What is menu analysis?
Menu analysis refers to the process of analysing sales data to assess the performance of menu items in terms of profitability and customer popularity. Menu analysis helps kitchen and product managers to make strategic decisions about which items appear on their menu.
One widely used approach in menu analysis is the implementation of a four-quadrant matrix. This matrix categorises menu items based on their profitability and popularity, providing a visual representation of their performance.
The four quadrants in the matrix include:
- Stars: These items are both highly profitable and popular, representing the menu's top performers. Restaurant owners and managers should actively promote and highlight these items to capitalise on their success.
- Plowhorses: While not as profitable as stars, the reliable plowhorses remain popular among customers. These items may not yield the highest profit margins but can still contribute significantly to revenue generation and help fill seats.
- Dogs: These items neither perform well in terms of profitability nor popularity. Identifying dogs is crucial as they can drag down overall profitability and fail to attract customers. It is advisable to remove these items from the menu or modify them to improve profitability.
- Question marks: This quadrant represents new or recently modified items on the menu. They require evaluation to determine their potential profitability and popularity. Restaurant owners and managers need to assess whether these items should be retained or further adjusted based on customer response and market demand.
Benefits of menu analysis
Conducting regular menu analysis brings a host of fantastic benefits for restaurants and food businesses, helping them stay flexible, agile and responsive to ever-changing trends and customer preferences. By treating their menu as a constant work-in-progress, businesses can ensure their offerings are always in line with the latest market demands and remain consistently profitable.
Creating strategic, profitable menus is key for any food-led business. Understanding the relationship between customer popularity and profitability of each dish on your menu helps to be successful by being responsive to changes in customer preferences, adapting to new food trends and being flexible in the event items are no longer profitable due to a downturn in popularity or rise in cost of ingredients.
Check out some of the main business benefits of conducting regular, effective menu analysis:
Boost sales
Regular menu analysis will help you understand which your best-selling menu are, and which items are a hit with your customers. The most popular items on your menu will always be changeable and by keeping on top of performance you can keep an eye on your sales mix as well as boost sales through promoting new and up and coming menu items to your customers.
Enhance profitability
By keeping a close eye on food cost percentages, you can identify opportunities to increase profitability of items on your menu. That might be by adjusting the portion size, making tweaks to ingredient rations or removing low-profit items from the sales mix.
Delight your customers
Menu analysis allows you to understand your customers better. What keeps customers coming back for more? What are you known for? Learning what items are popular with your customers will help you to curate customer-focused menus that they love.
Be more sustainable
By removing or adapting menu items with low demand or that create excessive food waste through ingredient spoilage or leftovers, you can minimise food waste and be more effective with ordering to reduce deliveries or number of suppliers, helping improve the environment as well as reduce business costs.
Manage inventory
Once you have identified your best and least performing menu items, you can improve your inventory management practices. This means making sure popular items are consistently available and reducing the risk of ingredient shortages to improve operational efficiency and maintain customer satisfaction.
Streamline operations
Through menu analysis, you can streamline your menu by removing unnecessary items. This simplification optimises your preparation processes, reduces complexity and enhances overall efficiency. By saving time and resources, you can focus on providing exceptional service and delivering an outstanding dining experience.
10 top tips for conducting menu analysis and creating an effective menu
Our product specialists work directly with food-led business operators to optimise their menu analysis processes and create effective and profitable menus.
We’ve gathered some of the top tips from our team for conducting menu analyses and creating an effective menu:
1. Gather your menu data: Start by collecting all the important information about your menu items prices, sales data and food costs and identify your stars, plowhorses, dogs and question marks. Access Procure Wizard analyses your data for you, which makes this step really easy.
2. Calculate profitability: It's time to calculate your food cost percentage. Simply divide the food costs of a dish by its menu price and multiply it by a hundred to get the percentage. While you want a low food cost percentage to indicate good margins, be careful not to set it too low, as it might mean your dish is overpriced or compromising on quality. Industry standard sets ideal food cost percentage at around 30%, which can help you benchmark your own figures. Don't forget that adjusting prices strategically can make your items more appealing without hurting your bottom line.
3. Keep an eye on the competition: Take some time to study your competitors' menus. By understanding what other businesses in your field are offering, you can find opportunities to stand out. Look for new trends that might work well for your establishment and consider factors like timing, seasonality and special offers to carve out your own unique niche.
4. Embrace dietary requirements: Show your commitment to inclusivity by ensuring your menu caters to various dietary needs. For example, offering dishes that cater (or can be customised) for vegan, vegetarian or gluten-free customers will help you to appeal to more people.
5. Make it a team effort: Don't go at it alone! Involve your entire team in the menu analysis process. Seek input from different departments, such as purchasing, kitchen staff and servers. You can also gather valuable insights from your customers through surveys and feedback forms. Remember, sometimes what people say they want may not align with their actual choices, so rely on data-driven insights to make informed decisions.
6. Spot new opportunities: Menu analysis can help you to learn more about how dishes work together to create new opportunities for upsell and cross sell to increase average order values and boost profits. Analysing your sales data regularly will help you to analyse performance and highlight which products could benefit from extra promotion.
7. Minimise ingredient waste: Take a closer look at your ingredient usage with food waste management software. Avoid recipes that require uncommon ingredients that can't be repurposed elsewhere. Menu analysis allows you to optimise ingredient usage and be prepared with alternative options if certain ingredients become unavailable.
8. Consider all cost factors: Remember to factor in other costs beyond food expenses. Consider preparation time and energy costs when making menu decisions. Calculate the direct costs associated with recipe preparation and assess how equipment requirements and expertise impact your bottom line. By considering these factors, you can make well-rounded menu choices.
9. Timing is key: Remember to conduct menu analysis at regular intervals, considering factors such as changing seasons and annual data. Adjust your menu accordingly to capitalise on seasonal ingredients, incorporate holiday specials or align with customer preferences during specific times of the year. Stay agile and responsive to market trends to keep your menu fresh and enticing.
10. Leverage technology for accuracy and efficiency: Take advantage of technology solutions like Access Procure Wizard's menu management module to streamline your menu and recipe costings. Keep your data accurate and up to date by integrating supplier ingredient information and pricing changes. Utilise features like allergen analysis, stock integration and EPoS integration to achieve transparency and improve overall profitability.
Ready to streamline menu management in your business?
Menu analysis is a vital tool for food-led operators to optimise their menus, improve profitability and meet customer demand. However, lack of resources and data-driven insights can be challenging. In this article, we’ve looked at what menu analysis is, how it can benefit your business and shared some of our top tips for success.
Access Procure Wizard is a powerful purchase to pay tool that can greatly simplify and streamline the menu analysis process. With its menu management module, operators can easily analyse cost, waste, sales and profitability. By automating calculations and integrating supplier ingredient information, pricing changes, allergen analysis, stock management and EPoS systems, Access Procure Wizard ensures accurate data and provides a comprehensive solution for menu management. This technology saves operators time, improves efficiency and enables them to make data-driven decisions with confidence.
By adopting tools like Access Procure Wizard, operators can overcome common challenges, enhance their menu analysis processes, and focus on delivering exceptional dining experiences. With the benefits of automation and streamlined operations, operators can stay ahead in the competitive food industry, optimise profitability and provide memorable culinary offerings for their customers.
If you would like to learn more about how we could help your team why not watch the demo.
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