Menu Engineering: What is it and why do I need it?
The term Menu Engineering is far more than just a buzzword for the F&B industry. In terms of profitability, Menu Engineering could make the difference between your business becoming one that fails or one that grows from strength to strength. In order to understand the basics of Menu Engineering, it’s important to understand exactly what it is, and why your business needs it. Here, Michelin Starred chef, John Wood explains….
Menu Engineering is a phrase used within the hospitality industry (mostly in the context of restaurants, hotels, catering businesses, cafes, pubs), but it can be applied to any business that makes and sells food or beverage. The main aim with menu engineering is to maximise a business’s profitability by subconsciously encouraging customers to buy what you want them to buy, specifically the higher profit dishes on your menu and the ones that have the best Margin %.
There are many factors to menu development, which we cover and explain in more detail in our “Menu writing lessons” series:
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Why do I need it?
As a chef you need to be able to analyse three elements of your menu: each individual dish, the menu sections and also your menu’s overall appearance. ONLY then can you make sensible, calculated decisions about whether you need to keep or remove dishes, whether you need to change the positioning of dishes on the menu and whether changing a dish description could affect its sales.
There are 3 main areas that menu engineering looks at:
How many of each dish do you sell (in comparison to the rest of your dishes)
What Food Cost / GP% each dish achieves (take a look at our Recipe Cost Calculator for help with this)
How much money you make each time you sell each dish.
A detailed analysis of the above elements can tell you everything you need to know about your menu.
Psychology of Menu Engineering
Visual perception is inextricably linked to how customers read a menu. Whether in a traditional menu format, on a blackboard or through other means of presentation, the way in which your menu is perceived visually will have an impact on the dishes selected.
The majority of menu engineering recommendations focus on how to increase attention by strategically arranging menu categories within the pages of the menu, as well as item placement within a menu category. This strategic placement of categories and items is referred to as the menu’s ‘sweet spots’. The concept is that customers are most likely to remember the first and last things they see on a menu. Studies have shown that depending on the menu presentation (single page, bi-fold, three fold menus), the sweet spots will vary, as the menu layout will have an impact on how the customer’s eye travels through the menu. The way in which a customer scans a menu is referred to as the “Customer’s Optical Journey”
Customer perception of items offered on a menu can also be affected by subtle manipulations. For example “boxing” or highlighting of dishes draws attention to them as well as bold print. Whilst the presence of a monetary sign (e.g. £, $ ,€) can draw attention to the price and value of the dish instead of keeping the focus on the menu description.
What is the purpose of Menu Engineering?
The primary goal of menu engineering is to encourage purchase of targeted items, presumably the most profitable items, and to be able to make educated decisions about whether a dish needs to be changed or removed from the menu. To that end, businesses must first calculate the cost of each item listed on the menu. This recipe costing exercise should extend to all items listed on the menu, and should reflect all costs incurred to produce and serve. Optimally item costs should include: food cost (including wasted product and product loss) All of which can be done on Kitchen CUT with extreme ease.
After an item’s cost and price have been determined evaluation of an item’s profitability is based on the contribution margin. The contribution margin is calculated as the menu price minus the cost. Menu engineering then focuses on maximizing the contribution margin of each guest’s order.
Recipe costing should be updated (at least the ingredient cost portion) every time there is any price changes from suppliers. Kitchen CUT’s automated sub recipe, recipe and menu pricing and costing update allows the chef to see this instantly.
How are dishes rated in the industry?
Stars: Stars are extremely popular and have a high contribution margin. Ideally Stars should be your flagship or signature menu items.
Plowhorse: Plowhorses are high in popularity but low in contribution margin. Plowhorse menu items sell well, but don’t significantly increase revenue.
Puzzles: Puzzles are generally low in popularity and high in contribution margin. Puzzle dishes are difficult to sell but have a high profit margin.
Dogs: Dogs are low in popularity and low in contribution margin. They are difficult to sell and produce little profit when they do sell.
Kitchen CUT’s new automated Menu Engineering
Kitchen CUT has a fully automated Menu Engineering tool that links to all your sub recipes and recipes. This exciting new development allows you to analyse your menu whenever and as many times as you want, very quickly and easily.
The report will automatically give you %, revenue sales, category sales, engineering analysis, comparisons, graphs and much more! All you need to do is enter how many you have sold!
You can get more information about Kitchen CUT by emailing email@example.com or calling +44 (0) 330 113 0050
You can register for a free trial here.