A restaurant is only as good as its profits. Yes, there’s the food of course, ambiance and venue setting. But if the profit is negligible then it’s probably not worth all that hard work and expense you’re putting into it.
Enter Menu Engineering. It’s nothing new yet surprisingly many restaurant owners are not using this tool to its full advantage to noticeably increase their profits. (We have the data to prove it).
But first, what is menu engineering?
All you need to know is that it is a growth-share matrix that is a data-driven approach to boosting a restaurant`s profit. And it works.
Have time on your hands? Read about the history of menu engineering here.
So, why is menu engineering so important for restaurants?
The short answer: It increases profits.
But how much those profits increase depends on how much you know about the inner working of menu engineering and how to apply it.
Experts say that if correctly applied, menu engineering can boost restaurant profit by 15%. A skilled restaurant owner can extract 10% more on top of this.
Data, data, data and more data…you can’t have too much of the stuff. But it’s what you do with it that counts.
Every aspect of your restaurant is a piece of business AND a piece of data. Turning your business into a successful enterprise means digging deep within that data.
All of the above business pieces of a restaurant can be turned into data, then measured and analysed. And once you have all that concrete data in your hands, nobody can argue with it.
One more thing, digging deep into the data helps to evaluate any changes and determine if there are any trends affecting the changes.
The logic of menu engineering
Menu engineering is not a quick-fix approach. It is an ongoing process that relies on historical sales data to outline the best products. These products can then be placed on the most eye-catching spot on the menu list to help increase sales.
Menu items evaluated on their profitability and popularity can be ranked into these four different groups:
- Stars: high profitability and high popularity
- Plow-horses: low profitability and high popularity
- Puzzles: high profitability and low popularity
- Dogs: low profitability and low popularity
Obviously, you’ll want more stars and fewer dogs. In fact, you’ll probably want to remove all the items ranked ‘dogs.’
Aligning your menu offering to the chart below enables you to extract the benefits offered by menu engineering.
So, what next?
You’ve got your figures and analyzed the data according to your menu items popularity and profit contribution. Now it’s over to the restaurant manager to undertake appropriate action by applying a strong, new menu design that lists what you want to be sold.
Those items that ranked ‘STAR’ rated dishes (in other words, the most profitable ones) should be placed in the top right corner of the menu. This is backed up by extensive research that shows most of us, including your diners, scan the top right corner of a menu list before looking at anything else. So, we’re not going to argue with that.
You’ll also want to increase the sales of ‘PUZZLE’ dishes (high profitability, low popularity). But how? Let’s return to the experts. They say that years of testing shows diners are more likely to order the first item of a group of offers like pasta, beef, chicken, etc.
It makes perfect sense, therefore, that ‘PUZZLE’ dishes are positioned on the top of their own group. This way, the menu-engineered new list will push clients to opt for those more profitable menu entries that, till now, have not been popular.
There are several factors you should consider when upselling ‘PUZZLE’ items. Think about including attractive images (the ones that make your diners go: oooh! That looks tasty). Typography type and size is important too. For example, use bold typography and/or place it in a frame.
Obviously, you should be increasing the profitability of the ‘PLOW-HORSE’ items. This can be done two ways: Increase the selling price or decreasing costs, since they are affect the overall Gross Profit Percentage (GP%).
And did we mention those ‘DOG’ items? They need to disappear. And quick.
But how often should I apply menu engineering?
This all depends on your restaurant type. Twice a year is a good starting point to achieve the maximum benefits.
The important point here is to be already using menu engineering in your restaurant. Don’t worry if you’re not, just download this menu engineering worksheet for free − just record the numbers and add them up to see how much menu engineering can impact your restaurant.
Savvy restaurant owners, however, have already installed an automated menu engineering system that requires just one click to activate and start getting the required results.
Take a look at the BIM POS menu engineering system we developed.
Menu Engineering is nothing new yet surprisingly many restaurant owners are not using this feature to its full advantage.
It is a continuous process that should be repeatedly practiced in any hospitality business. More studies mean more data and ultimately better menu performance.
It doesn’t matter if you are a hospitality newcomer or seasoned player, becoming an expert menu engineer is doable and should always be part of your business plan.
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