Building a profitable restaurant menu is one of the most excellent sales tools resulting in higher profitability.
That’s why we prepared this guide on menu engineering to help your restaurant design a functional menu.
Key Takeaways
- Calculate Food Cost: Always start with calculating the food cost for each item on your menu to assess profitability.
- Categorize Menu Items: Group your menu items by their profitability and popularity to identify top performers.
- Redesign for Menu Psychology: Redesign your menu considering menu psychology aspects.
- Physical vs. Online Design: Recognize the differences between a physical menu and an online menu for optimal user experience.
- Use Menu Management Tools: Leverage menu management software to create and maintain your online menu effectively.
- Add “Order Online” Button: Include an “Order Online” button on your menu to convert website visitors into paying restaurant customers.
- Implement Recommendations: Use techniques like menu item recommendations and suggestive selling to boost restaurant sales.
What is menu engineering?
Menu engineering, also known as menu psychology, is the process of analyzing and optimizing a restaurant’s menu to maximize profitability.
It 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 pricing, placement, and descriptions to encourage customers to order those items.
Effective menu engineering not only increases the popularity of specific dishes but also boosts profit margins for restaurants, manages food costs, and enhances overall customer satisfaction.
Menu engineering principles can be applied to both new and existing restaurant menus, making it a valuable strategy for all types of food service establishments, from quick-service restaurants to fine dining venues.
- As Business Insider mentions, a study by Cornell University found that customers are more likely to order menu items with descriptive labels, which can increase sales by up to 27%.
- As noted by Lightspeed, a Gallup poll revealed that the average customer spends just 109 seconds reviewing a menu. In that brief time, they quickly scan the options, read descriptions, and check prices before making their choice.
Examples of menu engineering strategies
Menu engineering encompasses various techniques designed to create more profitable menus. Here are several effective examples:
- Item placement: After a menu analysis, consider dividing the menu into three menu categories 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.
- Limit menu items per section: Each menu section should ideally contain a maximum of seven items. If you offer both lunch and dinner services, it’s advisable to create separate menus for each to reduce customer overwhelm and make decision-making easier for diners.
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 restaurant revenue. 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, ultimately increasing the average check.
- 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 food 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.
Also check out this article on how to make a restaurant menu.
Step 1: Choose 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
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 inventory reports in your POS: Most POS systems provide you with data on the amount of a given menu item sold. Additionally, some systems provide insights into restaurant inventory and guest profiles, enabling you to observe the buying behavior of selected customer groups.
- Customer feedback & reviews: Pay attention to customer feedback by analyzing your Google restaurant reviews, as well as feedback from the Yelp rating system, Tripadvisor for restaurants, and 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.
Example of cost breakdown for toast with egg, cheese, and avocado
To make 1 serving, you need:
- 1 slice of bread
- 1 egg
- 1 ounce of cheese
- 1/2 avocado
| Ingredient | Quantity Needed | Cost | Cost per Unit | Cost per Serving |
|---|---|---|---|---|
| Bread | 1 slice | $3.00 for 16 slices | $0.19 per slice | $0.19 |
| Egg | 1 egg | $3.00 for 12 eggs | $0.25 per egg | $0.25 |
| Cheese | 1 ounce | $5.00 for 16 ounces | $0.31 per ounce | $0.31 |
| Avocado | 1/2 avocado | $2.00 for 2 avocados | $1.00 per avocado | $0.50 |
Total Cost per Toast with Egg, Cheese, and Avocado:
0.19 + 0.25 + 0.31 + 0.50 = $1.25
Menu Price and Profit Margin
- Menu Price: $6.00
- Cost per Toast: $1.25
- Profit Margin: $6.00 − $ 1.25 = $ 4.75
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.
- Here you can 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 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.
- 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 online menu engineering.
Tip 1: Configure the online menu
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 attractive photos
Customers eat with their eyes, so adding delicious pictures on your menu 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.
If you’re taking pictures of your food dishes yourself, check out these food photography tips.
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
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 to optimize and boost 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
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 digital restaurant menu and can place an order faster.
Step 7: Test your new menu
A few months after conducting the market engineering analysis and designing a new menu, measure its impact on your restaurant sales.
Be sure to monitor 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.
Frequently Asked Questions (FAQ)
What is the menu engineering definition?
Menu engineering involves analyzing and optimizing a restaurant’s menu items to maximize profitability and enhance customer satisfaction. By categorizing items based on popularity and profitability, restaurants can make decisions about pricing, placement, and promotion to boost sales and revenue.
What is menu psychology?
Menu psychology is the study of how menus are designed and how they can influence customers’ choices when ordering food or drinks. It is a strategy used by restaurants, cafes, and other food service establishments to present their menu in a way that is visually appealing and effective in guiding customers to order items that are profitable for the business.
What psychological aspects influence restaurant menu design?
Psychological concepts influencing menu design:
- Currency Symbols: Remove currency symbols or use rounded numbers instead of .99 to reduce price sensitivity.
- Price Columns: Avoid using columns to display prices; instead, integrate them into the menu descriptions.
- Descriptive Language: Use enticing language, but keep descriptions concise.
- Menu Length: Keep your menu short to limit customer choices.
- Visual Appeal: Include attractive photos.
What are the three elements of menu engineering?
Menu engineering involves analyzing the performance of every item on a menu, focusing on three key elements:
- Popularity
- Pricing
- Profit
What are the four types of menu engineering?
The four types of menu engineering are:
- Star Items: Highly popular and profitable items.
- Plowhorses: Popular items with lower profit margins that may need cost adjustments to improve profitability.
- Puzzles: Profitable but unpopular items that require better marketing.
- Dogs: Items that are neither popular nor profitable.
