Building a profitable restaurant menu is one of the most excellent sales tools resulting in higher profitability. That’s why we prepared this guide to help your restaurant design a functional menu.
What is menu engineering?
Menu engineering analyzes and optimizes a restaurant’s menu items to maximize profitability. Online menu engineering involves using menu metrics techniques to identify the most popular and profitable items on a menu and making strategic changes with menu redesign services, menu prices, placement, and descriptions to encourage customers to order those items.
Menu engineering can help a restaurant owner increase a menu item’s popularity, profit margins for restaurants, manage restaurant food costs, and improve customer satisfaction by improving menu performance, making it more appealing and profitable.
The principles of menu engineering analysis can be applied to new and existing menus. They can be used to improve the performance of all types of food service establishments, from quick-service restaurants to fine dining establishments.
- “It involves the strategic design and pricing of menu items to maximize profitability, with research indicating that the placement, description, and pricing of items can impact sales by up to 25%.” (Source: National Restaurant Association)
- “According to a study by Cornell University, customers are more likely to order menu items with descriptive labels, which can increase sales by up to 27%.” (Source: Cornell University)
- “Online ordering and delivery platforms have become an increasingly important aspect of menu engineering, with many restaurants creating separate menus and pricing strategies for online orders to maximize profitability.” (Source: Toast)
- “Rather than read menus from front to back, diners tend to scan them quickly (spending an average of just 109 seconds, according to a Gallup poll).” (Source: Canva)
What is a menu engineering example?
It’s anything done to create profitable menus – Here are a few menu engineering examples:
- Item placement: After a menu analysis, consider dividing the menu into sections for appetizers, entrees, and desserts, known as a three-panel menu. Customers tend to pay more attention to the top and bottom items in each area, so the most profitable items are placed there, thus increasing the menu item’s popularity.
- Item descriptions: Menu engineers often focus on creating appetizing menu descriptions for each dish, highlighting ingredients, cooking methods, and unique features. This helps to entice customers to choose specific dishes you want to sell.
- Restaurant menu pricing strategy: Omitting dollar signs and price decimals makes customers less price-sensitive.
- Highlighting high-profit items: Profitable items are highlighted through the use of call-out boxes, bold text, or images. These visual cues draw the customer’s attention to these dishes and help to create a more profitable menu.
- Strategic menu item placement: Place high-profit items next to more expensive but less profitable items within the menu engineering matrix. This makes the high-profit items seem like a better value, encouraging customers to choose them.
What are the elements of menu engineering?
Let’s see what the restaurant menu engineering process looks like. Menu engineering efforts focus on six elements divided into two main categories:
- Analyze your current menu
- Popularity: This pertains to the frequency at which customers place orders for a particular menu item. Items that enjoy higher popularity are inclined to enhance the contribution margin and thereby augment the overall revenue of the restaurant. Understanding these dynamics is crucial when exploring how much do restaurant owners make.
- Profitability: This involves analyzing your menu pricing compared to the average contribution margin, considering the food cost percentage, restaurant labor costs, and other expenses. High-profit items can contribute significantly to a restaurant’s bottom line.
- Menu Item Cost: This element involves understanding the cost of goods sold (COGS) for each menu item, which is the total cost of ingredients used to make the dish. Accurately calculating COGS is crucial for establishing a menu price list and determining each item’s profitability.
- Build a new profitable menu
- Menu Item Placement: This involves all your menu items and strategically placing high-profit or popular items in prominent locations to increase visibility and restaurant profits.
- Menu Item Pricing: This element involves setting prices that are competitive and profitable, taking into account food costs, competition, and other factors. Pricing strategies, such as bundle pricing and psychological pricing, help categorize menu items and can encourage customers to order high-profit items.
- Menu Item Description: This element involves creating menu item descriptions that are appealing and persuasive, highlighting unique features, ingredients, and flavors to encourage customers to order the menu item.
- Increase profitability by identifying high-profit menu items and consider increasing their selling price.
- Improve customer satisfaction by optimizing the menu to meet customer needs and preferences.
- Stay competitive by standing out in the restaurant industry.
- Reduce waste and lower restaurant costs by identifying low-performing items.
- A well-designed and optimized menu can help restaurants attract new customers and retain existing ones.
How to build a profitable restaurant menu with menu engineering (Step-by-Step Guide)
We’ve prepared a guide to show you how to create your menu engineering worksheet for restaurant operators. With it, you can assess menu metrics data and understand each item’s contribution margin and the menu engineering categories, which will help your business take off.
Step 1: Select a time frame to analyze your menu
Conducting the menu engineering takes time, but it’s worth it. If you can do it quarterly or twice a year, you should see the results in boosting your restaurant sales. Make sure to look for dips and peaks in your analyses and track how much the average customer spends in your restaurant to find any places for improvement.
Step 2: Develop a menu costing strategy (Analyze profitability and popularity)
A starting point is calculating food costs for each menu item. A menu item’s food cost is a sum of the costs of each ingredient and purchasing prices. For example, to calculate the food cost of a burger, you need to list all of the ingredients you use when preparing a burger, the amount of a given ingredient you use, and how much it costs.
Factors such as portion size also affect your price slightly, so make sure to calculate the portion costs when introducing new dishes to give customers a good value, but are also making profit.
How to analyze menu profitability and popularity?
- Analyze sales and restaurant inventory reports in your POS: Most POS systems provide you with data on the amount of a given menu item sold. You can check it in a given time period and see the trends. In some POS systems, you can also check guest profiles meaning that you can observe buying behavior of a selected group of your customers.
- Customer feedback & reviews: Analyze reviews on services like Google, Yelp, and from your own online ordering system.
- Talk to your waiters and bartenders: Your team has unique knowledge you can’t find in any report. Ask your team about their ideas on menu improvements.
Step 3: Categorize your menu items based on profit and popularity
The next step is categorizing your menu items, considering their profitability and popularity. We can distinguish four menu engineering categories, which are:
- Stars: are dishes with high profitability and high popularity
- Puzzles: are dishes with high profitability and low popularity
- Plowhorses: are dishes with low profitability and high popularity
- Dogs: are dishes with low profitability and low popularity
Step 4: Design Your Menu
Having analyzed your restaurant menu items, you can start redesigning the menu. The main idea about categorization is to design your menu in next step with this algorithm:
1. Highlight Stars (high-profit, high-popularity items): You can reposition and design the menu to showcase popular, high-margin items in prominent locations, such as at the top of the menu or with photos.
2. Promote Puzzles (high profitability and low popularity) and Plowhorses (low profitability and high popularity): You can adjust the price of the popular signature dish to increase the item’s profit margin or introduce a similar but more profitable dish.
- Change position in menu
- Change menu item name
- Prepare attractive menu descriptions
- Make discounts on Puzzles
- Lower menu item food costs
- Increase menu item prices for Plowhorses
- Change a recipe
- Pair your Horses with beneficial drinks, sides, etc.
- See more restaurant promotions ideas
3. Eliminate Dogs (low-profit, low-popularity items): You can remove menu items that are not popular and don’t have a high profit margin.
Remember about these menu design tips
- Remember about the eye movement patterns. This so-called Golden Triangle is a concept used in menu design to describe the natural eye movement pattern when people view a page or a screen.
The Golden Triangle is formed by connecting three key points on the page: the top left corner, the top right corner, and the center of the page. This triangular area is where people’s eyes tend to gravitate, making it the prime real estate for important information or focal points.
- Keep your menu short: a short, to-the-point menu is easier to navigate and shows customers that you have a house specialty that isn’t an array of different cuisines.
Step 5: Reprint your paper menu
After redesigning your menu, it’s time to print it and start using it in your restaurant. First, ensure your menu is easy to read, neatly arranged, and follows the Golden Triangle rule.
- Matt or glossy paper
- Paper thickness options
- Full-color vs. black-and-white menu
- Menu size
- Lamination
- Folding
Step 6: Create a new online menu (10 profitable tips)
Once you’ve redesigned your physical restaurant menu, begin working on your online menu. Almost 80% of all online orders come from the internet so your online presence is essential in order to make your menu profitable.
Here are 10 tips on how to do this.
Tip 1: Configure the online menu (on your website)
The first step is adding your restaurant menu and menu items to the UpMenu system. Doing so lets you integrate your menu with the system, allowing clients to order their meals right off your UpMenu page.
Tip 2: Add the “Order online” option to your menu
You can use a restaurant online ordering system like UpMenu to convert your website menu into an online store. This will turn your website visitors into customers.
Tip 3: Don’t use PDFs
Imagine your consumer downloading your menu and having to zoom in on it to find the dish that interests them. It can be a nightmare. Instead of uploading a PDF, use UpMenu’s Online Ordering System with the menu management module to add your dishes with attractive menu desciptions.
Tip 4: Add enticing photos
Customers eat with their eyes, so adding delicious pictures on your menu (next to the menu items) and on your restaurant website is a good idea. Remember that the photographs must be of good quality and show your dish from the right perspective.
Tip 5: Arrange your dishes to encourage interactions
While adding photos on your website, take into account menu item placement. Theoretically, two of the same images may not differ, but intuitively you will choose the one on the right side from the picture below, as you can imagine yourself eating a dish from this image.
Tip 6: Provide customers with additional food choices and recommendations to enhance revenue
In UpMenu, you have different ways of offering a consumer additional food options, which is a great way to increase the cart value.
- Menu item modifiers – a powerful part of the Menu Management Module, which enables a restaurant to offer free or paid extras to products, replacement options for default ingredients, and extra ingredients at different prices depending on the menu item size. This option makes order customization much more convenient for customers.
- Upselling recommendations – You can use menu item recommendations for menu optimization and boosting your restaurant sales. A popup window can appear at the end of the buying process, encouraging consumers to add extra products to the cart. As a result, sales can significantly increase with this option enabled.
Tip 7: Incorporate menu item labels
Another visual aspect you can use while adding your online menu is menu item labels. This graphic way quickly informs a customer about a given dish and it helps to highlight your Star and Horses menu items. With this option, you can put your top dishes in front of clients to encourage them to order them more often.
Tip 8: Offer menu item sizes (to make the menu shorter and better categorized)
In UpMenu, you can create a menu that completely adjusts to your offer. For example, if your restaurant offers dishes in different sizes, you can set them on your menu without problems. This gives customers more variety when ordering their dishes.
Tip 9: Position the majority of the visual content on the left side of your menu
The right hemisphere of our brains is in charge of our more creative side, meaning that we process any images with this part of our brains. What’s more, the right side of the brain controls the left side of our bodies, so it’s better to put menu item images on the left side of your restaurant menu.
Tip 10: Create a QR code menu
Make use of QR code menu in your restaurant. In UpMenu, you can easily generate QR codes and place them on tables in your restaurant. By scanning a QR code, customers are automatically redirected to your restaurant menu and can place an order faster.
Step 7: Test your new menu (to measure its impact on your restaurant sales)
A few months after conducting the market engineering analysis and designing a new menu, check your restaurant’s financial results. Ensure to follow any dips or spikes in your revenue, as these can be telling signs for your business. For example, dips might show that your menu matrix still needs some work, whereas spikes might mean that your menu is perfectly optimized and you have mouth-watering pictures and a great menu description of each food item.
Key Takeaways
- Calculate the food cost for each menu item from your menu
- Categorize your menu items based on their profitability and popularity
- Redesign your menu considering menu psychology aspects
- Don’t forget the differences between physical and online menu design
- Use Menu Management Tools for creating your online menu
- Add the “Order Online” button to your menu to convert website visitors to customers
- Consider techniques like menu item recommendations and modifiers to increase your restaurant sales
Frequently Asked Questions (FAQ)
What is the menu engineering definition?
Menu engineering is defined as analyzing and optimizing a restaurant’s menu items to maximize profitability and enhance customer satisfaction. By categorizing menu items based on their popularity and profitability, restaurants can make decisions about pricing, placement, and promotion to drive sales and increase revenue.
What is menu psychology?
Psychology concepts with influence on menu design:
- Currency symbols – remove currency symbols or use round numbers instead of .99
- Avoid using price columns to show your prices
- Use descriptive language for each dish, but remember not to make descriptions too long
- Keep your menu short – limit customer choices
- Use attractive photos to make a mouth-watering impression
What are the elements of menu engineering?
It’s the process of strategically designing a menu to maximize profitability by analyzing the popularity and profitability of each item on the menu. The following are the key elements of this menu engineering:
- Menu Categories: The first step in menu engineering is categorizing menu items based on their popularity and profitability. For example, popular and profitable items can be placed in the “star” category, while less popular but profitable items can be placed in the “cash cow” category.
- Menu Item Analysis: Once the items are categorized, they can be analyzed using a matrix that considers the popularity and profitability of each item. This analysis helps to identify which items are worth promoting, which items need improvement, and which items should be removed from the menu.
- Menu Design: The design of the menu can influence customer behavior and affect profitability. This considers the visual layout, typography, and placement of menu items to create an appealing and easy-to-read menu that guides customers towards profitable items.
- Menu Pricing: It also involves pricing strategies such as bundling, tiered pricing, and anchoring, which can influence the customer’s decision-making process and increase profitability.
- Menu Item Promotion: Finally, it includes strategies for promoting high-profit items such as highlighting them with special menu design elements, using enticing language to describe them, and placing them in prominent locations on the menu.
How to calculate menu engineering?
Menu engineering formula analyzes the profitability and popularity of each menu item to identify which items to promote, improve, or remove from the menu. The following are the steps to calculate menu metrics:
- Categorize the Menu Items: Categorize each menu item into four categories based on their popularity and profitability:
- Stars: High profitability and high popularity
- Cash cows: High profitability and low popularity
- Puzzles: Low profitability and high popularity
- Dogs: Low profitability and low popularity
- Calculate the Menu Item Contribution Margin: Contribution margin is the difference between the cost of the menu item and its selling price. Calculate the contribution margin of each item by subtracting the cost of goods sold (COGS) from the selling price.
- Calculate the Menu Item Popularity Index: Calculate the popularity index of each item by dividing the number of menu items sold by the total number of menu items sold.
- Plot the Items on a Matrix: Plot each menu item on a matrix with the X-axis popularity index and the Y-axis contribution margin.
- Analyze the Results: Analyze the results to identify which items are worth promoting, which items need improvement, and which items should be removed from the menu.
- Implement Changes: Use the analysis to make changes to the menu by promoting high-profit items, improving low-profit items, and removing low-profit items.It
How to do menu engineering?
Here are some strategies to implement changes in the menu based on the analysis:
- Promote high-profit items: Highlight star items using visual design elements or attractive language to attract customers’ attention. Consider placing them in prominent locations on the menu, such as the top or bottom of the menu or in boxes.
- Improve low-profit items: Consider changing the menu item’s recipe, presentation, or pricing to increase its profitability or popularity. For example, consider using lower-cost ingredients or reducing portion sizes to improve the contribution margin.
- Remove low-profit items: Remove menu items with low profitability and low popularity to simplify the menu and reduce costs.
