Menu Engineering refers to the method of maximizing a restaurant’s profits per guest, through strategic design and item placement on a menu. This enables you to make the customers purchase what you want them to purchase.
The idea of menu engineering is based on work performed by the Boston Consulting Group in 1970, to help businesses separate and segment different product lines. With regard to the restaurant industry, most restaurants sell a number of different items, each with different profitability and popularity levels. Menu engineering allows you to segment these items on a menu such that the high profit items are emphasized in the eyes of the customers.
Step 1: The first step of this process begins on the restaurant’s end with what is known as “Costing the Menu.” The restaurant must break down the food cost (not including labor cost) of every item on the menu to the last rupee. This is a step that less than 80% of restaurants in the industry implement, but is the most crucial step in the process of menu engineering since the impact of such engineering depends largely on the profitability of each menu item.
Step 2: Categorize each menu item under two units of measurement – profit and popularity. First, divide the items into categories such as appetizers, entrees etc. and then further segment these into smaller categories such as non-vegetarian entrees, vegetarian entrees etc. Once this is done, each item must be placed into one of the four quadrants. Star indicates high popularity and high profitability, Horses indicate high popularity and low profitability, Puzzle indicates low popularity and high profitability, & Dog indicates low popularity and low profitability.
Now how does one work with each of these items?
Stars: Owing to its high score on both profitability and popularity, these items must be highlighted on the menu.
Horses: These items are highly popular, but not as profitable. These items could be bundled together on the menu. For example, something such as a “soup and salad combo” could help increase profitability if these items are sold together.
Puzzles: These items are those that turn high profits, but for some reason are not as popular with customers. These are the items that need to be placed a menu such that the customer’s eyes go directly there, or design them on the menu such that they appeal to customers. Furthermore, lowering prices of these items would also increase profitability through sales volume.
Dogs: Getting rid of these items on the menu is an option, in case their sales volume and/or margin is negligible, as compared to the cost. However, it may be that these items attract a specific small niche of customer base; in this case, it may help to de-emphasize these items on the menu, and reduce overall clutter for the other more popular and profitable items.
Step 3: Design your menu using visual cues.
According to Ryan Gromfin of TheRestaurantBosss.com, there are specific tactics a restauranteur may use to engineer the menu to their advantage.
Firstly, omit the Rs. signs on the menu – this reduces the significance a customer would place on the price while choosing what item to purchase (recommended for the “Puzzle” quadrant)
Secondly, hide the prices in the text. For instance, several restaurants choose to follow the item description with a dotted line, followed by the price.
This takes the customer’s eyes directly to the price, as opposed to the item. We want to remove the focus from the price, and leave the customer’s purchase decision to be for the most part influenced only by the description of the food item.
Thirdly, don’t bold the prices. This again serves the same above mentioned purpose. This can be more clearly illustrated through the image below. In the top half, where the prices are bolded, your eyes go directly to the price, whereas in the bottom half, they remain on the menu item, and the price almost merges in with the text.
Fourthly, use a smaller font for numbers. This is yet another tactic to shift the customer’s attention away from the price.
Fifth, it may be beneficial for the low popularity items (“puzzle” and “dog” quadrant), to use descriptive labels. In a 2001 study (Wansink, Painter and van Ittersum, 2001), it was shown that descriptive labels led to a 27% increase in sales, increased perception of quality and likelihood to return. For example, the item name “Red Beans with Rice”, was changed to “Traditional Cajun Red Beans with Rice”, “Seafood Filet” was changed to “Succulent Italian Seafood Filet.”
Next, use photographs for every menu item – this would benefit all four quadrants (but only if it is a low to mid-range restaurant, not at a high-end restaurant).
Finally, it is important to find the “sweet spot” on the menu. As portrayed below, number “1” indicates that in each of the three different types of menu, that is where the customer’s eyes go first and most often, followed by “2” and then “3” and so on. It helps to box the menu items on the sweet spots, so as to emphasize the items in there. These items would most likely be the “stars” items or even more so, the “puzzles” items.
Step 4 is to test your new design, and measure impact in sales for each category of item.
Menu engineering represents a low-hanging profit that the restaurant industry needs to pick up. This technique is known to increase both margins and sales volumes for a restaurant, at a negligible cost.
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