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Menu Engineering 1 1

Menu engineering is the process of analyzing the profitability and popularity of menu items to maximize profits. It involves costing each menu item, categorizing them based on profit and popularity, designing the menu to highlight popular profitable "star" items, and testing the new design. The goal is to keep profitable popular items prominent, make unprofitable popular items more profitable without reducing sales, increase sales of profitable unpopular items, and remove or deemphasize unprofitable unpopular items. Continual testing of new menu designs can further improve profits.

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Ritesh Kumar
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759 views5 pages

Menu Engineering 1 1

Menu engineering is the process of analyzing the profitability and popularity of menu items to maximize profits. It involves costing each menu item, categorizing them based on profit and popularity, designing the menu to highlight popular profitable "star" items, and testing the new design. The goal is to keep profitable popular items prominent, make unprofitable popular items more profitable without reducing sales, increase sales of profitable unpopular items, and remove or deemphasize unprofitable unpopular items. Continual testing of new menu designs can further improve profits.

Uploaded by

Ritesh Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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MENU ENGINEERING

WHAT IS MENU ENGINEERING?


Menu engineering is the study of the profitability and popularity of menu items and how
these two factors influence the placement of these items on a menu. The goal is simple: to
increase profitability per guest.
The concept of menu engineering is not based on random, seat-of-your pants decision
making; it is rooted in work performed in 1970 by the Boston Consulting Group to help
businesses segment their products in a way that facilitates analysis and decision making.
The idea was brought to the restaurant industry roughly a decade later by Professor Coach
Donald Smith of Michigan State University.
While menu engineering is most often mentioned in the context of traditional paper
restaurant menus, the concepts are equally applicable to menus posted online, drink menus,
specials written on table tents, and items written on menu boards. Simply put, if you sell
items that have varying levels of profitability and popularity, menu engineering may help you
increase your profits.

The menu engineering process

I have broken down the craft of menu engineering into four steps:
1.
2.
3.
4.

Cost your menu. (You cant skip this step!)


Categorize menu items according to profit and popularity levels.
Design your menu.
Test your new menu design.
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. Establishments absolutely must cost their menu to the penny for food (not labor) costs
because the engineering process depends heavily on the profitability level of each menu
item.
It is important to note that the person who performs the menu costing is generally the best
person to be put in charge of the menu-engineering process, as that person will be highly
knowledgeable about the food costs of each menu item. For this reason, I always suggest
that someone in charge at the restaurant perform the costing process.

Unfortunately, one of the biggest problems in the restaurant industry is that roughly 80% of
restaurants dont cost their menu, and another 5% cost their menus incorrectly (correct
menu costing means that everything is costed consistently by a single person, as different
people will cost items differently). The reason behind the 80% figure is simple: costing a
menu is very time consuming. Unfortunately there is no way around that fact, and you have
to put in the work if you want to reap the benefits of a more profitable menu.

2. Categorize menu items according to profit and popularity levels


The process of categorizing each of your menu items will allow you to determine how to
apply your menu-engineering efforts. This process can be broken into three parts:

a. Split your menu into categories and sections

The term category refers to the way you break your menu out at the broadest level. The list
of what is considered a category is not set in stone, but for some guidance, following are the
names of some common categories: Appetizers, Entrees, Desserts, and Drinks. The key is
that there is no overlap between the menu items in the various categories and that the list
makes sense for your particular menu.
Break out your categories into sections. You can define section in different ways according
to your menus content, but to give you some guidance, here are some common sections
that fit into the Entree category: Vegetarian Entrees, Seafood Entrees, Meat Entrees; and
here are some for the Drinks category: Alcoholic Drinks and Nonalcoholic Drinks. However
you define your sections, be sure to keep distinct types of menu items separate from each

other (that is, dont include a collection of vegetarian entrees and meat entrees in the same
section).
For this step you may want to create a simple spreadsheet displaying each of the menu
items beneath its category and section heading.
b. Place each of your menu items into one of four quadrants

Go through each of your menu items, and using data for a recent time period (perhaps the
most recent month), place each menu item into one of the following four quadrants:

Starshigh profitability and high popularity


Plow-horseslow profitability and high popularity
Puzzleshigh profitability and low popularity
Dogslow profitability and low popularity

Determine the fate of menu items in each of the four quadrants

Use the profit/popularity information from part (b) to help determine how you want to deal
with each of your menu items. You will need to look at the menu items ranked by profitability
and popularity at the category level first and then at the section level. Viewing your data at
the category level can help you decide where to place the various sections of your menu (for
example, if steak items are your Stars, you may want to work hardest to promote the Meat
Entrees section). Viewing the data at the section level will then enable you to determine how
to place and promote menu items within each section of your menu.

The decisions you make will result from a combination of art (not science) and common
sense. And while every situation is different, here is some guidance for how to act on the
data you have generated:

StarsThis is easy. Your menu should highlight your Stars.


Plow-horsesYou may want to create more profitable versions of these menu
items. For instance, soup-and-salad specials often fall into this category, and you might try
turning such a special into a more profitable three-salad sampler.
PuzzlesMake sure your servers are promoting these items and investigate
whether customers like the taste of the items in question. Sometimes simply lowering prices
will increase sales volume enough to produce higher overall profits, and you also may want
to consider reinventing items in this category.
DogsWhile omitting such items may be an option, you cant necessarily omit
everything in this category (just think of a grilled cheese sandwich that is a staple among
your youngest customers). Your best option may sometimes be to deemphasize these items
by simply listing their title and prices on your menu and not putting any further effort into their
promotion.
Once you have worked through this step, your menu-engineering goals are in place and you
are ready to begin the menu design phase.
3.

Design your menu

Part of the design process involves highlighting the items you want to sell the most (your
Stars), but it goes beyond this and cant be accomplished with a simple checklist. When
designing your menu it pays to consider your customer base: what types of customers order
which items, what drives them to your establishment (a certain dish, cheap drinks,
atmosphere), do your customers read your menu thoroughly, and other factors. Menu design
does not exist in a vacuum, and having such information informs how and when you should
apply certain menu design techniques.
That said, when it comes to menu-engineering techniques, there are certainly best practices.
The following guidelines include enough of them to turn your menu into a profit center:
4.

Test your new menu design

When working with large restaurant chains typically use 10 to 90 restaurants as test cases
for the new menu. With regional chains I typically test using a single location, and for singleunit operations I generally dont run a simultaneous test of the new and old menus because
tracking two sets of results from a single location can get complicated.
Whatever method you choose, remember that when it comes to designing the one piece of
free advertising that all of your customers will seeyour menuthere is always room for
profit improvement. Continually test new menu designs.

What Should You Do with Your Results?


Stars:
Profitable and popular; possible to increase their menu prices
without affecting volume.
Dogs:
Unprofitable and unpopular; remove from the menu unless
there is a valid reason for continuing tosell them or profitability
can somehow be increased.
Plowhorses:
Unprofitable but popular; keep on menu but increase
their contribution margins without decreasing volume.
Puzzles:
Profitable but unpopular; keep on menu but increase their
popularity.

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