Price Like a Pro: How Menu Engineering Helps You Price Right and Sell More

If you think your restaurant's menu is merely a list of dishes, it's time to rethink. A well-engineered menu does more than display what's for dinner.

With food costs on the rise, a smartly designed menu can help you fight against inflation. This approach, known as menu engineering, goes beyond basic listings to crafting dish descriptions, strategic pricing, and psychological tactics to influence customer choices. 

In this blog, we'll learn about restaurant menu engineering with practical tips and insights to help you price right and sell more. Get ready to see your menu in a whole new light and watch your profit margins grow!

What is Menu Engineering?

Menu engineering is a tactic to craft your menu strategically so that it helps boost your revenue. You do so by analyzing cost and sales data. This data gives you a crystal-clear picture of which dishes are stars and just take up space on your menu.

How does restaurant menu engineering work?

You categorize each menu item based on two key factors—popularity and profitability. For this, you pick dishes that bring financial benefits to you and attract the crowds to spotlight them.

But there's more to it than just numbers. Understanding menu psychology plays a huge role. How you describe your dishes, where they're placed on the menu, and even what the menu looks like can sway customers' choices. 

To begin, you need three basic components:

1. Cost Analysis: It involves looking closely at what each item costs to make, from ingredients to preparation, to price your dishes smartly.‍
2. Demand Forecasting: Here, you predict which dishes will be the crowd-pleasers by analyzing past sales data. ‍
3. Contribution Margin: This is about finding out how much money each dish brings in after covering its costs.

Benefits of Menu Engineering

Menu engineering has many benefits, more than just increasing your revenue. Here's how focusing on restaurant menu engineering can transform your business:

Increased Profitability

The purpose of menu engineering is to pump up your profit margins. For example, prominently placing a high-margin seafood pasta could naturally lead to higher orders of that dish.

Improved Customer Satisfaction

Your menu is the first conversation you have with your guests. Make it count. A well-organized menu with clear descriptions helps customers easily choose from the best dishes. 

Enhanced Menu Design and Readability

A cluttered menu can be as confusing as a crowded street. Streamlining your menu's design makes it easier for customers to navigate. You can make simple tweaks like grouping similar items, using readable fonts, etc.

Better Inventory Management

When you understand what sells and what doesn't, you can make smarter decisions about what to stock up on and what to scale back. Inventory management not only cuts costs but also makes your operation much more efficient.

The Process of Menu Engineering

By now, you must be wondering how the menu engineering process works; here's a detailed explanation:

Analyzing Current Menu Performance

The key step in revamping your menu is to analyze your current menu performance. In this process, you figure out which dishes sell well and which don't. To get a better understanding, you need to track sales data and customer feedback.

Food Cost and Contribution Margin

To kick things off, you need to be familiar with several critical financial terms:

Menu Item Food Cost

This is simply the total cost of ingredients for each dish.

Total Food Cost Percentage

The food cost calculator tells you how much of your sales go towards the cost of the food itself. 

The sum of ingredient costs per item

Menu Item Food Cost Percentage

This shows what percentage of the price of a dish goes towards the ingredients.

Food cost per item/selling price per item*100 

Total Contribution Margin

This is what you have left from sales after paying for the food.

Total Sales - Total Food Costs

Portion Contribution Margin

It helps you understand the profitability of each portion you serve.

Selling price per item - food cost per item

Menu Item Popularity

How well do your dishes sell? Get into the restaurant analytics to understand menu item popularity better.

Why is Menu Engineering Matrix Analysis Important?

A menu engineering matrix is a method that lets you spot which dishes aren't pulling their weight and which hidden gem could bring in more money. With the cost and sales data in hand, you can categorize your menu items into four types:

1. Stars: High profitability and high popularity. These are your menu champions.
2. Puzzles: High profitability but low popularity. These items have potential but might need a marketing boost or a tweak in presentation.
3. Plow Horses: Low profitability but high popularity. Your customers love these dishes but aren't making you much money.
4. Dogs: Low profitability and low popularity. These are dishes for removal or modification.

Regularly checking in on these details helps you determine why your top sellers might be losing their luster. Are you dealing with ingredient waste, theft, or fluctuating prices? 

Menu Psychology

Understanding the psychology behind your menu design can enhance how customers interact with it. Here's how you do restaurant menu optimization:

Choice Overload

It's tempting to offer a wide variety of dishes, but did you know that most of your sales likely come from just a few items? About 80% of your sales might come from just 20% of your dishes. 

Offering too many options can overwhelm your guests, which may slow down decision-making and affect your table turnover. 

Pricing Strategy

When it comes to listing menu prices, subtle tweaks can make a big difference. For instance, leaving currency symbols next to prices can lessen the pain of parting with money, at least psychologically. Also, avoid listing prices in a column; this makes it too easy for diners to scan and choose the cheapest option.

Eye Movements and Menu Layout

People generally scan menus in predictable patterns. Some might start at the top left corner and read like a book, while others might glance first at the center or top right. Placing your most popular or profitable items in these strategic spots can catch the eye faster.

Menu Descriptions

A great description does more than list ingredients; it sells the experience. Use descriptive language to evoke taste and aroma, and don't shy away from mentioning the origin of ingredients or unique preparation methods.

Highlighting Specials

Don't forget to spotlight dishes popular or personally recommended by the chef. These callouts can guide new customers towards tried and tested favorites.

Restaurant Menu Design Aesthetics

For this, you need to focus on the below restaurant menu engineering tips. 

1. Consistently use your logo, color schemes, and themes across all platforms.
2. Keep your menu simple and uncluttered. Use clear fonts and organized sections.
3. Use high-quality photos and detailed descriptions to enhance online menus. 
4. Offering specials and allowing modifications can cater to diverse customer preferences.
5. Ensure essential information like restaurant timings, contact details, and menu prices are easily visible on all platforms. 

Menu Cover Styles

Menu covers come in various styles, impacting how customers interact with your offerings. 

• One-panel menus: A one-panel menu makes for quick decisions but might limit orders. ‍
• Two-panel menus: A two-panel menu is often ideal. It balances ample choice with easy readability.‍
• Three-panel menus: Three panels work well if offering a wide range. ‍
• Many-panel menus: More than panels can overwhelm both diners and service staff.

Steps to Optimize Your Menu

Understanding the essentials, begin outlining actionable steps to refine your restaurant's menu. Keep your notebook, current menu, and cost details handy to enhance your dishes as you proceed.

Conducting a Menu Audit

Conducting a menu audit helps you ensure your offerings align with customer preferences. 

• Start by reviewing each dish's sales data and customer feedback. 
• Analyze seasonal trends and ingredient availability to gauge each item's relevance. 
• Regularly update your audit logs and compare current findings with past data.

Redesigning the Menu Layout

To redesign your menu layout, begin by:

• Organizing dishes by popularity and profitability. 
• Use clear, appealing fonts and colors that reflect your brand's personality. 
• Place high-margin items to catch the eye and consider customer feedback.

Adjusting Prices Strategically

For this step, consider not just the cost of ingredients but also the perceived value of each dish. For example, a high-quality, innovative dish can command a higher price if it enhances the dining experience. 

Common Mistakes to Avoid in Menu Engineering

When engineering your menu, avoid common pitfalls that can hinder your restaurant's success. 

• Ignoring customer preferences: Disregarding what diners favor can lead to underperforming dishes, so always listen to feedback.‍
• Overcomplicating the menu: A complex menu can overwhelm guests and slow service. So keep it simple. ‍
• An un-updated menu: Menus that don't evolve can bore regulars. Periodic updates keep the dining experience exciting.‍
• Neglecting staff training: Uninformed staff can't sell your menu effectively. Invest in regular training.

How to Implement Menu Engineering in Your Restaurant

To make things easier, here's a guide to show you how to implement menu engineering: 

Tools and Software for Restaurant Menu Engineering

OneHubPOS's menu management system is a platform that revolutionizes how you control your restaurant's menu. Here's how it benefits you:

1. Centralize menu control: Manage and customize menus for all your locations from a single, cloud-based dashboard.
2. Real-time product updates and inventory control: Instantly update your menu items, prices, and descriptions. 
3. Insightful analytics: The dashboard offers deep insights into menu performance.
4. Pricing and promotions: Easily implement and manage promotions, unique combos, and offers.

Collaborating with Chefs and Kitchen Staff

For effective menu engineering, collaboration helps you go a long way. Connect with your chefs and kitchen staff to get their thoughts on which dishes are hits, how long they take to prepare, and what ingredients are available. They will give you insights that you might otherwise have.

Continuous Monitoring and Adjustment

Menu engineering is not a set-and-forget process. Continually monitor your menu's performance through the analytics your menu management system provides. Look for trends in item sales to identify what dishes are stars and which are underperforming. Adjust your menu periodically to respond to these insights.

The Future of Menu Engineering with AI 

AI streamlines the entire menu planning process, from initial design to ongoing updates, saving you time and money. Less manual labor and more efficient food use mean lower costs and smoother kitchen operations. It also helps ensure your menu features high-demand, profitable items priced just right. 

Here's what AI brings to the table:

• AI pinpoints which dishes are making waves and raking in profits.
• It determines the best prices based on costs and how much customers are willing to pay.
• It can identify underperformers so you can tweak or take off the menu.
• AI predicts exactly how much food to prep.
• It can customize your menus to fit local tastes perfectly.

Conclusion

Menu engineering might seem overwhelming, but it's not something you have to rush through. Start by setting a timeline, pricing out your dishes, and sorting them by popularity and profit. 

Next, work on enhancing your menu's look. Then, see how these updates affect your business.

Now is the perfect time to start refining your menu, leveraging these insights to maximize efficiency and revenue.

Consider adding technology like OneHubPOS to get real-time data analytics, automate mundane tasks, and reduce human error.

Ready to see your profits soar with smarter menu pricing? For just $1, you can optimize your menu with our advanced menu management system with the least effort. Connect to our experts to learn more.