Getting Started #5 – Using Menu Engineering Reports

The term menu engineering is used within the hospitality industry (mostly in the context of restaurants, hotels, catering businesses, cafes, pubs), but can be used in any business that makes and sells food or beverage. In this post, we look at what it is, how you use it and the impact it can have on your business.

What is Menu Engineering?

The main aim with menu engineering is to maximize a business’s profitability by subconsciously encouraging customers to buy what you want them to buy – which are going to be the higher profit dishes on your menu, which are the ones that have the best Margin %.

There are many factors to Menu development, which we cover in our “Menu writing lessons” which also feature on our blog. You can access our Menu Writing articles HERE. We cover topics such as Menu placement, Menu pricing strategy, Menu wording, type font and size and dish descriptions… among other things – everything that Chefs and managers need to consider before writing menus.

Why do I need it?

As a chef you need to be able to analyse the performance of each of your dishes individually, plus the sections of your menu as well as the performance of your menu as a whole. ONLY then can you make sensible, calculated decisions about whether you need to keep or remove dishes, or whether you may need to change the position on the menu. You’d be surprised at how even just changing a dish description can affect its sales dramatically.

There are 3 main parts that menu engineering looks at:

1. How many of each dish you sell (in comparison to the rest of your dishes)
2. What Food Cost/ GP % each dish achieves
3. How much money you make each time you sell each dish.

A detailed analysis of the above 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. Most menus are presented visually whether this is in a traditional menu format, on a blackboard or through other means of presentation.

The majority of menu engineering recommendations focus on how to increase attention by strategically arranging menu categories within the pages of the menu, and item placement within a menu category (a blog post on menu placement is coming shortly as part of our Menu Writing Series). This strategic placement of categories and items is referred to as the sweet spots.

The thought is, customers are most likely to remember the first and last things they see on a menu – hence, sweet spots on a menu should be where the customers look first and last. Studies have shown that depending on the menu presentation (single page, bi-fold, three fold menus), the sweet spots will vary on where the customers eye travels through the menu. Sometimes referred to as the “Customer Optical journey”.

KC TOP TIP: 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. The presence of a monetary sign (e.g. £, $ ,€) can draw attention to the price and value of the dish, when you want to keep the focus on the menu description.

What is it for?

The primary goal of menu engineering is to encourage the purchase of targeted items, usually the most profitable items, and to be able to make educated decisions if a dish needs to be changed or removed from the menu. In order to do so, businesses must first calculate the cost of each item listed on the menu. This costing exercise should extend to all items listed on the menu (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 maximising the contribution margin of each guest’s order.

Recipe costing should be updated (at least the ingredient cost portion) every time there are any price changes from suppliers. Kitchen CUT’s automated sub recipe, recipe and menu pricing and costing update allows 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 automated menu engineering

At Kitchen CUT we are constantly developing new tools, calculators, reports, forms and sheets for you to use and we have created 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 and all you will need to do is write in how many you have sold!

In addition to this there is very easy to read charts and figures allowing any business to be able to improve bottom line profit with even the same amount of customers. NO modern thinking business can effectively change/ adjust menus without carrying out Menu engineering first.

QUITE SIMPLY MENU ENGINEERING WILL DELIVER MORE PROFIT.