Menu engineering sounds like the work of specialised scientists. In a way it is, given that gastronomy can be loosely described as ‘the science of good eating’.
If you’re a chef, or even a regular cook, that makes you the scientist. If you’re a pub, restaurant or cafe manager, then part of your remit is making sure the kitchen-lab creations listed on your food menus stay profitable.
Maintaining menu profitability is itself something of an alchemy that you’re about to learn about in this guide to food-menu engineering. Bon appetit.
What is food menu engineering?
We can answer the question ‘what is food menu engineering?’ by asking what it’s not.
Food-menu engineering is not, for example:
- Seat of your pants decision-making
- Serving whatever you’ve got in stock
- Inventing new dishes you think diners will love
Food-menu engineering very much is:
- A way of evaluating menu pricing using sales & food-cost data
- A method for deciding which dishes to feature, at which price
- The frequent categorisation of menu items based on popularity and profitability
Food menu-engineering fact:
‘Menu engineering’ as a concept is the result of 1970s research from Boston Consulting Group. The aim of the work was to help food and hospitality businesses categorise food products in a way that made profitability decisions easier to make.
What that should tell you is that it’s not something to be shrugged off. FME can really be make-or-break. Done wrong, it can bring margin-crushing costs that snowball quietly out of sight.
Growyze’s restaurant management and stock inventory app intelligently gathers stock and costs data in one place, so you can make faster, more effective food-menu engineering decisions. Start a 30-day free trial during your next busy service and see for yourself.
How to make food menus more profitable
Chances are you already have your own process of how to design food menus. Here’s a recap of the process start-to-finish so that you can benchmark and make sure you’re not missing any essential steps.
1. Choose a time period
If your menus are seasonal, it makes sense to do your food-menu engineering in sync with how you switch up what's on offer.
If you don’t tend to change your food menus too often, then your food-menu engineering process doesn’t need to be as frequent.
2. How to cost your menu
To accurately cost your food menus, you’ll need to know:
a) food-cost percentage
b) contribution margin
a) food-cost percentage: that shows you how much of your overall sales go on ingredients and food-prep supplies.
To calculate FCP, you’ll need to first know:
- Beginning inventory value: the cost of food stock bought at the start of the week.
- Purchases: the cost of stock bought throughout the period that wasn’t part of the initial food stock bought.
- Ending inventory: the value of the food stock left over at the end of the period.
- Total food sales: the value of your food sales for the week.
Once you’ve got all those figures worked out, you can use this formula to calculate your food-cost percentage:
b) contribution margin: which is effectively your profit margin per menu item. In other words, the difference between the menu-item’s selling price, and its cost to make.
Once you’ve calculated food-cost percentage & menu contribution margin you can create categories for menu-item popularity and profitability.
3. How to categorise food-menu items by popularity & profitability
Ok, so you’ve got your menu using the process in step 2. Now it’s time to create a popularity and profitability matrix that should include these categories:
- Low profitability, high popularity (Cash cow menu items)
- High profitability, high popularity (Star menu items)
- Low profitability, low popularity (Dud menu items)
- High profitability, low popularity (Tricky menu items)
Your profitability matrix should help you design a more profitable food menu by adjusting what you’re offering at what price.
You might find that a ‘dud’ menu item might turn into a ‘tricky’ menu item from one season to another.
What should you do with your duds menu items?
You could axe them from the menu completely, or just deprioritise them in the menu design.
You could even rework the price or ingredients based on customer feedback. If you do rejig a dud menu item and both its sales and contribution margin remain low, consider removing it from the menu altogether.
4. How to redesign your food menu (now that you have the right data)
All that process and you’re only just ready to redesign your menu. As we said, food-menu profitability really is a science.
You’re not done with the data-gathering just yet! To design knockout food menus that bring in consistent profits, you’ll need to gather some qualitative data to add to your quantitative data.
To gather qualitative feedback to inform menu-redesign, ask your front-of-house teams which food menus have been selling well and gather customer feedback on what they’d like to see more of on the menu.
The only way to find out is to ask!
With a combination of hard business metrics and experience data from your team and customers, you’ll be able to redesign your food menu to maintain that sweet spot of food profitability consistently.