Restaurant menu engineering is the delicate art of creating a menu that successfully targets guest psychology and purchasing habits. It’s the practice of guiding restaurant guests to the most profitable (and popular) items on your establishment’s menu.
Menu engineering combines aspects of marketing, psychology, graphic design, and food cost calculation in order to truly leverage the power of your most important promotional document; your menu.
Determining Contribution Margins
It’s imperative that your recipe costs be accurate before beginning the engineering process. Be sure when determining the cost of an item that you’re factoring in cost of sauces, garnishes, etc.
Effective menu engineering depends heavily on the profitability of your menu’s dishes. The contribution margin is the number you really want to focus on here.
Contribution margin is simple enough to describe, it’s defined as Menu Price of Item minus Cost of item. This measure is the dollar amount you ultimately end up banking off each individual item. Examples:
- Cost: $4.79
- Menu Price: $10.99
- Contribution Margin: $6.20
Prime Rib Burger
- Cost: $5.25
- Menu Price: $12.99
- Contribution Margin: $7.74
In this case, let’s push the Prime Rib Burger. Right?
Who’s Winning the Popularity Contest?
The other key ingredient to your engineering plan is determining the popularity of each menu item. If you’ve got a POS system worth its salt, it should not be hard to delve into its records to determine your most popular dishes.
Contribution margin tells you how much each sale of an item adds to your piggy bank. Popularity speaks to how often it sells. With those two factors determined, it’s time to do some organizing. The Prime Rib Burger has the higher contribution margin, but is it selling well? The answer to that question will help determine its placement.
Finding Your Superstars
Boston Consulting Group’s Growth-Share Matrix is often cited as the best method for categorizing menu items. It breaks items down into the following four categories:
1. Stars – These items offer both a high profit margin and sell consistently. Your menu should absolutely highlight these major players. Give them the best placement, highlight them on the page anyway you can, and have serving staff mention them regularly.
2. Plow Horses (or Workhorses if you prefer) – Items that sell well enough, but offer lower profits per plate. Consider reworking these items to reduce cost without sacrificing quality. It could involve removing a garnish or subbing out one particular ingredient. They sell well so don’t alter them too much, but find ways to decrease overall cost per item.
3. Puzzles – Items low in popularity, yet high in contribution margin. These may need a reinvention or even a slight price slash to increase sales. Consider having your serving staff more aggressively promote them to drive sales, or feature them in a promotion. They’re high in profit, so don’t completely marginalize them.
4. Dogs – Low in both popularity and contribution margin. If you can remove them from the menu, it may be the best course of action. If they’re still considered staples, consider at least deemphasizing them on the menu. Simple descriptions, no images, etc. Talk to staff and try to find the exact reasons these aren’t selling well.
Note: It’s recommended that in categorizing menu items you rate appetizers against appetizers, desserts vs desserts, etc.
Once you’ve done your costing and identified your good and bad performers, it’s time to think about menu placement and design.
Here is where you’ll use positioning and visual cues to more effectively highlight those star dishes. Without getting too heavily into aesthetics (e.g. font choice, color scheme), here’s a few things to keep in mind.
1. Contrary to long-standing popular wisdom, the idea that guests tend to focus first on the top right-hand corner of the menu (the supposed sweet spot) may not be entirely accurate.
In 2012, research from San Francisco State University claimed that by tracking study participants’ eye movements it was found that people typically read menus from left to right, like a book. Even the Wikipedia entry for Menu Engineering states that “to date, there is no empirical evidence on the efficacy of the sweet spots on menus.” Keep this in mind when designing your layout.
2. Highlight the profitable dishes. If you have limited space for images, make sure it’s your star performers being showcased visually. Place them in borders or boxes to really make them stand out. Add language such as “House Favorite”, “Signature Dish” or “Chef Recommends” to better bring them to a diner’s attention.
It should also be noted that there is debate about using images. Some feel that – in more upscale dining establishments at least – photographs have a way of lowering perception of a restaurant’s quality.
3. Be mindful of how many items you’re highlighting throughout the menu. Highlighting too many items could lessen the impact of your efforts. Really focus on one or two items per category (apps, entrees) for maximum effect. If everything is special, nothing is.
4. Never organize items by price. Take the guest’s focus off the item cost as best as possible. To that same end, try not to right-align prices on the menu as this tends to make them stand out far too much.
5. Research seems to confirm that dropping the dollar sign from a price can indeed increase overall guest spending. (Source)
6. List order definitely matters. Again, if diners are reading menus like a book they’ll read top to bottom. Feature the star dishes at the top of a list, and maybe slip one at the very bottom. Items just above the very last item tend to be the most ignored.
Remember, menu engineering isn’t just for your restaurant’s printed menus. Keep all of these concepts in mind when creating online menus, drink and dessert menus, table toppers, and menu boards.
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This post originally appeared on FoodTender.com’s Restaurant Strategy Blog.