Menu engineering is an approach which hospitality venues such as restaurants and cafes take to optimise their menus for profit, marketability and sustainability. By continually analysing the popularity of dishes, which ingredients are used, and the design of the menu itself, businesses can develop and promote dishes which represent the best possible mark-up and profit margin.
Why menu engineering is important to food businesses
How to do menu engineering
Menu engineering matrix
How do you calculate the food data in your menu?
Final thoughts
Why Menu Engineering is Important to Food Businesses
With the average profit margin of restaurants in the UK between 3-5% (Epos Now), every opportunity to make the most of footfall and balance customer experience and profitability should be grabbed with both hands.
Menu engineering gives food businesses the chance to analyse dishes, from where and how ingredients are sourced, including sustainability and seasonality considerations, to how they’re marketed and positioned on their menu. Each of these individual component parts contribute towards reducing costs and squeezing as much per head as possible from diners.
It also allows businesses to take advantage of trends and seasonal changes, by bundling certain products together to form offers – this can help breathe new life into older menu items and make them more appealing to consumers.
How to do Menu Engineering
Menu engineering can be broken down into four key steps, which work together to improve overall profitability:
- Collect data related to your current menu items
- Analyse your current menu items and feedback from customers
- Consider your dish pricing
- Redesign your menu to push profitable dishes
Collect data related to your menu items
With the evolution of apps and online food ordering, it’s easier than ever to collect data on orders and analyse the patterns that start to form in the analytics of your platform.
By mapping this data against the profitability of your dishes using the menu engineering matrix found below, you can see where you’re losing money. If you have the ability to pool cross-site (using software such as Ten Kites), then you can see the scale of where small changes can make a huge impact on your margins.
Analyse your current menu items and feedback from customers
You can then break down the component parts of your menu to see if you’re pushing items you shouldn’t be through the way your menu is designed or marketed. A bold font here or a coloured background there can psychologically nudge people in a direction that you don’t want.
The component parts of your dishes are also a factor to consider. Do you know where your ingredients are sourced from, how seasonality affects their costs or how far they’ve had to travel? All of these can not only affect your margins, but also the final result when consumers are served their dishes. Software which automatically does this for you can help you to identify ways to cut your costs, but also to find new marketing opportunities where dishes meet dietary or trends.
You should also consider collecting feedback from your customers: why are they choosing certain dishes? What are their favourites? These tip-offs will help you when you redesign the menu by taking the elements they love and applying them to the stars of your menu.
Consider your dish pricing
How your pricing structure is modelled on your menu can also have a huge impact on how consumers interact with it. While there may be opportunities to raise prices on popular dishes to really stretch those margins, rethinking unpopular dishes can also bump up your premiums.
Is there an opportunity to cut the price of an unpopular dish which could potentially make you more per head? Could you bundle some of these together to make a new offer or experience for customers? Considering changes beyond price can help to re-engage customers with forgotten menu items.
Redesign your menu to push profitable dishes
With all of this information in mind, you should now have an idea of which dishes need highlighting, and which should be further down the priority list when it comes to marketing.
How you use colour, positioning, images and fonts can ensure that customers’ eyes are drawn to exactly where you want them to go, helping to nudge them towards options that are the most profitable.
How you use language is also important in highlighting aspects of dishes. For example, when it comes to vegan food, describing a dish as an ‘English lentil shepherd’s pie’ rather than vegan shepherd’s pie brings out the texture, origin and potential health benefits of it.
Using terms such as ‘plant-based’, ‘healthy’ or ‘sustainable’ are chosen far more frequently than just using ‘vegan’, so combining these with adjectives that describe taste can prove a winning formula for nudging customers in the right direction.
Menu Engineering Matrix
By considering dish costs alongside how many are ordered in your business, you can use the menu engineering matrix infographic below to figure out where your priorities should lie in terms of menu updates.
Using a menu engineering matrix helps you to categorise your dishes: it will allow you to carry out the first step listed above in how to do menu engineering. The four categories of menu engineering in the matrix are:
Dog: This has low profitability and is not popular on your menu. This should be changed, bundled with other items or cut completely.
Plow horse: These dishes are popular but low in profitability: these dishes represent an opportunity to shift your pricing structure or again to combine with other items to make it more profitable.
Puzzle: High in profitability but not a hit with your customers, this is where the feedback you gather from your customers is valuable in considering whether it’s the dish itself or how it’s positioned on your menu.
Star: The dream for any menu – both highly profitable and popular. This should be the dish that you take inspiration from, and again consider customer feedback to try to replicate the concept further across your other food items.
How do you calculate the food data in your menu?
There are a number of ways you can do this:
- Use spreadsheets: this is the manual process, whereby you would need to work together with your chefs and food development team to break down what goes into each individual dish and gather the data for each ingredient separately. This is costly in both time and labour.
- Work with suppliers: suppliers will have information about the ingredients they offer, which would allow you to build a picture of where cost savings may be achieved. However, this is again manual, and can be liable to change. It also does not allow for you to easily find new ways to market dishes, such as through meeting certain dietary requirements.
- Use menu and recipe engineering software: a platform such as Nutritics would allow you to find the ingredients you use, and easily build recipes at the click of a button. Using robust food-data monitored by nutrition experts, this method saves you time and also makes it easier to adhere to food safety regulations. Combining this with Ten Kites would also give you access to analytics which measure dish popularity, helping you adjust your menus in line with the menu engineering matrix.
Final thoughts
Menu engineering has huge benefits for food businesses, allowing for cost reduction and helping you to make the most of your most profitable dish offerings for customers.
The constant change of consumer trends, food diets and regulations means that getting menu cycle changes right is harder than ever; if you follow our four step guide and introduce automation, then you can ensure that your bottom line and customers are both satisfied.