Using menu engineering to enhance profitability

An effective menu is one of the best tools that any restaurant has when it comes to engaging customers and enhancing profitability.  For example, the right menu layout and design can increase profit by up to 5%. Creating a menu that will optimise your business’ potential for profit isn’t a question of guesswork – it requires the insight and knowledge that only menu engineering can add to the process.

What is Menu Engineering?

Essentially, it’s a process of evaluating menu pricing – both today and in the future – and using insights drawn from data about your business to create the right design and content. It can be effective in terms of helping to steer customers towards the decisions that you want them to make about your menu and helping to ensure that the menu items that generate the most profit for your business get picked. It’s a tool that can benefit every restaurant, no matter what your cuisine or target audience.

Using Menu Engineering Effectively

How often do you want to change your menu? Menus change frequently for many businesses and it’s essential to use the tools of menu engineering each time you update a menu if you want them to be effective. So, the first step is to be honest about how often you’ll have time to go through the process e.g. once or twice a year.

What’s the food cost for every item on the menu? It’s key to start with this data. You can work it out by adding the cost of each ingredient to the purchasing cost and dividing this by the number of portions it will make.

How profitable is each dish? You can calculate this by taking the food cost from the sales price. Another key metric that can be useful is food cost percentage (which will show you if dishes are correctly priced) – this is worked out by dividing food cost by menu price e.g. a £5 dish with a food cost of £1 will have a food cost percentage of 20%.

How popular is each dish? This is often easiest represented on a menu engineering matrix with one axis showing the number of times the dish was sold within a timeframe and the other its contribution margin (the difference between the selling price and the item cost).

What do your customers think? Often, the most effective way to evaluate menu performance is to ask those who are using it – what do they order, do they like the menu, what else drives them to the restaurant and what changes would they suggest?

Creating a New Menu

Using the data you now have you can engineer your menu to make it more effective, for example:

Using visual clues and highlighting colours to direct customers towards the dishes you know are the most profitable for you based on food cost, profit per dish etc.

Improve your descriptions – descriptive menu items are chosen 27% more than those that don’t include much information. Apply the most detail to the dishes you want to sell more of.

Consider two portion sizes. Depending on the costs of each dish it can advantageous to offer a smaller size dish, as customers often assume this is better value but may actually be more profitable for you.

Use the ‘golden triangle.’ When reading a menu we generally look at the centre first then our eyes move to the right and then the left. Bear this in mind in terms of where you place the items you most want customers to focus on

Once you’ve taken the time to engineer your menu it’s essential to track the progress to see whether your assessments have been correct. This will help you to evolve the process of menu engineering for greater profitability over time.

Find more about our menu management system.