What is Menu Engineering? Restaurant Owner Explains in Simple Terms.
When I stumbled across the concept of menu engineering, my establishment was struggling and I wasn’t sure why. Down the years I had tried many different ideas to make my restaurant more profitable. I had yet to develop an effective method to reduce my overheads while maintaining the quality of the food I was serving my customers. One of my college buddies, who also started a restaurant, suggested I try menu engineering. Trust me I was like you, the first thing I had to ask was ‘What’s menu engineering?”.
What does menu engineering
The plan, when you engineer your menu, is to boost the profits you make from every single person who comes into your restaurant. You select the most popular and profitable items on your menu, then you redesign the menu to encourage your patrons to choose the dishes that are most advantageous to your business.
To do this correctly you need to understand two things, the impact of psychology and design on a customer’s decision-making process, You also need to carefully analyze your sales figures and the cost of your ingredients. I had been told that there were many advantages to this approach to maximizing profits. I liked the idea that my decisions could be based on facts that could be backed up by clear data, and I could keep my restaurant menu fresh without worrying about losing money.
Most of my guests will never appreciate the work that is involved in getting their plates of food in front of them every afternoon or evening. They merely want to come in and enjoy their experience. I have no doubt that more than a handful of them leave thinking, “I could run a restaurant”. What they will never grasp juggling management, purchasing, quality control, overheads, hiring and training, is difficult enough without having to plan your menu.
What I have learned down the years is that effective planning represents half the job. One thing I did overlook is how important planning my menu was to the success of my restaurant. I feel that I got the heart and soul of the place right. Customers were always complimentary about its vibe, feel and look. But we were still struggling.
Your menu is everything.
Once I began to engineer the menu, customer satisfaction remained the same, but our operating costs went down and profit increased. I began to understand that our menu was everything to our restaurant. If our guests had an easier time connecting with us through our descriptions, dishes’ key attributes, photos, price points and ingredients they would be more likely to return on a regular basis.
We decided to give our customers what they wanted, by analyzing our sales we began to detect a trend, customers were tending towards the items that were healthier and locally sourced. But they seemed to be happy to pay the higher price point. We knew that focusing on organically grown locally sourced food would certainly drive our food costs higher and it did.
But the patrons in our neighborhood were able to absorb the cost increases and were happy to do so for more healthy options to be added to the menu. This may not be the case in every neighborhood, before altering anything on your menu you should discern the spending patterns and average household income of your target market. Another thing to consider is a readily available, easily accessible source of the ingredients you will need.
How much your clients can afford to spend remains a key factor in engineering any menu. My research revealed that 44% of my customers say that price as their primary concern when eating out.
You should always try and offer something of value to your local community. If there are 5 restaurants serving pizza on their menu within a few blocks of you, it’s probably best to leave it off the menu and focus on something people cannot get in the area. To compete in the local pizza market you would have to keep your price point extremely low and profits would reflect this
How does the menu engineering formula work?
What I have learned is that It is simply a numbers game. I used an excel spreadsheet but you can buy more sophisticated software if you choose. The most difficult aspect was that I needed to learn to calculate the following.
- Weekly Food Cost Tracking
- Profitability vs Popularity
- Menu Item Costing
- Recipe Information reflected Profit Sheet
- Contribution Margin Analysis
- Calculating the food cost of menu items
Some of the above terms were new to me but with a little bit of study and some help from an expert, I was able to understand the profitability and popularity of different items on my menu. How my profitability was directly linked to factors such as contribution margin, food costs, and operating costs and I needed to keep a regular weekly account of each
My menu now reflects a combination of design and financial decisions while boosting the brand of my restaurant. This article is just an overview of what seems to be a very complicated process. But rest assured if your restaurant is struggling your recovery can begin today by understanding and implementing a newly engineered menu.