Your restaurant’s menu is so much more than a list of food: It’s your most effective marketing tool.
In your restaurant, you create ambiance and train your staff to provide amazing, warm service to keep guests coming back, but your guests, first and foremost, are showing up initially for the food, and your menu is where your food gives its first impression.
The average customer spends 109 seconds studying your menu, according to a Gallup poll. That’s almost two minutes going over each description and detail, so how can you make that time count? The best way to design an effective menu is through menu engineering.
Your menu should match the vibe of your restaurant and align with your brand, but you can do way better than that: your menu can also help you increase profit if you do a menu engineering analysis to inform your design and layout decisions.
What is Menu Engineering?
Menu engineering is an empirical way to evaluate restaurant menu pricing, using your restaurant data to influence your menu’s design and content decisions. It involves categorizing all menu items into one of four menu engineering categories, based on the profitability and popularity of each item.
Doing so requires knowledge about your customers and an in-depth analysis into your restaurant’s food costs, menu item prices, and contribution margins. With a detailed view of your menu items’ profitability and popularity, you can identify which items contribute more profit and which items are holding your restaurant back.
Once you’ve categorized your menu items, you can use this menu engineering data to guide a guest’s decision-making process so they select your most profitable menu items. Menu engineering also allows you to continually work to improve your restaurant’s profitability and the effectiveness of your menu’s design.
No matter what kind of restaurant or menu you have, you can engineer your menu for maximum return by completing this five-step process.
1. Choose a Timeframe
The goal of menu engineering analysis is to redesign your menu and shuffle around different items on the page to help push your most profitable items, so figure out when you'll realistically be able to do it.
Menu engineering analysis takes some time, but it's a time investment that will always pay off.
If you can do it seasonally (or quarterly), that’s great. If you can do it every month, that’s even better. But even doing a menu engineering analysis twice a year can help you boost your sales: Some menu engineering analysis is always better than none.
2. Measure Profitability & Popularity
Michael Kasavana, the inventor of menu engineering, encourages restaurant operators to use contribution margin as the metric that indicates how profitable a menu item is. The other important metrics when it comes to measuring profitability are menu item food cost and menu item food cost percentage.
Your restaurant point of sale should calculate food cost and profit for specific menu items within the system, but if it doesn’t, you can perform a menu audit yourself by following these formulas.
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How to Calculate Menu Item Food Cost
Calculating Food Cost for each menu item might not be as fun as writing the menu descriptions, but completing this analysis is necessary to help you reduce food waste and curtail over-ordering — and to guide your menu engineering analysis.
List all ingredients involved in a specific dish. Don’t forget the cooking oil, seasonings, and garnishes.
Based on what you pay for each item, calculate the cost of each ingredient in a dish. If an onion costs 25 cents, and each one yields eight slices, the onion cost for a dish that includes two slices would be six cents.
Compile delivery fees, interest, return charges, or other expenses related to purchasing foods and inventory. Do NOT include labor costs.
Add the cost of ingredients and the costs of purchasing together. This is the food cost for a specific menu item.
Cost of Each Ingredient + Purchasing Costs = Menu Item Food Cost
How to Calculate Contribution Margin
Contribution margin, or individual item profit, is the difference between the selling price and the item cost. We will use this number when we map your menu items in the next step.
Sales Price — Menu Item Food Cost = Profit
How to Calculate Menu Item Food Cost Percentage
Divide the food cost by the menu price to calculate food cost percentage of a specific item. Your POS system may have this functionality. Toast, for example, has an inventory module with menu engineering calculations, food cost calculations, menu item reports, and more within the dashboard.
Depending on the outcome, you can then determine whether you are pricing your dishes correctly. For example, if you sell a meal for $20 and your food costs for the dish are $8, then your food cost percentage is 40%.
Menu Item Food Cost / Menu Price = Food Cost Percentage
Then, it's time to calculate menu item popularity.
Most POS systems already count how many of each item is ordered in a specific time frame, so this data should be really easy to access. You can also corroborate your findings with anecdotal information from your staff — has one of your dishes been selling like crazy after you promoted it on social media? They'll be the ones to notice these insights.
3. Categorize Your Menu Items
Once you know how much of each item has sold in your specific time frame, and how much profit is driven by each menu item, you can plot popularity and profitability together in a menu engineering matrix.
That's where the Menu Engineering Spreadsheet comes in. It’ll categorize the menu items into one of four menu engineering categories: Stars, Puzzles, Plowhorses, and Dogs.
Your Y axis will be the item's popularity (or the number of items sold in the timeframe you chose), and the X axis will be the item’s profitability (or that item’s contribution margin). It'll look something like this:
You can then draw a trending line through these items to see whether your menu is trending toward Stars, Dogs, Plowhorses, or Puzzles.
But what do these categories even mean? Each one is broken down below.
Stars: High Profitability and High Popularity
Your Stars are high profit, high popularity items. They’re cheap to make, and your guests can’t get enough of them. Rather than experiment with these menu items, keep them consistent, and promote them in any way you can. Be sure to make them extremely visible on your menu. If you have a mac and cheese on your menu, we’d bet it’s a Star.
Puzzles: High Profitability and Low Popularity
Puzzles are the items on your menu that are highly profitable, but difficult to sell. Try to find out why they’re not selling — could they be better described or more prominently placed on your menu? Promoted more on social media? Or, it might be that the price tag is a little too high — sometimes, simply lowering prices will increase popularity enough to produce higher overall profits.
Plowhorses: Low Profitability and High Popularity
Plowhorses are popular menu staples whose ingredients are on the more expensive side. The goal with pPowhorses is to make them more profitable. How? You can rework the recipe to create a more profitable version of the same item, or pair the item on your menu with a profit-boosting drink. You can also keep an eye on portion size: Are customers leaving these menu items on their plates? You may want to decrease the portion size slightly while improving the appearance of the dish.
Dogs: Low Profitability and Low Popularity
Dogs are the items on your menu that are costly to make and not much of a hit among your guests. They’re taking up space on your menu for items that could increase your profits. Consider omitting your Dogs, or you can de-emphasize them by hiding them on your menu. You can also try rebranding and re-inventing the item before you remove it altogether.
Want more action plans for each type of menu item? Find them in part one of the Menu Engineering Course.
4. Design with Your Menu Engineering Findings in Mind
When redesigning a menu, use the findings from your menu engineering analysis to guide the layout.
It’s also important to talk to your trusted customers about specific menu items and learn from their feedback. What types of customers order which items? Do certain meals drive them to your restaurant, or are they attracted by your atmosphere? Do your regulars even read your menu thoroughly, or do they stick to their usual order? Mention that you're working on a menu redesign, and ask if there are any items they never consider ordering.
With both empirical and anecdotal information about your menu items, you can go ahead and redesign your menu. Use these four menu design conventions to guide your new design.
Highlight your Stars and Puzzles.
Use visual cues to highlight the items you want to sell the most. You could place a box around them, print the item in a different color, underline them, or put a picture near them. You could also label items as “Chef’s Special” or “New” to draw the eye.
The best practice here is to highlight one item per category so you don't end up with so many highlighted items that none of them actually stand out.
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Craft beautiful menu descriptions.
According to research from Cornell University, menu items sell 27% more if they’re given a great menu description. Don’t just list the ingredients; use evocative words that pique the guest’s interest. Keep it brief, and don’t use overly flowery language, but make sure the guests know how much love goes into every plate.
Keep eye movement patterns in mind.
There are several different schools of thought when it comes to eye movement patterns when reading a menu. Some cite "The Golden Triangle," where the eyes move to the middle first before traveling to the top right corner and then, finally, to the top left.
But according to a Korean research study, a third of your diners are more likely to order the first item they see on your menu.
We suggest you cover your bases: place your Stars and your Puzzles — your highest-profit items — at the top-left, top-right, and center of your menu.
Keep your menu short — and try out having separate menus for lunch and dinner services.
According to George A. Miller, a cognitive psychology expert, most guests may only remember seven pieces of information (plus or minus two) at a given time. When looking at a restaurant's menu, guests often have too many choices to process.
If you have two different curated menus for your different meal services, it lessens the burden of choice. If it's lunchtime, guests will only have to pick from your lunchtime items.
It also allows you to play around with pricing and make some Plowhorses (low profit, high popularity) into Stars. For example, if you have a fettuccine alfredo that’s super popular at lunch and dinner, you can charge $13 for a lunch portion, and $16 for a somewhat larger dinner portion that comes with a side of garlic bread. It costs you almost the same to make, and suddenly the item it much more profitable at dinner than it is at lunch.
5. Check On Your New Menu's Success
A few months after you've done your first menu-engineering-fueled total redesign, go back and check how your sales have been impacted. Then, you can do another round of menu engineering analysis, and make one or two small tweaks depending on how your Stars, Puzzles, Plowhorses, and Dogs are doing.
Then, going forward, continue to only test one or two things at a time, so you can keep track of what works and what doesn't.
Involve Your Staff in the Menu Engineering Process
Finally, don’t forget to train your staff on your new menu design. They’re your best assets because they speak to customers every day. Your front-of-house team probably already knows which menu items are your Stars (high profit, high popularity) — but if you teach them which menu items are Puzzles (high profit, low popularity), they can help you push those items into Star territory.