November 7, 2011
What would you rather order: a juicy, marinated fire-grilled chicken filet or a plain chicken breast? Do you scan the menu prices from top to bottom and choose your dish based on price? Are your cheap staples like burgers and sandwiches occupying a prominent area of your menu because they are popular? Have you considered if they are they giving you the highest margins?
These are all common questions and concerns when you analyze and engineer your menu for profitability.
Menu engineering has been around since the early 80’s and is defined as the process of selecting, costing, pricing and evaluating all of your menu items to ensure your offerings are contributing to bottom line dollars – not food cost percentages. Let’s face it; you take money to the bank, not percentages!
Think of it like this. A customer comes in and wants a recommendation. Are you going to push your penne arrabiata for $10 (your cost $2) or your Steak and Frites for $20 (your cost $8)? If you were looking at food costs, you would push the pasta, as the food cost are 20 per cent versus 40 per cent for the steak. However, if you are looking at contribution margins, the steak will contribute $12 to gross revenue while the pasta only contributes $8.
Each of your items has to be analyzed and categorized. There are generally four categories:
- Stars – high popularity and high margins
- Workhorses – high popularity and low margin
- Puzzlers – low popularity and high margins
- Dogs – low popularity and low margin
Menu engineering involves the analysis of each and every one of your menu items as well as the critical design and placement on your menu.
High profit items should be featured and easily found. Mouth watering descriptions combined with fabulous food photography can “make” a dish. The more “stars” you can feature, the better, and do you really want “dog” on your menu?
The proper engineering of your menu is a recipe for success. It will take time but you will see results with happier customers and a much healthier bottom line.