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Increase Restaurant Profits Through Menu Engineering

May 2, 2016

If you are a restaurant owner, did you realize that the design of your menu could be costing you in profits? Your menu is one of your most effective sales vehicles. Used correctly, a restaurant menu guides diners to choose the items you want them to order. Through proper menu engineering, you could see ongoing profit increases of 10-15% or more!

What Is Menu Engineering?

Menu engineering is the study of profitability and popularity of a restaurant’s menu items to determine how these factors influence the placement of items on a menu. It’s a highly-involved process that subconsciously encourages customers to buy what you want them to buy, and discouraging purchase of items you don’t want them to buy The goal is simple: to maximize profitability per guest.

Menu engineering extends beyond traditional tabletop menus; the strategies are equally applicable to specials menus, menu boards, drink menus, desert menus, and more.

The Menu Engineering Process

Menu engineering can be broken down into 4 steps:

  1. Cost your menu.
  2. Categorize your menu.
  3. Design your menu.
  4. Test your menu.

Let’s dive into each of these steps in greater detail…

1. Cost Your Menu

“Costing” a menu refers to the process of breaking down every item on your menu to its individual ingredients and determining exactly how much it costs to create each of these items. This first step is the most import and cannot be skipped or done half-heartedly; the menu engineering process depends heavily on the profitability level of each menu item.

The costing of a menu should be performed by a single person – one who has an intimate knowledge about the food costs of each menu item. The process is time consuming but vital. Sorting menu items by profitability is useless if you aren’t aware of the cost of each item.

2. Categorize Your Menu

The next step towards engineering your menu is to break it down into categories and sections. An item’s category is the broadest level in which is can be classified. Sample categories include Appetizers, Entrees, Desserts, and Drinks. Your categories may vary, but it’s important that there be no overlap between menu items in categories. Further divisions can be created by breaking your categories into sections. For instance, entrees may be broken down into the following example sections: meat entrees, seafood entrees, vegetarian entrees, and so on. Your categories and sections are useful for organizing the layout of your menu.

Your categories and sections can be further broken down into the following four distinct areas:

  • STARS: Top dollar, excellent dishes that have a high profit margin. These should be your flagship signature items.
  • PUZZLES: Puzzle dishes are difficult to sell but have a high profit margin.
  • PLOWHORSES: Your popular staples, but less profitable items.
  • DOGS: The least popular items that also have a low profit margin.

 

Menu categorization quadrant

Use the profit and popularity of your menu items to determine proper placement in the quadrant. Start at the category level first. Where you place your category level items may help you decide where to place the various sections of your menu (for instance, if fresh seafood items are your Stars, you may want to promote the Seafood Entrees section).

Next use the quadrant model to classify your sections. The profit/popularity of each item will determine where it is placed within the section of your menu.

Once you’ve properly categorized your menu items, it is now possible to use clever, strategic menu engineering to steer your diners to the stars and the puzzles.

  • STARS: These are the top items. Your menu should naturally highlight your Stars.
  • PUZZLES: You should promote these items through specials and server recommendations. Consider lowering prices to increase sales in order to produce a higher overall profit. Sometimes reinventing items in this category can create a boost in sales.
  • PLOWHORSES: Try to create more profitable versions of these menu items. Combine items or create a multi-item sampler to increase profitability.
  • DOGS: Determine which of these items can be omitted from the menu. Some items are a necessity (hot dogs or mac-and-cheese for your youngest customers). Your best option may be to deemphasize these items on your menu and not put any further effort into their promotion.

Once you have finished categorization, you are ready to begin the menu design phase. Let’s discuss ways you can make your menu better while guiding your diners to your highly profitable menu items.

3. Design Your Menu

The design process involves highlighting the items you want to sell (your Stars), organizing items in a way that will grab maximum attention, and describing items in the most appealing way.

Organize Your Layout

The organization of your menu matters, especially when it comes to listing your menu items in their proper section. Lists should be limited to around 5 or fewer items in each section, with a maximum of seven. Longer lists result in information overload, and often lead to the customer ordering the most common (but less profitable) item. Shorter lists are easier to navigate and lead to higher profits due to the inclusion of higher-profit items.

The order of your lists matter. Customers are more likely to order the first item in a list. Place your most profitable dishes in the lead position; it’s an excellent place to put your less-ordered but more profitable Puzzle items. The next several spots on the list enjoy levels of importance that correspond to their position on the list. The second-to-last item is generally the most ignored, with the last item receiving more attention.

The end goal is to create an organized menu that is more accessible and encourages customers to order specific items.

Scanning Path Matters

Studies have shown that the eyes of your customers tend to focus on certain areas of your menu, tracking across each page in a specific order. Knowledge of these scan paths can be used to place chosen items in spots where they are likely to receive maximum—or minimum—attention.

Conventional wisdom in the restaurant business suggests that most people will look at the upper-right hand corner first (followed by the upper-left hand corner), so you should put your most profitable items (the Stars) in that position. However, a recent study has shown that customers scan a menu in the same way they read a book. Either way, the areas of a menu that receive the greatest amount of attention are always at the top of the page.

There is also some dispute on whether to promote your most expensive item first. Some sources claim that placing your most expensive dish in a prime position makes the rest of the menu seem reasonably priced. Others suggest keeping your most expensive dish out of the menu’s highest focal point, since this may make your restaurant appear to expensive.

The areas that receive the least attention are just below the bottom of each page.

Traditional menu flow

Diagram showing the pattern of reading a restaurant menu that was thought to be the industry standard in the restaurant business. This scan path implicates a “sweet spot” just above the center of the right hand page, where it’s believed that customers look the longest and gaze most frequently.

New menu flow

A new eye-tracker study by San Francisco State University Professor Sybil Yang challenges this conventional wisdom and finds that customers read a menu sequentially like a book. Her results found no evidence of menu sweet spots.

Use Visual Cues

Use design elements to highlight specific menu items, such as placing a box around it, using a special font, or adding a photograph. Photographs and visual cues should be used sparingly, since the more you add, the lower their impact when it comes to guiding customers to the meals you are highlighting. High-end restaurants should avoid photographs all together.

Write Descriptively

Use evocative text to describe your dishes. Food should sound tantalizing; the more adjectives, the better.

When writing descriptions for your menu items, keep these tips in mind:

  • Don’t just list ingredients; use mouth-watering descriptors that can pique a guest’s interest in a dish.
  • Giving a dish an ethnic label will create greater authenticity. Calling your pasta dish, “Grandma Bella’s Noodles Bareggio,” has more impact than spaghetti and meatballs.
  • Tell customers why the item is on your menu: Did your great grandmother use this recipe? Was it your favorite dessert as a child? Humanizing a dish takes it out of the realm of being a commodity.
  • If your ingredients include items that are made by well-known and respected brand names, include the brand names in your description. Doing so enhances the perception of the item’s quality.

According to research from Cornell University, descriptive menu item labels lends an extra sensory experience to your menu and your customers are more likely to be satisfied at the end of the meal. Another study shows that using descriptive menu labels can raise sales by as much as 25%, compared to food items without intriguing text.

Ditch the Dollar Sign

Don’t use dollar signs because dollar signs cause your customers to think about spending money. Keep your menu prices as abstract as possible to make spending less threatening. Just numbers without the dollar sign and psychologically your diners will “think” they are spending less.

Try not to end your prices with the number 9. In our current economy, prices that end in 9, such as 9.99, tend to signify value, but not always quality. For more effective pricing, end your prices with the friendlier number five, or just include the price without any cents at all.

Pricing placement is also important. Placing your prices in a separate column causes customers to focus on price, not the food. Instead place prices two spaces after the end of the item description without any embellishment.

Create Package Deals

Packaging menu items together can add a sense of greater value, creating a psychological upsell. Sampler plates or fixed menus (packaging an appetizer with an entree, or adding a drink or desert) removes the sometimes overwhelming responsibility of choosing what to eat. Customers will sometimes order this more expensive package to avoid having to make a choice between other items.

Offer Portion Sizes

It’s called bracketing: offering the same dish in two different sizes. Customers assume the smaller portion is the best value because it costs less, and they believe you want to sell them the higher priced menu item. From a restaurant perspective, however, it costs less money for raw materials to make the smaller portion, offering a greater profit margin over the slightly more expensive larger portion. In essence, the smaller portioned item is what you want them to purchase. You make a greater profit and the customer feels like they are being conscientious. Everyone wins!

4. Test Your Menu

The final step is to test your new design to see how it performs. Large restaurant chains can use a cross section of their locations as test cases for the new menu. Single restaurants can run a performance test compared to the old menu to gauge profits.

Remember that your menu is one of the most important sales tools you own, especially considering that all of your customers see it. Don’t let the design of your menu cost you in profits. Astronaut can help you properly engineer your menu so that you can see ongoing profit increases for your restaurant.