Menu Engineering : Key Steps To Build A Profitable Menu
- November 1, 2023
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Jean-Philippe Serhal
Menu Engineering combines art and science. It is the practice of engineering a menu that both ensures profitability for your restaurant and also delights customers. With a study reporting that customers spend about 2 minutes looking at a menu before making a decision, and another reporting that menu engineering could boost profits by up to 15%, a restaurant menu is a powerful sales tool that shouldn’t be left up to chance.
But what is menu engineering and how does one go about to design a profitable menu ? How does a restaurant owner decide which item makes it to the menu, and what place, price, or name to give it ?
This in-depth article covers the essential steps needed to engineer a menu to maximize profits.
Table Of Contents
- What Is Menu Engineering ?
- The Importance & Benefits Of Menu Engineering
- How To Engineer A Menu For Maximum Profitability
- Determine The Cost Of Your Menu Items
- Analyze The Popularity Of Your Menu Items
- Categorize Dishes Into One Of The Four Menu Engineering Categories : Star, Plowhorse, Puzzle, & Duds
- How To Design A Menu That Sells
- Menu Psychology : The Silent Influencer
- How To Choose The Right Menu Configuration
- Consider Eye Movement Patterns
- Write Strong Menu Descriptions
- Analyze The Performance Of Your Menu
- The Drawbacks Of Menu Engineering
- Conclusion
- About Supy
1. What is Menu Engineering ?
But menu engineering isn’t as straightforward as listing your best selling, most profitable items at the top, and the less popular, low margin dishes at the bottom. A lot more thought goes into understanding the performance of your menu, and many tactics can be used to not only optimize the profitability of your menu but also influence the choices of your customers towards the more profitable menu items. From leveraging menu psychology to promote an item to re-designing a recipe to reduce your costs, the techniques and tactics to perform are varied.
Keep in mind that menu engineering is hardly ever a one-time exercise. It’s a continuous process that requires adaptability and innovation, and consists of switching things up, and trying different strategies.
Interesting Facts About Menu Engineering
1. Pricing items using a .99 format ($9.99) make items seem cheaper. Removing the $ sign, makes customers spend more.
2. Menus with 7 items per category are the most effective.
3. High quality pictures of items increase sales by 30%.
4. 80% of sales come from 20% of menu items.
It is also worth noting that the biggest challenge in building profitable menus is in getting and maintaining accurate data, in order to make accurate decisions. This is why restaurant operators must keep tight control over their inventory, ingredient costs, portions, and generally speaking, over all data going in, out, and across their food business.
To summarize, menu engineering is about knowing what’s selling the most and what’s making you money, and applying several tactics to maximize profits, all while delighting customers.
2. The Importance & Benefits Of Menu Engineering
Menu engineering serves a dual purpose: enhance the diners experience with fun and interesting choices, and optimize the profitability for the establishment. When a restaurant operator starts to look into Menu Engineering, they’re essentially delving into a strategic process that elevates a simple “restaurant menu” to a potent business tool.
Menu engineering serves a dual purpose: enhance the diners experience with fun and interesting choices, and optimize the profitability for the establishment. When a restaurant operator starts to look into Menu Engineering, they’re essentially delving into a strategic process that elevates a simple “restaurant menu” to a potent business tool.
Menu Engineering Software
Monitor Your Recipes' Profitability In Real Time.
- It Drives Sales : by using techniques related to pricing, positioning, wording, imagery, menu engineers can contribute significantly in boosting the sales performance of their establishment.
- It Enhances Dining Experience : creating a menu that is aligned with your brand, proposing dishes that your customers expect but also proposing novelty, both contribute to creating a pleasant dining experience. Engineering a menu that is simple, clear, and straight to the point simplifies decision-making for your customers too.
- It Reduces Waste : Engineering a menu takes into consideration the ingredients you’ll need to create the recipes you’re advertising. A well-engineered menu will ensure ingredient cross over, so that you can reduce complexity in your procurement operations, and maximize the usage of ingredients.
- It Streamlines Cost Management: By meticulously analyzing ingredient costs and preparation expenses, restaurants can refine their profitable items by reviewing pricing or updating the recipe.
- It Promotes Innovation: As preferences evolve, restaurant menu engineering facilitates periodic updates, allowing experimentation with fresh offerings and maintaining menu vitality.
3. How To Engineer A Menu For Maximum Profitability
At the heart of every successful restaurant lies a well-thought-out restaurant menu. As we previously mentioned, while the culinary craft is essential, the design and strategic presentation of the menu play a pivotal role in maximizing profitability.
Three main factors go into designing an efficient menu :
- Determining The Cost Of Your Menu Items
- Analyzing The Popularity Of Your Menu Items.
- Categorizing Dishes Into One Of The Four Menu Engineering Categories : Star, Plowhorse, Puzzle, & Dogs
1. Determine The Cost Of Your Menu Items
Profits = Revenue – Costs.
It is therefore key to start with determining the costs of your menu first.
This is where the food cost percentage comes into play.
Calculate Your Recipe Costs with Supy
Breakdown the cost of your recipes per ingredient. Visualize your food cost percentage and potential profits
You must first calculate the food cost per serving, which is the total cost of ingredients per serving.
We covered an example of this using Anthony’s Shawarma Joint, where the cost of producing a chicken shawarma amounted to $2.00.
The profit Anthony will be making on his chicken shawarma is the difference between the price he sets, and the cost of his ingredients.
If the Chicken Shawarma sells for $6.00, then the profit will be of 6.00 – 2.00 = $4.00
This exercise needs to be done for all the items in your menu, and you will need to strike the right balance of profits. A study by the Johnson & Wales University reported that a good margin would be 70%.
Good To Know
The profitability of an item will fluctuate over time as the price of ingredients (and therefore your costs) will vary. This is why it is key to stay informed on the profit percentage of your menu items.
Restaurant inventory management software helps you keep track of your ingredients’ cost, the selling price of your dish, and consequently whether it is profitable or not.
This first exercise should give you clear visibility onto which items are the most and least profitable.
2. Analyze The Popularity Of Your Menu Items.
Once menu items are listed from most to least profitable, restaurant owners must list them from most to least popular. Several sources of information can be used, including restaurant analytics software, looking into your POS system, or simply picking up on trends by listening to your customers.
You should also involve your staff : Your team, from chefs to servers, interacts with the menu and customers daily. They can offer feedback on dish popularity, preparation challenges, or even suggestions for improvement, thus contributing to a more holistic menu design approach.
It is important to also not just look at which items sell the most, but to also understand the context in which the analysis is taking place :
- Are you selling a lot of pumpkin pie because it’s October and we’re in the middle of Fall ? Or is this item popular all year round ?
- Is pumpkin pie popular amongst kids only, or do adults also enjoy it ?
It is key for restaurant operators to mix in their sources of information, from advanced restaurant software to speaking with staff and customers.
3. Categorizing Dishes Into One Of The Four Menu Engineering Categories : Star, Plowhorse, Puzzle, & Duds
Now that you’ve analyzed the popularity and profitability of your menu items, you can categorize them using the Menu Engineering Categorization process :
Stars : High Profits, High Popularity
Star items are both popular and profitable. They’re the dishes that customers frequently order and generate good margins for the restaurant, as they’re cheap to produce.
These dishes do not generally need reworking, as the formula is already working as is !
Instead, look into ways to promote your stars to increase revenue. For example, highlight these dishes in prime spots on your menu.
Plow Horses: Low Profits, High Popularity
Plow Horses are popular dishes that aren’t profitable. They ensure steady footfall and customer satisfaction, often acting as familiar staples that keep customers coming back. However, you should explore ways to tweak the costs of a plowhorse dish without compromising quality :
- Look into the portions you’re serving and determine if you could reduce it if customers don’t typically finish their plate.
- Look into reducing the cost of your ingredients by analyzing the prices of your suppliers and seeing if you could negotiate better deals or a cheaper supplier.
- Look into reworking the recipe with new ingredients, or try to counteract the low profit issue by pairing it with a high-profit item : for example, fries and steak.
Supplier Performance Dashboard
Monitor price fluctuations, discounts, and quantity ordered per supplier to negotiate better deals and reduce your costs.
Puzzles : High Profits, Low Popularity
Puzzles are high-profit items, but they aren’t ordered as frequently.
They’re called puzzles because they present an opportunity: can you turn them into Stars?
Puzzles can be pivotal in enhancing profitability if marketed correctly. They may require promotional efforts, staff upselling, or even a menu highlight to boost their popularity.
To address puzzles, you should try to determine why customers aren’t buying them. Are they easily noticeable on your menu ? Are customers aware they exist ? Is the naming unclear ? Is the description not compelling ? Is the price an issue ?
Investigate the causes and experiment with different solutions.
Dogs : Low Profits, Low Popularity
Dogs are items that aren’t very popular and have low profitability. They’re the underperformers of the menu. Recognizing Dogs is crucial for menu engineering as it signals items that might need to be re-evaluated, re-positioned, or even removed. It would be advised to first experiment with changing different aspects of the menu item, such as the price or the recipe, before deciding to remove it entirely from your menu.
Understanding and working with these four categories is central to engineering a successful menu. It ensures that every dish on the menu has a defined role, contributing to both customer satisfaction and restaurant profitability.
4. How To Design A Menu That Sells
This is where hard science meets art. Designing a restaurant menu needs to take into consideration the findings related to the performance of your menu, but also the branding of your business, and the preferences of your customers.
Talk to your staff and get their feedback on how customers behave when reading through the menu. The questions they often ask. They dishes they often point at and select. What feedback do your waiters get from customers regarding portions, taste, or presentation ?
Restaurant Menu Templates
When it comes to menu design, you can find numerous existing templates to get going with little to no cost. Canva, for example, proposes exciting templates.
But before you simply copy, paste, and edit a given menu, it is key to understand the psychology that goes into crafting a menu.
1. Menu Psychology : The Silent Influencer
Menu psychology focuses on techniques that motivate customers to consume in a certain way (such as increasing the chances of them buying a specific menu item). Every detail matters : the way you showcase your prices, the categories you choose, the images you display, the colors you showcase, and the general appeal of your menu all play a crucial role.
Here are a few tips to keep in mind when designing your menu :
- Be aware of how you display your menu item prices
- Highlight the dishes that need more exposure
- Choose the right palette
- Arrange your dishes thoughtfully
- Use words that resonate.
A. The Subtlety of Price Display
Did you know that diners tend to order more when the dollar sign is omitted? Simplifying pricing by just showing rounded figures can shift focus from cost to cuisine. It’s a commonly adopted practice in upscale dining venues.
In his Menu Engineering study, Rapp reports that placing prices in a column causes customers to focus on the price, and not the food, and could lead them to choose the cheapest item in the column.
B. Building The Gaze
Beyond the popular dishes that most know and love, effective restaurant menu engineering can spotlight lesser-known but equally delightful options. This might be through distinct markers, symbols, or even a different font.
C. Choosing the Right Palette
A beige or muted gold might evoke a sense of warmth and comfort, whereas a stark white might symbolize simplicity and elegance. The color palette of your restaurant menu subtly communicates the ambiance and culinary journey awaiting diners
D. Thoughtful Arrangement
Consider how diners naturally scan a page. While many stress the Golden Triangle – which refers to how our eyes typically move to the middle first before traveling to the top right corner and then finally to the top left corner of menu – a modern approach might be about clusters, grouping dishes in threes, tapping into the psychology that people tend to remember and choose from groups of three.
E. Words That Resonate
While elaborate stories might be enticing, in restaurant menu engineering, precision wins. A concise and apt description, for instance, slow-cooked to perfection or garden-fresh, can give clarity and set expectations right.
In essence, restaurant menu engineering is a confluence of aesthetics, psychology, and strategy. By understanding and harnessing these principles, establishments can craft a profitable menu that resonates with diners while aligning with business goals.
2. How To Choose The Right Menu Configuration
If you browse through Canva’s menu designs, you’ll notice that menus come in different shapes and forms : a single page menu that reads top to bottom. A double page menu that reads left to right. But what effect does this have on the customer ?
Rapp It is key to understand the psychology that goes behind such a menu engineering decision :
- 1 panel menus : Customers tend to decide what they’d like to order faster, but don’t order as much as more complex menus, which reduces profits per customer. Rapp reports that this is due to the configuration of the menu evoking a lighter, more casual dining experience compared to a fuller menu.
- 2 panel menu : This is reported to be the best configuration to use. It is easy to read and, contrary to the 1 panel menu, evokes the sensation of a full dining experience, and therefore increases order sizes.
- 3 panel menu : A valid choice if you have numerous items to sell and need menu real estate. It is, however, more complex to sift through than the 2 panel menu.
- 4+ panel menu : The more panels you have the less control and influence you have over your menu.
3. Consider Eye Movement Patterns
When engineering a menu, you must take into consideration how customers browse through a menu. This will depend on the number of panels used in your menu.
4. Writing Strong Menu Descriptions
According to a study by Sage Journal, food descriptions can trigger an increase in buying decisions by 45%. Yet a common problem we see within menus is that operators simply describe their items with a lifeless list of ingredients, which of course affects sales.
Rapp reports that, in order to write a strong menu item description, you must divide it in 3 parts :
- The name of the dish
- The ingredients : Position the ingredient of the dish in order of importance, starting with the most present and expensive ones. The reasoning behind it is that guests read as little as they can when deciding what to order.
- The “sell copy” : or the “marketing” language used to sell your dish.
Let’s look at the organization of the ingredients in this example of a beef burger :
Order of ingredients : 1>2>3, from most important item to the least.
Now let’s try something else. To ensure that your menu doesn’t stay monotonous, you can occasionally reverse the order of the ingredients to highlight your “sell copy”.
It is ultimately up to you to decide how to order your ingredients. You must test and learn.
The “Sell Copy” can sometimes be transferred to the name of your dish and help your customers browse more rapidly.
For example :
Another tip to increase the perceived value of your dish is to state its geographic origin.
With sustainability being top of mind, customers will always appreciate knowing that their menu item was sourced locally. When it comes to fine-dining, customers will appreciate knowing that ingredients were sourced and imported from the finest regions in the world.
For example, the following descriptions of the same menu item adds more value to the ingredient :
- Beef patty
- Beef patty from France
- Beef Patty from Saône-et-Loire breeder, France
The more specific you get, the more thoughtful your dish appears, and the more valuable your customer perceives it to be. This also helps you differentiate yourself from the competition.
Most of the items you buy come from a specific farming area or small town. The smaller the town, the more interesting the menu description.
Add a backstory to your dish
Aside from the addition of geographical sourcing and the sell copy to a particular ingredient, a menu engineer can use an ingenious way of setting a specific dish apart by adding a backstory to the dish.
These are some examples you can use :
Train Your Staff
Once your menu is ready, it is key to present it to your staff for them to understand the dishes, the backstory of specific dishes, where the ingredients were sourced, and which menu items to propose during the ordering process. This will help you sell more of the most profitable dishes.
5. Analyze The Performance Of Your Menu
Menu Engineering isn’t a one time process, but a continuous exercise. Once your menu goes out, keep a close eye on your sales performance. See if the changes you’ve made have had an impact on your profits. How is each category of dish (Star, Plowhorse, Puzzle, Dog) doing ? Are puzzles still underperforming or have they moved to Stars ?
It is key to be data-driven throughout your process. This is also why you and your team must be rigorous in inputting data into the system – be it orders, procurement, receiving items, or updating ingredient prices. You will likely have a hard time understanding how your restaurant business is truly performing if you do not have accurate back-of-house and front-of-house data.
5. The Drawbacks Of Menu Engineering
Yes, menu engineering comes with countless benefits, but overdoing it might actually kill it. Here’s what’s at risk :
- Customer Trust : While promoting high-profit dishes is essential, overdoing it might alienate customers, create an illusion of a lack of innovation, and could impact long-term loyalty.
- Profit vs Pleasure : Overemphasizing margins might come at the expense of variety and customer delight. Striking a balance is crucial.
- Menu Revision Frequency : Seasonal shifts can invigorate a menu, but overly frequent changes might cause confusion, possibly driving customers away.
While menu engineering offers a structured approach to curate a profitable menu, it’s crucial to continuously factor in customer feedback and monitor its implementation to reap its full benefits.
6. Conclusion
In summary, menu engineering is a strategic process that combines data-driven decision-making and design to create a profitable and customer-pleasing restaurant menu. Analysis starts by understanding which items are the most profitable and the most popular, as well as the least profitable and least popular, and categorizing them into four categories : Stars, Plowhorses, Puzzles, and Dogs. Based on the category in which the item is, restaurant owners can then decide which step to take in order to maximize the sales of the profitable items, and the exposure of the least popular items.
Designing a menu that sells involves psychology techniques that require an awareness on menu configuration, eye movement patterns, and compelling menu descriptions. Several tricks can be leveraged to influence customer behavior, and ultimately, boost profits.
It is worth noting that menu engineering is an ongoing process that requires adaptability and balance. By continuously monitoring and adapting the menu, restaurant owners can unlock its full potential for success in the competitive culinary industry.
7. About Supy
Supy is the data-driven restaurant inventory management software built to help restaurants cut costs and boost profits using data and automation. Supy focused on the smooth flow of accurate data within back-of-house operations, in order to empower restaurants owners in making informed, data-driven decisions.
One of the 6 interconnected modules is menu engineering, a powerful, market-leading software embedded within Supy’s ecosystem that supports users in building and monitoring recipes. Supy’s menu engineering enables operators to enter precise items and quantities to replicate recipes easily, link real-time ingredient price to recipes to never sell at a loss, and find the price that’s right for both them and their customers with our cost simulator.
