Optimizing your menu can increase your restaurant profits by 10% to 15%. Read on to learn 5 menu engineering tips to promote your food items strategically.
5 Menu Engineering Tricks for Boosting Your F&B Profits by 15%
Menu engineering is the science of designing your menu to boost your profitability per customer. You need to figure out how the profit margin on each menu item then look at sales data to see what items are most popular. Once you know this you have the info you need to determine promotion, design and organize your menu or even remove low performing menu items all together.
There’s a bit of math involved to figure out the contribution margin on each menu item, but it’s pretty straightforward. We all know that the difference between the sell price and the cost of the goods is the profit.
You’ll need to know the cost of each ingredient and the amount of that item used in the recipe. Once you know the cost of each ingredient, add them up to get the item cost. If you subtract the cost of the menu item from the sale price, you’ll have the profit.
There is a way to make this all easy, and let technology do it for you. A platform like Mosaic Analytics will take all the details on cost and your sales data and figure out the profit margin for you. The reporting doesn’t stop there, it offers a menu engineering report that actually plots out each menu item by profitability and popularity.
If you take the time to do this work, you can refine your menu strategically to promote your offerings in a way that delights your customers and raises your revenue and maximizes your profits. Happy customers, happy bottomline!
By instinct, all food and beverage (F&B) businesses engineer their menus. But the problem is that most don’t do it properly. According to Gregg Rapp, a celebrated menu engineer with over 30 years of experience, only 4 in 10 restaurants cost their foods. And out of the 40%, just 10% take this activity seriously.
Even if you’re already turning a profit with your current menu, you ought to actively engineer (or re-engineer) it to capture the untapped revenue potential of your foods and swell your coffers by 10% to 15% with clever menu tweaks.
To get started, here are some practical tips to apply.
1. Pick the Right Menu Engineer
First and foremost, entrust the menu engineering process to the person with the most knowledge of your establishment’s inventory and menu sales. Putting this person in charge makes it possible to accurately determine the portion cost of each offering, which can define the success or failure of your effort.
Whether you sell a few items or have an exhaustive list, costing a menu can be a tedious process. Needless to say, you shouldn’t cut corners. But everything is easier when the most competent individual in your establishment for this task is at front and center.
And don’t forget, there are technology platforms that can help with this significantly. Spend a little on technology but save more by cutting cost and upping those profits.
2. Determine the Profitability and Popularity of Your Items
The whole point of menu engineering is to increase the sales of your most profitable items. Since what’s profitable isn’t necessarily popular, you need to categorize everything and see where you need to focus or what maybe needs to drop.
To understand which offerings should be the center of interest, put them in these quadrants:
- High-Profitability and High-Popularity
It should go without saying that your menu should emphasize these items. They sell themselves, so capitalize on their likeability to increase your profits with little effort.
- Low-Profitability and High-Popularity
Since these items are popular you probably want to keep them. But maybe you can make them more profitable. Or consider promoting them as a bundle with a more profitable item so you can connect profitability and profitability together.
- High-Profitability and Low-Popularity
It’s in your best interest to increase the sales volume of these items. Since they’re relatively unpopular, you need to understand why they’re not so appealing.
Perhaps they’re not as delicious as your other foods or they’re price is just too high for your customers. Either way, you have to change their undesirable qualities. Find a way to sell more and noticeably move the needle in profit.
Further, items in this group need some push marketing-wise. You can learn more about this shortly.
- Low-Profitability and Low-Popularity
These are the foods you should contemplate removing from your menu. Don’t overdo it, though, since many of them are probably staple items. They may not attract customers themselves, but their absence could affect the popularity of your other offerings.
More often than not, your best move is to keep them on the menu but reduce their prominence. This way, you can compel customers to order other offerings without taking away their option to choose these items.
3. Design Your Menu With Customer Psychology in Mind
Identifying the profit potential of your foods is just half the job. It’s also imperative that you think like a customer to engineer your menu strategically. Without considering how customers read menus (physical or digital), your efforts will go down the drain.
Below are key design considerations you shouldn’t overlook.
- Visual Cues
Making certain items visually striking grabs the eye. Excellent use of colors and photographs can be an effective technique to draw more attention toward highly profitable but less popular items.
Don’t go overboard, though. Using too many visual cues can cheapen their presence and result in sensory overload. Accentuating items can eat up precious limited menu space, so practice moderation.
- Persuasive Descriptions
Well-thought-out descriptions give menu items some distinct character.
Mentioning key ingredients, especially widely known brand names, can inspire confidence, but telling a story can also do wonders.
By humanizing a dish , it transforms from a commodity into a family tradition or a piece of history.
- Price Layout
Fight the urge to put prices in one column. This usual mistake encourages customers to make decisions based on food prices alone, which can defeat the purpose of engineering your menu in the first place.
To influence the thought process of your customers, place the price of each item about two spaces after the description. This way, you can sell your foods based on desire and value, not merely on price.
- List Order
Most customers don’t have the patience to go through all individual items on a list. Usually, they concentrate on the first five foods and the last. The brain ignores those in the middle.
Keeping your food lists short is sound practice. A list of seven items should be the maximum.
This way, most customers can easily consume and digest the offerings in all categories and boost your overall revenue per transaction.
- Menu Panel Configuration
By and large, a two-panel menu holds the most promise since it encourages customers to take a longer time to decide and ultimately order more.
If you can’t squeeze all of your orders into 2 panels, you could go up to 3. Having 4 or more panels will negatively impact the readability of your menu.
The above are focused on physical menus for dine-in restaurants but these same practices can be applied to the digital experience. Make sure to apply this thinking to your online offerings as well.
4. Promote to Profit
With all that you now know about your menu, you can choose promotions that have an intelligent impact on your bottom line. Create bundles to improve profitability. Offer “freebies” of your high-profit (low-cost) items after a certain check total is reached. Think about discounts and offers that bring up the profitability of each customer transaction.
Your staff can help just by their recommendations. If yours is a dine-in establishment, use your staff to reinforce the promotion of high-profitability, low-popularity items. A verbal recommendation takes only seconds to do and can carry a lot of weight since it comes directly from the restaurant. But be careful not to look disingenuous or self-serving. Customers are smart and they will know if you are just pushing them to spend more.
5. Test, Test, Test
Perfecting menu design the first time is rare. To know whether it works or needs some adjustment, test it over time. As long as you are capturing all the data, you will know what succeeds and what fails. Overtime, you will refine and get to those big profit increase percentages.
Menu engineering is both a science and an art. The concept’s guiding principles are universal, but the application of each technique is subjective. Study the menus of your competitors, and use the five tricks we discussed here in a way that makes sense for your restaurant.