Here are the critical steps involved in menu engineering:
Categorization :
Start by categorizing your menu items into different categories, such as appetizers, main courses, desserts, beverages, etc. It helps in understanding the composition of your menu and the sales distribution across different categories.
Sales analysis :
Analyze the sales data of each menu item to determine its popularity and profitability. Look at each item's number of units sold, revenue generated, and contribution margin (selling price minus the cost of goods sold). This analysis helps identify the best-selling items that may need improvement or be considered non-profitable and replaced or tossed out.
Menu item positioning :
Plot your menu items on a matrix based on their popularity (measured by sales volume) and profitability (measured by contribution margin). This matrix typically consists of four quadrants: stars, puzzles, plow horses, and dogs.
-
-
Stars : High-popularity and high-profitability items. These are your menu's winners, and you should focus on promoting them further to increase their sales.
-
Puzzles : Low-popularity but high-profitability items. These items have potential and may require better positioning or marketing to increase sales.
-
Plow horses : High-popularity but low-profitability items. Although these items are popular, they may have high ingredient costs or low selling prices, leading to low profits. Consider adjusting their pricing or modifying their recipes to improve profitability. These items are significant to the restaurant's popularity served with signature items.
-
Dogs : Low-popularity and low-profitability items. These items may need to be removed from the menu or reworked to make them more appealing to customers.
-
Menu item optimization :
Based on the analysis, make decisions to optimize the menu.
-
-
Highlighting star items : Showcase your high-profit and high-popularity items prominently on the menu to attract attention and increase sales.
-
Repositioning puzzles : Experiment with different strategies like changing descriptions, pricing, and combo plans, and introduce offers and discounts or presentations to make the low-popularity, high-profitability items more appealing.
-
Modifying plow horses : Adjust pricing, portion sizes, or ingredients to improve the profitability of popular but low-profit items.
-
Eliminating or reworking dogs : Consider removing or revamping low-profit and low-popularity items that do not contribute significantly to the menu's success.
-
Menu design and layout :
Pay attention to the design and layout of your menu. Use strategic placement, formatting, and descriptions to guide customers toward the items you want to promote. Highlight specials, signature dishes, and profitable items using images, fonts, colors, or visual cues, or digitalization of the menu can add more to your menu presentation.
Regular evaluation :
Continuously monitor and evaluate the performance of your menu items. Update your analysis periodically to identify changes in customer preferences, ingredient costs, or market trends. Adjust your menu accordingly to stay competitive and maximize profitability.