There are many elements in a restaurant that keep the customers comfortably seated for hours. The food, the atmosphere, the vibe, the service, the entertainment; all these elements make up the time a customer spends in your restaurant, one contributing more than the other for their collective purpose of keeping the customer hooked and satisfied.
However, there is one small element that restaurateurs tend to overlook because of the less customer interaction time it demands. It occupies less than two minutes of a customer’s time at the restaurant, yet it is the main element that defines their entire dining experience - the menu.
According to recent research, the average customer spends only a mere 109 seconds studying the menu when they are in a restaurant. During these seconds, they would scan the menu items, read their descriptions and study the item prices, a process which makes or breaks their entire experience, so it is of paramount importance that restaurateurs know exactly what to show their customers on their menu. So, if your customers miss the best thing since sliced bread on your menu because of poor menu structuring, then you will have no one but yourself to blame!
The perfect menu is not only for making your customers see what you want them to see. A carefully structured menu can also be the bedrock of your restaurant’s profitability because the making of such a menu will involve intricate pricing strategies that ensure maximum contribution to the restaurant's profitability targets from each dish that leaves the kitchen.
So, how do you make the perfect menu? This is where Menu Engineering comes into play.
What is Menu Engineering?
Menu Engineering is a systematic process developed to elevate and optimise your restaurant menu. It uses the profitability and popularity of your menu items as key elements to determine which items to feature on the menu and at what price. Simply put, it is a mechanism which helps you figure out which of your items are performing the best and which of your items are dead weight. You can also consider menu engineering as a part of your restaurant’s advertising because it involves marketing and menu psychology hand-in-hand.
Menu engineering can help restaurants make the most out of their resources in numerous ways.
It highlights and draws the customer’s attention to your most profitable menu items
It can help you save food costs by playing down or altogether eliminating poorly performing items
It can be used as a seasonal analysing method to keep your menu optimised all throughout the year
It can boost the overall popularity of your restaurant due to better dining experiences and enhanced customer satisfaction
Coming up with the perfect menu is not a task that is done within a day. It requires intensive planning, data collection and careful calculations to be successful and productive. Let us go through the quantitative data you need to gather in order to engineer your menu.
The 3 Key Data You Need to Engineer Your Menu
Properly engineering your menu calls for in-depth knowledge about menu item prices, food cost per serving and the individual item profit (Contribution margin). Apart from these quantitative data, you also need to consider the menu item popularity when generating the Menu Engineering Matrix.
Food cost per serving
Food cost per serving is the amount of money that it costs to make a dish. This includes the cost of everything from the seasonings to garnishes. If you know the entire cost of the recipe, you can simply divide it by the number of servings and come up with the food cost per serving easily. If not, you need to list down all the ingredients, how much of each ingredient you use in one dish, how much that particular ingredient costs and add them together.
Individual item profit (Contribution margin) and Food cost percentage
The contribution margin of an item is the difference between the item’s selling price and its cost per serving. As an example, if the price of a chicken burger is £5.00 in your restaurant menu and its food cost per serving is £1.00, the contribution margin for the chicken burger will be £4.00.
The ratio between the food cost per serving and the item selling price is called the food cost percentage. If we take the above-mentioned chicken burger, the food cost percentage would be ⅕*100%, which equals 20%.
Menu item popularity
Menu item popularity is the remaining data required to generate your menu engineering matrix. It is basically about figuring out which of your menu items are popular and have a higher selling rate among your customers.
In a traditional restaurant environment, generating your menu engineering matrix can be a daunting task. You will have to think through who has the most knowledge about your ingredient costs and the menu item performance to assign the task. Not only that, they need to have skills in menu designing and menu psychology as well. Sometimes, this can be one person or a group of people and it also tends to be a time-consuming task when having to go through each and every component one by one.
However, with modern POS systems taking over the restaurant industry, collecting the raw data related to cost per serving, contribution margin and the food cost percentage of each menu item is no longer a hassle. With inventory management features built into the POS system, users can collect the data easily to proceed with the menu engineering matrix.
When restaurants are equipped with reporting-enabled POS systems, it is no longer necessary to ask restaurant managers or servers about which dish sells the most. Most POS systems now have the functionality to produce reports that show how many dishes you have sold by each item, over a certain period of time.
Even with the numeric data you collect from your POS system, it is always wise to speak to your servers, restaurant managers, etc. to get their opinion on item popularity. No matter how concrete your numeric data is, they also can give you important tips and insights since they deal with your customers face-to-face.
The 4 Menu Engineering Categories
Now you know how much each of your menu items cost and their contribution margin. You are also equipped with their popularity rate based on the sales reports you generated from your POS system. Therefore, you have all the key data to categories your menu items based on profitability and popularity. But first, let us show you the four main categories of Menu Engineering that help you revamp your menu; Stars, Plow horses, Puzzles and Dogs.
Stars: high profitability and high popularity
Stars of your menu are the items that are inexpensive to make, but what your customers may order all the time. They earn high profits because they are cheap to make and they may be popular because customers are used to them. Rather than experimenting with your Stars, it is better to leave them as they are, and promote them aggressively to get more sales.
You may need to think about ways to make your Stars stand out and catch the eye at the first glance when they are going through your menu. Give them interesting details so that your customers cannot help but try them out. Getting your server to suggest them to customers is also a great way to maximise your profits per service.
Plow horses: low profitability and high popularity
Items that are more expensive to make, but are popular among your customers are Plow horses. These items do not generate a lot of profit because the ingredients that make the item are costly. Regardless, these items are extremely popular among your guests, so you cannot take the risk of eliminating them from your menu altogether. The most obvious choice to enhance their profit contribution is increasing their selling price, but there is a limit to how much you can do it. So what are your other options?
You can always rework the recipe and come up with a more profitable version of it, probably by changing its ingredients. Furthermore, you can try pairing them with a Star drink or cocktail and tweak the portion sizes with creative plating ideas and garnishes, so that your profitability goal of the dish remains unaffected.
Puzzles: high profitability and low popularity
Just as the name suggests, these items are true enigmas. They are way up in the profitability scale, but they are less popular among your customers. You cannot discontinue these items just because they do not sell well, because of the high profit contribution they bring with them once they do sell.
Trying to pinpoint why they do not sell is the best way to start when dealing with your Puzzles. Is their selling price too high? If so, try to bring it down a little because it can make a huge difference if they begin to sell. Also, check whether they are noticeable on your menu. What can you do to make them look more appealing? Try to give them a compelling description or pair it with a mouthwatering photograph. You can also try promoting them on social media to create a buzz so that they sell well and become a Star in no time!
Dogs: low profitability and low popularity
Dogs on your menu are expensive to make and they do not sell well among your customers, so they are neither profitable nor popular. Basically, Dogs are the dead weight on your menu and they might distract your customers from Stars and Puzzles, making them even more problematic when it comes to your restaurant’s overall profitability.
You can de-emphasize or try to hide them on your menu and you can also try to rework them by rebranding or rethinking the recipe. If their sales and contribution margin still don’t improve, you can omit them entirely from your menu as they will continue to drag your menu down and it is not worth taking that risk.
Guide to Engineer Your Menu
Now that you are well-informed about Menu Engineering, it is time to actually do it! Follow our simple, step-by-step guide to revamp your menu so that you, your menu and your restaurant can continue to flourish!
1. Decide the best time to revamp your menu - If your restaurant runs on seasonal produce and popularity, consider revamping your menu as you get ready for a new season. Also, don’t forget to do menu revamping when the food costs fluctuate, or else you will end up with a high cost per serving and low profits. Overall, it is wise to do a menu analysis at least twice a year to keep your menu in its optimal condition.
2. Cost your menu items - According to the three key data calculations we have mentioned above, calculate your menu items’ cost per serving, contribution margin and determine their popularity.
3. Categorise your menu items - Determine where your menu items belong in the Menu Engineering framework. Which items are your Stars? What are your Puzzles and Plow horses? Are there any Dogs which are just dead weight?
4. Redesign your menu - Rethink and restructure your menu to highlight your Stars. Play with your Plow horses and Puzzles and think about ways to make them more appealing. Omit or hide your Dogs so that they won’t slow you down. Consider menu psychology elements such as compelling item descriptions, attractive food shots and eye movement patterns.
5. Measure and evaluate - Revamping your menu and putting it into use is not enough. You need to measure its performance once it has been live for a considerable amount of time. Decide the time according to the popularity of your restaurant and continue enhancing your menu.
Menu Engineering is the future of manipulating your customers' decisions. Once you grasp this and implement it in your restaurant menu revamping, there is no end to the improvements and benefits that open up. Every dish that comes out of your kitchen will be a best seller and your customers will never stop talking about your restaurant. So, why wait?