dog items, the simplest solution is to streamline the menu. Companies like Chili's and McDonald's have implemented this strategy to help customers focus on star items and improve service times.
However, some of these dishes are unavoidable. Take vegan-friendly or gluten-free items, for example, which are necessary for the occasional customer with dietary restrictions.
Once the restaurant's menu items have been categorized, the next step is to run recurring cost analyses of the restaurant's inventory and menu pricing.
This process should be easy if you have inventory management software, which can provide comparisons of input against output performance to show the efficiency of the kitchen. However, these calculations can also be done manually with the following formula.
Food cost = Inventory cost Total revenue
Cost of specific menu items = Ingredients cost Total menu item revenue
Tracking food costs is essential to maintaining kitchen efficiency and knowing how to price menu items. If ingredients are lost or wasted, your star items may lose their profitability or your cash cows could end up having even thinner margins.
Restaurant operators can use any of a number of psychological tricks to get customers to order specific items on the menu. These include-
- Color - Understand the basics of color theory and use color schemes to highlight star and cash cow items. It's also a good idea to ensure that the menu's color palette matches the restaurant's existing brand colors for branding consistency.
- Scannable content - The average diner spends about 109 seconds reading the menu. Make every second count by making sure the menu is easy to scan.
- Use a lean menu - Less is more. Don't overwhelm diners with too many choices. This also leads to more dogs and higher inventory costs.
- Use images strategically - Menus with lots of photos can look tacky and overwhelming. Either place a few images on each page or skip them altogether.
- Complete Guide to Calculating & Controlling Food Cost in Restaurants
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- Simple Restaurant Menu Pricing Methods to Drive Profits
- Menu Engineering- How to Optimize Your Menu to Boost Profits
- 6 Top Tips to Reduce Restaurant Food Waste and Cost
- Restaurant Inventory Management- 7 Best Practices to Consider
- What to Know Before Choosing Restaurant Inventory Management Software
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