Is Your Menu Focused on Maximizing Profits?

Menu engineering is both an analytical and creative process to ensure that your menu will help your restaurant maximize profits. The process of analyzing your menu prices alongside the layout and design of the menu allows you to create your menu in a way that encourages customers to order the most profitable items. It is both an art and a science. Without the right design, you may not be highlighting your restaurant’s most popular and profitable items. And without analyzing your costs and prices, a beautifully designed menu won’t help pay the bills.

Analyze your Costs

The first step is to cost out each item on your menu, recording the cost of each individual ingredient that goes into your recipes. This can be time consuming, but a good POS system can help with this task. Once you have determined all of your portion costs, you can calculate the contribution margin, which is the profit you make per item.

Selling price – Portion cost = Contribution margin

Example for an order of Garlic Knots:
Selling Price: $4.99 – Portion Cost: $0.69 = $4.30 Contribution Margin

Group your Menu Items

The next step is to categorize your menu items by high or low profitability and high or low popularity to determine where they should be placed on the menu. Popularity is based on the sell rate compared to other items on your menu. So if you sell 500 orders of Garlic Knots per week and only 50 Garden Salads during the same time period, the Garlic Knots would be considered to have a high popularity. Make sure to analyze and compare all of your menu items before determining which category they belong in.

Those with the highest profitability and popularity are the items you want to feature and highlight on your menu. These are the items you want to sell the most of, so getting your customers to notice them is critical. This is where the actual menu design comes into play. When designing the menu, keep the four categories below in mind as they will guide the placement, size and treatment of the how they appear on your menu.

Popularity-Profitability-Index

Redesign your Menu

In addition to deciding if an item belongs on your menu and where it should be located, a number of other factors should be considered to make your menu more profitable and appealing to your customers. Stars should be highlighted by putting a box around them or using a different color or size font. Anything that will draw the diner’s eye to that item.

  • Write an appetizing description for each menu item to entice diners. Use sensory words like “savory” and “velvety” to appeal to cravings.
  • Make the menu about the food, not the price. Consider omitting the dollar signs.
  • Use photos to improve the overall design, but don’t overwhelm with too many.
  • Use fonts that are easy to read. An ornate script might look good, but if diners can’t read it, they won’t buy it.
  • The design should reflect your restaurant’s brand including colors, images, fonts and tone.

Menu Engineering Watch-outs

What works for one restaurant when it comes to menu engineering may not work for another. You need to consider your customer base, competition and location. QSR pizzerias in New York City and a casual dining Italian restaurant in Kansas City will end up with completely different menu designs, but the process to get there should be the same. The below list outlines some tips and tricks to make sure you develop the most profitable menu for your restaurant.

  • Cost out every food item with a target food cost in mind.
  • Don’t base your menu offerings or prices strictly on what your competitor is doing.
  • Add menu items only after understanding the impact to menu profitability.
  • Strategically raise prices when necessary; don’t wait until you are losing money.
  • Don’t design your menu with only foods that you like. Everyone has different tastes and preferences and you want to appeal to them, too.
  • Re-evaluate your menu offerings frequently to keep things exciting for your customers and take advantage of food trends.
  • Review and take advantage of these menu best practices.

Your menu should be considered part of your overall marketing efforts. It should promote your most profitable menu items and encourage your customers to spend more.

If you are a Grande 100-Percenter, download our menu engineering tool to help you organize and analyze your costs, categorize your menu items and guide decision-making. Grande 100-Percenters can also take advantage of our team of design experts to create a fully customized menu for your restaurant. To learn more about our Solutions @ Work design capabilities, click here.

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Date: August 11, 2020

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