What are the benefits of menu engineering?

Menu engineering helps restaurants and hospitality businesses to create a profitable offering that aligns with the intended target audience.

A Guide To Menu Engineering: 20 Tips to Maximise Profits

But how do you dig through the data to get the information you need for menu planning? In this article, we’re going to look at how menu engineering can benefit your business, as well as explore our 20 top tips, direct from our product specialists, on how to perfect your menu planning strategy this year.

What is menu engineering?

Menu engineering is the practice of optimising a restaurant’s menu performance by conducting a detailed analysis of sales and performance data alongside food costs and pricing to create a profitable menu.

The process involves categorising menu items based on their popularity and profitability and using this to inform sales and marketing activity.

As the popularity of items in a restaurant is heavily influenced by seasonal variation, menu engineering, and analysis is often an ongoing activity to help make dynamic decisions.

Benefits of menu engineering?

By analysing and optimising menus, menu engineering provides numerous benefits for restaurants.

Enhanced profitability

By analysing consumer preferences and market trends alongside profit margins, menu engineering can help you to identify dishes that are not only popular but also the most profitable. With this information, you can strategically market these dishes to boost sales and, in turn, maximise their profits.

Streamline operations

With constantly changing market trends, food costs, and legislation affecting menu planning, it can be challenging to consider every factor. To simplify this process, many hospitality operators use digital software that streamlines operations by pulling information from suppliers, automatically calculating nutritional data, listing allergens, and determining costs.

A more targeted menu

Menu engineering helps you to identify your best-selling dishes and showcase them effectively on the menu. By understanding consumer preferences, you can also tailor their offerings to create dishes that appeal directly to your target audience.

Reduce food waste

If done effectively, menu engineering can help you to reduce food waste. By creating a menu that is based on consumer preferences and demands, you can better manage your stock to prevent food waste.

The menu engineering matrix

A menu engineering matrix is a key factor in the success of menu engineering. This matrix helps restaurant and hospitality businesses to conduct a sales mix analysis and understand how the current menu items are performing.

To be able to use a menu engineering matrix, you must first understand the sales of menu items and their profit margins. Once you have this information, you can start to place the items within the menu engineering matrix. The standard matrix has four categories:

1. Star

A ‘star’ menu item is both highly popular and profitable, meaning it is inexpensive to make, yet popular with customers. While these items don’t need to be changed, strategically promoting them can help enhance their visibility and continue to drive sales. A well-engineered menu should primarily feature ‘star’ items.

2. Puzzle

In contrast, ‘puzzle’ menu items are highly profitable but have low popularity. Since these items have strong profit potential, the goal is to boost their popularity. To achieve this, consider employing menu engineering practices such as enhancing their descriptions or positioning them at the top of the menu, where attention is naturally drawn. Continuously monitor the effects of these changes and adjust as needed.

3. Plow horse

‘Plow horse’ menu items are those that are popular but not very profitable, often due to high production costs. To manage their low-profit margins, you should carefully monitor changes in ingredient prices and the supply chain. You might need to:

Adjust menu prices to keep profitability in check
Find alternative ingredients or suppliers to cut costs
Reduce portion sizes to improve profit margins

When making these adjustments, be careful not to negatively impact the popularity of these items.

4. Dog

The final category on a menu engineering matrix is ‘dog’ items. These are the least desirable because they are low in both popularity and profitability. Since these items are costly to produce and offer low-profit margins, consider making adjustments to improve their performance. You might change the recipe to make it more appealing or use menu engineering techniques, such as revising the product description or altering their placement on the menu. If, after these changes, the items still don’t perform well, it may be best to remove them from the menu entirely.

Tips for successful menu engineering and planning

There are some tried and tested ways you can make sure your new menu is a success. Here, we’ve rounded up our top tips to help get you started with menu planning and engineering.

1. Supply chain planning

Product supply planning should be the foundation of your menu engineering strategy. Identifying potential supply chain issues early on can help you be proactive – with a backup plan if your preferred supplier has issues or making sure you don’t end up with a popular dish that’s never available – leaving a bad taste in your customer’s mouth.

2. Forecast demand

Every hospitality business has factors that influence demand at different times. Your sales data holds the key to the demand trends that are relevant to your business and will help you understand your customers’ behaviour. Identify your most in-demand products and also when that demand peaks throughout the week, month, and year. Accurate forecasting will help prevent shortages or excess inventory.

3. Be dynamic

Planning helps you lay a strong foundation, but keeping a forward-looking approach to what customers like and upcoming food and drink trends will ensure that your business stays relevant and fresh. Having a changing specials menu might be a good way to test new dishes alongside your standard menu offerings to check viability.

4. Sourcing the right products

Identify and source products that align with your business brand values, standards, and those of your customers. Depending on your business that might mean prioritising affordability, quality, or sustainability. For some operators, valuing locally sourced, but potentially more expensive products will resonate with the local customer base, and in other areas, customers might value affordable but quality dishes. Do your research both in the market and ask your customers through periodic surveys to find out what matters to your customers.

5. Balance availability vs cost

Strike a balance between product availability and cost to optimise your menu offerings. Ensuring that popular items remain accessible while managing costs effectively contributes to both customer satisfaction and overall profitability.

6. Prioritise sustainability

Sustainable business practices continue to be listed as a priority for hospitality consumers, so businesses should opt for environmentally friendly product sourcing where possible.

7. Maintain dynamic price files

Create and maintain dynamic price files that are supplier-managed but involve a customer approval process. This ensures that pricing remains competitive and aligns with market conditions while still allowing for necessary approvals within your organisation.

8. Link pricing to menu PLUs

Get your backend organised to keep in control of your profit margins. Connecting product pricing directly to menu PLUs helps you streamline the pricing process and reduce errors, which means your menu accurately reflects the current cost structure.

9. Update regularly

Keep your menu prices in line with market standards and competitors by planning for regular updates and reviews. Staying informed about fluctuations in the market and economy will help you to be ready to make real-time adjustments that keep your menu pricing both competitive and profitable.

10. Analyse your data

Your sales data can also help you to identify your most popular and profitable items and strategically highlight and promote them accordingly. These items could be different from site to site based on various factors such as local trends or the diversity of local competition.

11. Stay on top of compliance

Compliance plays a huge role in menu engineering as not only should you be familiar with the legislation and guidelines related to allergens, nutrition, and PPDS/ingredient declarations, but the best operators will have options that cater to allergen sufferers (such as offering dairy or gluten-free alternatives to popular dishes).

12. Create a single matrix for visibility

Simplify your processes and employ a single matrix to link and stack all compliance information against individual product IDs. This visibility exposes any missing or incomplete data, enabling swift correction and ensuring that your menu meets all regulatory requirements.

13. Automate for efficiency

You can save hundreds of hours and reduce the risk of manual error with software that can automatically pull approved compliance information directly through to your dishes, batch recipes, and menus.

14. Establish centralised control

Establish a single management report that links all product information with suppliers, streamlining secondary site approvals and providing control over suppression and edit functions. Centralised control enhances efficiency and minimises the risk of non-compliance across your menu offerings.

15. Timing is key

When it comes to menu engineering, timing is key as new menu offerings need time to be marketed, implemented and staff to be trained on new items as well as align with customer demand – there’s no point being late to the party with the latest food or drink trend.

16. Plan ahead

The most successful menus are planned around 6-8 months in advance (8-10 months for festive menus) to stay ahead of demand and to ensure you don’t trail behind competitors when it comes to marketing your offer.

17. Accuracy is everything

Streamline your backend pricing by connecting supplier pricing to products to ensure accurate cost considerations. Creating this link provides real-time insights into your cost structure, enabling you to make informed decisions about menu pricing and profitability.

18. Compare profit vs popularity

Classifying your menu products based on their performance and popularity enables you to make informed decisions about promotion, upselling, and viability. The best way to do this is with a sales mix analysis that enables you to categorise your products according to the menu engineering matrix above.

19. Build custom price files

There’s no one-size-fits-all when it comes to menu engineering. We recommend that you tailor your pricing strategy to your business model by customising price files based on your unique product requirements and cost structures to ensure that your menu remains both competitive and profitable.

20. Factor in a price increase percentage

Cost fluctuations in the market can have a big impact on the profitability of your menu items. Adopt a proactive approach and factor in a percentage increase based on product unit cost to maintain profitability so that you can adapt to changes in costs while ensuring your menu remains profitable.

Procure Wizard: Menu engineering made easy

In this article, we’ve looked at the benefits of menu engineering and how it can help you develop a winning menu with a strong sales mix. Our hospitality purchasing software, Procure Wizard can help you dig through the data to identify your top-performing products as well as save hours on manual tasks by pulling cost, supplier, and allergen information through automatically. Once you’re all set up on the system, ordering, purchasing and costing becomes a much easier task – helping you to create a successful menu.