Menu engineering: How to build a more profitable menu.

This article has been written by Pilla Founder, Liam Jones, click to email Liam directly, he reads every email.

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What is Menu Engineering? The Art and Science

Menu engineering is a strategic way of classifying your menu items based on their popularity and profit, to optimise your restaurant’s profit. This menu engineering process not only increases profit but also customer satisfaction by making sure your menu offers what your customers want. By focusing on high margin dishes and making data driven decisions menu engineering helps restaurants combat cost inefficiencies and increase overall profit through menu engineering categories.

If done right menu engineering can increase profit by 10-15%. But it also comes with challenges like having to revise the menu frequently and reducing menu variety. Periodic menu engineering analysis creates innovation and timely changes, keeps your menu current and profitable. This ongoing process requires commitment to understanding the psychology of menu design and making consistent changes for long term success.

✅ The Menu Engineering Matrix

The menu engineering matrix is a powerful tool that categorises menu items into the four menu engineering categories: stars, puzzles, plowhorses and dogs based on their profit and popularity. To get the most out of this tool using a menu engineering worksheet can be very helpful. ‘Stars’ are the menu items that shine the brightest, being both high profit and high popularity. These are your menu’s MVPs and should be featured and promoted.

‘Puzzles’ are high profit items that for some reason aren’t as popular with your customers. These items may need more marketing or better descriptions. ‘Plowhorses’ are the workhorses of your menu; they are popular but not very profitable. For these you may want to consider price adjustments or portion control to increase their profit.

Finally ‘Dogs’ are the items that don’t sell well and don’t bring in much profit. These may be candidates to be removed or revamped. By placing each item in the right quadrant of the menu engineering matrix you can make strategic changes to build a more profitable menu.

✅ Calculating Your Menu Item’s Contribution Margin

The contribution margin is a key metric to measure the profitability of your menu items. It’s calculated by subtracting the food cost from the menu price using the formula: Sales Price - Cost Per Serving. This simple but powerful calculation will show you how much each menu item contributes to your overall profit.

If a menu item’s portion contribution margin (CM) is below the average contribution margin (ACM) of all items, it means the item is not meeting profit expectations. By identifying these low performers you can make informed decisions whether to adjust the price, portion size or even remove the item from the menu. This focus on contribution margin ensures every item on your menu is pulling its weight in terms of profit.

✅ Using Food Costs to Your Advantage

Accurate food costing is essential to make sure your menu items add to your overall profit margin. To cost a specific dish you need to:

1.List all ingredients

2.Cost each ingredient

3.Add delivery fees and other related expenses

4.Add these up to get the total cost

This will give you a clear understanding of the true cost of each dish.

Food cost per serving is calculated by listing the ingredients, the amount of each, the cost of each and adding these up. This level of detail allows you to control portions, reduce waste and increase profit. By reviewing and adjusting your food costs regularly you can ensure your menu stays profitable and sustainable in the long term. Monitoring your food cost percentage is part of this process.

Building a Profitable Menu

Building a profitable menu is a series of strategic steps which include choosing an analysis period, pricing menu items and categorising each dish by popularity and profit. This is not a one off task but an ongoing process that requires regular updates and adjustments to keep up with customer preferences and market trends.

Once you have categorised the dishes the next step is to reformat the menu to highlight high profit items and measure the impact of these changes. By considering the placement and presentation of each item you can guide the customer’s choice and encourage them to choose more profitable dishes. This holistic approach ensures every aspect of your menu is optimised for profit.

✅ Choosing the Right Timeframe

Choosing the right timeframe for menu analysis is key to balancing frequency of updates and impact on sales. Menu analysis is recommended to be done every 3-6 months or quarterly to bi-annually for best results. This regular analysis will help you identify trends, spot underperforming items and make timely changes.

Seasonal changes and customer preferences play a big part in determining the right timeframe for menu analysis. By aligning your analysis with these factors you can ensure your menu stays relevant and appealing to your customers all year round. This proactive approach will keep your customers happy and increase sales.

✅ Profiling Menu Items

Menu item profiling requires you to analyse food costs, portion sizes, popularity and POS data.

Having costed recipes for menu items sets the foundation for food costing which impacts portion control and allows you to calculate portion contribution margin. This data driven approach will give you a clear understanding of each item on your menu.

Point of sale (POS) systems provide detailed data on the number of orders for each menu item and is key to analysing menu item popularity. By combining this data with food cost percentages and contribution margin calculations you can make informed decisions on which items to promote, adjust or remove from the menu. This profiling will create a more profitable and appealing menu.

✅ Menu Pricing and Design

A strategic approach to menu pricing and design is key to maximising profit and directing customer choice. Menu layouts should be designed to be visually appealing and functional with a considered layout that guides the customer’s attention to high profit items. The high profit items should be placed in the middle, top right and top left of the menu to take advantage of the natural eye movement and get the customer to see and choose these options.

To get menu designs to resonate with customers and promote high profit items restaurateurs need to gather and incorporate both quantitative data and qualitative feedback from servers and guests. This holistic approach to menu design will make sure your menu looks good and drives sales and profit.

Menu psychology is the study of how menus influence customer’s ordering decisions and plays a big part in increasing profit, enriching the dining experience, optimising menus, encouraging higher spend, increasing customer satisfaction and repeat business. By making informed decisions on pricing, portion sizes and highlighting popular or high margin items with well crafted menu descriptions restaurants can increase sales by up to 27% and improve attitudes to the food and the restaurant.

Showcasing popular items with clear and descriptive descriptions will make it easier for customers to choose and reduce feelings of being overwhelmed or confused and avoid disappointing customers with their orders and enhance their experience. By using menu psychology restaurants can create a more engaging and satisfying experience that will encourage repeat business and drive profit.

✅ Great Menu Descriptions

Well written menu descriptions can increase sales by up to 27% when an item is described. Writing great descriptions for high margin and popular items will maximise profit. Descriptive language that appeals to the senses will make dishes sound more appealing and get customers to choose higher profit items.

Investing in writing great menu descriptions is key to selling profitable items. Descriptions should highlight unique ingredients, cooking methods and the overall experience to make the items irresistible. By focusing on the sensory and storytelling restaurants can turn menu descriptions into a sales tool.

✅ Design Choices That Drive Profit

Design decisions will drive profit by directing the customer’s attention to high profit items. High profit, high popularity items should be placed prominently to encourage more sales. The Golden Triangle which is the middle, top right and top left of the menu is considered prime menu real estate and is a key area to place important information or high profit items.

A simple approach to graphics will draw attention to the targeted menu items without overwhelming the customer. By using a clean design restaurants can highlight key items, make the menu easier to use, enhance the customer experience and drive profit.

✅ Train Staff to Maximise Menu

Training your staff is key to getting the most out of your menu. Train staff to identify and promote menu items that are designed to be more profitable, know their role in the restaurant’s success, understand menu psychology and the high profit items and make informed recommendations to the customer

By following these steps staff will contribute to your restaurant’s success.

Get insights into what menu items are popular and profitable by talking to servers and bartenders about their direct customer interactions, getting feedback from staff on customer preferences and recommendations, looking at sales data to see what’s selling and what’s high margin and conducting customer surveys or comment cards to get feedback on menu items

This will help refine the menu and ensure staff are equipped to guide guests to high margin items and drive sales and customer satisfaction.

Menu engineering will enhance restaurant operations by better inventory management, minimum viable menus, menu change execution and continuous monitoring.

Good cost control and kitchen efficiency comes from streamlined inventory management which also affects equipment utilisation and consistency of dishes. By reducing food waste restaurants can plan ingredient quantities more accurately and order and prepare perishable items to match customer demand.

Using menu engineering software will give restaurant managers real time view of food costs and contribution margins, immediate cost control and optimisation of every aspect of the menu for profit and efficiency.

This will mean every aspect of the menu is optimised for profit and efficiency.

✅ Minimum Viable Menu

A minimum viable menu will simplify inventory and reduce complexity by focusing on items that add to profit. Menu engineering will help you create a minimum viable menu by identifying and removing unprofitable and unpopular items. This will mean the kitchen can operate more efficiently and focus on high quality dishes.

A minimum viable menu will reduce food costs by focusing on items that add to profit. By simplifying inventory and reducing preparation complexity restaurants can reduce waste and increase overall profit. This will also improve the customer experience.

✅ From Menu Redesign to Tableside: Implementation Tips

Implementation of menu redesign involves staff training, menu positioning and getting feedback from servers and customers. Staff play a big part in menu engineering by guiding guests to the profitable dishes. Training staff on the menu is key to driving sales of high profit items without being too pushy.

Getting feedback from servers and customers will help refine the menu and make sure it resonates with the customer. By incorporating this feedback restaurants can continually improve the menu and drive profit. This implementation strategy will ensure the menu changes are communicated and adopted by staff and customers.

✅ Monitoring and Adjusting for Continuous Success

Menu analysis and modification is required to keep dishes profitable and adapt to changing food costs and customer preferences. A few months after a full menu redesign it’s time to review the sales impact and make a couple of targeted adjustments. This continuous improvement will keep the menu relevant and profitable.

To measure the impact of a new menu on a restaurant’s sales review the financials for any notable changes in revenue. Menu analysis is required due to the fluctuation in food prices to make sure dishes are as profitable as possible. This proactive approach to monitoring and adjusting the menu will ensure long term success.

Online Menu Engineering: Going Digital

Online menu engineering will allow you to adapt to digital trends, test menu changes quickly, build online menus, upsell and allow performance analysis.

Agile menu engineering allows you to test menu changes online without the cost of printing new menus. This flexibility will allow you to adapt to changing customer and market trends.

Digital tools and strategies will give you more engaging and profitable online menus. By using technology you can improve the customer experience and drive sales through menu placement, high quality visuals and personalisation.

✅ Building an Online Menu

An online menu should have a clear structure, high quality images, strategic use of colour and typography and brief descriptions to entice the customer.

An online menu should start with a clear, logical structure that guides the customer through all your menu items in the different sections. High quality images of food will enhance the menu and stimulate appetite.

Use of colour will draw attention to certain items and typography will make certain dishes stand out. Place popular and high margin items in prime positions on the online menu for more visibility. Include detailed descriptions for dishes but make sure they are brief so as not to overwhelm the customer; this balance will increase profit by making dishes more appealing without causing decision fatigue.

✅ Upselling in the Online Experience

Online upselling means highlighting profitable items, creating bundle deals and customising menu based on customer data. Highlight profitable items on the online menu through featured sections or as ‘chef’s choice’ and make sure these are prominent. Create bundle deals or combo offers that include high profit items to encourage customers to choose them over lower profit items.

Track individual customer preferences and purchase history to personalise menu offerings and suggest items based on previous behaviour. Use customer data to identify trends and create upselling opportunities by suggesting popular add-ons or upgrades to current orders.

✅ Performance Analysis of Online Menu

Performance analysis of online menu means reviewing sales data and key performance indicators to increase profit. Restaurant owners can review their online menu performance by looking at sales data and KPIs. This will tell you which items are performing and which need to be adjusted.

Use this data to make informed decisions to optimise your online menu for profit. Review and adjust the menu regularly based on performance metrics so your online menu remains competitive and attractive to customers.