Opening a Restaurant or a Retail Shop? Claim Your Free Consultancy

LATEST NEWS

What is Menu Engineering?

31/05/2017
share icon

A business is generally assessed by the profit it makes out of the revenues. The greater the profit, the more a business can cover their overhead costs and expenses. A carefully structured evaluation can take advantage of such numbers for the benefit of the business.

Menu engineering is a tool that analyzes how efficiently a restaurant menu is performing, with regards to profitability and popularity. In other words, it evaluates which items are promoters and which items are detractors.

This procedure was first developed by Michael Kasavana and Donald Smith, at Michigan State University,  in 1982. It is an essential task that all restaurants should partake periodically, so as to assess the wellbeing of their products.

 

So how exactly does Menu Engineering act as an analyzing tool?

It involves a simple methodology that facilitates all menu items to become profitable. The study places menu items into 4 categories vis-à-vis item profitability and popularity. Most selling items are placed towards the popularity axis, and most profitable items are placed towards the profitability axis (See Figure 1).

BIM POS Menu Engineering Axis

BIM POS Menu Engineering Axis

  • Items that are popular and profitable are considered Star items.
  • Items that are less popular and high in profit are categorized as Puzzle items.
  • Items that are popular but less profitable become Plow Horse.
  • Items that are not popular and not profitable are called Dog items.

 

Ideally, the ultimate scenario for every restaurant is to have all items equally popular and profitable (even if the idea is farfetched). Therefore:

 

  • Puzzle items should be promoted and upsold to customers because they improve the category’s profitability.
  • Plow Horse items should have their profitability increased, by raising the selling price or decreasing costs, because they affect the overall Gross Profit Percentage (GP%).
  • Dog items should be removed from the menu altogether, because they do not contribute to any area.
  • Star items are ideal and should not be touched.

 

This constructive analysis should be performed every 6 to 12 months, depending on the restaurant type, for maximum benefit.

Attached is a sample spreadsheet that you can use if you don’t have a Smart POS that easily and automatically generates it. BIM POS can generate restaurant Menu Engineering with a simple click of a button.

How does one easily promote items?

Based on how a menu is read and in what priority order, a menu book is organized and divided. There are 4 major sections which a customer looks at a menu: the first place a customer’s eyes lay on (normally situated at the top right section), then the second, third, and finally the last place a customer looks at. Of course, this applies to menus that are in a left-to-right language and laid out in a 2-page format (See Figure 2).

BIM POS Menu Visibility Priority

Accordingly, if you want to promote an item that is categorized as Puzzle, place it in location 1 and 2. Place Star items that already sell in a less attractive location. Simultaneously, take into consideration that all items should be within the same meal category and logical sequence.

Common issues that could affect upselling are design, pictures, and font size of listed items. Puzzle items, for example, can be put in bold, presented with bigger fonts, or placed in a frame. 

Menu engineering is a continuous process that should be repeatedly practiced in any hospitality business. The more data and studies done, the better the menu performs.



BIM POS SARL © - All rights reserved