Imagine serving two dishes with nearly identical ingredients at your restaurants, yet they differ in their popularity and profitability. Menu design at restaurants and coffee shops isn’t random or luck. It’s a science, based on menu engineering.
Menu engineering is an analytical process that relies on data and sales numbers provided by point-of-sale (POS) systems. These insights allow restaurants to accurately assess the profitability and popularity of each dish or item on the menu. They also show how often the menu item is ordered daily, weekly, and monthly.
Through these analyses, dishes are categorized based on their popularity to determine which deserve marketing and promotion and which should be removed from the menu.
Menu engineering can boost restaurants’ profits by up to 15%. It also helps reduce food waste from spoiled ingredients that have been unused for a long time in low-demand dishes. This is in addition to enhancing customer experience by spotlighting popular dishes or beverages.
In this article, we’ll explain what menu engineering is and how the menu engineering matrix works. We’ll also show you how to engineer your menus to boost your restaurant’s sales and profits.
What is menu engineering?
The concept of menu engineering was first introduced in 1982 by Michael. L. Kasavana and Donald I. Smith. They realized that menu design isn’t just about building an ordinary list of dishes, but about carefully crafting a sales map that directs profit flow. Over time, the concept developed into a tool for analyzing the financial and marketing performance of food businesses of all sizes.
The popularity and profitability equation
The principle of menu engineering depends on the balance between a dish’s popularity, based on how often it’s ordered, and its profitability, by determining the profit margin of each dish on the menu.
It is based on a well-structured matrix of 4 main categories. This matrix is known as the menu engineering matrix.
Menu Engineering Matrix
The menu engineering matrix simplifies and organizes food menus to optimize profitability. Dishes are classified into 4 categories based on their level of profitability and popularity.
High-demand dishes fall into the popularity category, while high-profit dishes are classified under profitability.
This categorization enables restaurant owners to make strategic decisions that improve their restaurants’ cash flow, financial performance, and operational efficiency.
The 4 categories of the menu engineering matrix are:
- Stars: These are both popular and highly profitable dishes, representing the main items on the menu.
- Puzzles: These are highly profitable dishes, but unpopular and in weak demand.
- Plow Horses: These are highly popular dishes among guests but have low profit margins.
- Dogs: These are neither popular nor profitable dishes. It’s best to remove them from the menu to avoid wasting ingredients.
How to professionally manage the 4 menu categories at your restaurant
Menu engineering helps restaurant owners make informed decisions to improve profitability. It allows them to focus on successful dishes, improve others, and get rid of non-profitable ones.
You can create a menu matrix using a restaurant management system like Foodics.
Once you’ve identified your dish category, you need to know how to optimize it. For example, Puzzles yield good profit margins but have low popularity, so you should try improving them to move into the Stars category.
Here are some ideas to enhance your menu by refining dishes and beverages after reviewing the menu matrix:
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Highlight Stars for maximum impact
Stars are the backbone of your restaurant’s profitability. Hence, these dishes and their sales require special attention.
Consider visually spotlighting them by using eye-catching boxes and icons to draw customer attention. Using professional photos can also stimulate customer appetites.
Being familiar with the prominent places on your menu is key. Place Stars menu items on the top of the menu or in high-visibility spots where customers naturally look first.
To scale up your restaurant’s profitability, train and encourage staff to recommend Stars, especially those considered ‘customer favorites.’ You can also use POS system reports and data to identify customer preferences and suggest dishes based on past orders.
Moreover, consider offering rewards for selling Stars to incentivize staff. But make sure your team is trained to make recommendations without being pushy.
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How to turn Puzzles into Stars
Puzzles are dishes with excellent profit margins but rarely ordered by customers. This is usually due to poor visibility or wrong placement on the menu or they seem unappealing.
The goal of menu engineering is to highlight the merits of these dishes to attract customers.
For instance, you can change the dishes’ names to be more appealing and add appetizing photos. You can also offer temporary campaigns or discounts on Puzzles to encourage customers to try them.
Additionally, train your staff to professionally promote and present Puzzles so guests feel eager to try them. You can also collect customer feedback to fine-tune these dishes in the future.
With these simple steps, you can turn less-popular Puzzles into Stars, increasing your brand’s profits.
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Improve your popular but less profitable Plow Horses
To restaurants, Plow Horses are highly popular dishes but have lower profit margins. You should be cautious when dealing with Plow Horses, so they don’t lose their popularity.
That’s why when experimenting with these dishes, we recommend maintaining the level of quality, while looking for other ways to boost revenues.
For example, you can pair Plow Horses with high-margin add-ons like drinks or sauces. You can also adjust portion sizes or use cost-effective ingredient substitutes, without compromising the quality and flavor that make these dishes ‘customer favorites.’
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Dealing with the less popular, low-profit Dogs
Menu performance analysis, including drinks, salads, and desserts, usually shows rarely ordered dishes with weak profits. In the menu engineering matrix, these dishes or items are known as Dogs.
The best and most common solution is to remove these dishes from your menu. This step saves costs and ingredients for other dishes, which also helps you cut your restaurant’s overall expenses.
Analyzing and developing your menu with digital tools
To understand and analyze your restaurant’s menu, you need to gather accurate and comprehensive data. This includes sales reports and the costs of ingredients and materials.
While this might sound like a lot of work, it’s a simple process with a POS system like Foodics. These systems help you easily track reports via your dashboard or download the reports as Excel sheets.
These reports help you make decisions based on actual figures of each dish rather than relying on guesswork. They assist you in identifying the reasons why certain dishes aren’t as popular as others.
Using artificial intelligence (AI), along with the POS system, also enables you to recognize sales patterns.
Wrapping it up
Adjusting your menu shouldn’t be done randomly, as menu engineering requires accurate data analysis. The goal is to boost revenues, reduce costs, and achieve sustainable growth for your restaurant.
With advanced AI-powered restaurant management and POS systems like Foodics, menu engineering has become easier and more accurate than ever.
These systems give restaurant owners a comprehensive view of each dish’s performance, along with consumer behavior, which varies by season. This helps them make effective data-driven decisions.
Remember: Customer preferences are constantly changing. Hence, regularly reviewing your menu is key to maintaining excellence and profitability.
Get started today with Foodics. Book a personalized demo and we’ll help you manage your menu and restaurant effectively.
