What is Menu Engineering?
Restaurant menu engineering is the process of strategically analyzing a restaurant menu to optimize its profitability and popularity. It involves analyzing the performance of each menu item by looking at how to increase sales and profitability, and then making data-driven decisions to optimize the menu mix and pricing strategy.
There are several benefits to menu engineering, including:
- Increased profitability: By analyzing sales and profitability data, restaurants can identify which items are most profitable and adjust their menu accordingly. This can lead to increased profits and revenue for the restaurant.
- Improved customer satisfaction: By highlighting popular and profitable menu items, restaurants can steer customers towards items they are more likely to enjoy. This can lead to improved customer satisfaction and loyalty.
- Enhanced menu design: Menu engineering involves analyzing the placement, descriptions, and pricing of menu items. By optimizing these elements, restaurants can create a more effective and visually appealing menu design.
- Streamlined operations: By identifying which menu items are most popular, restaurants can adjust their inventory and staffing accordingly. This can lead to more efficient operations and reduced waste.
- Competitive advantage: By continually analyzing and optimizing their menu, restaurants can gain a competitive advantage over other establishments in their area. They can also adapt to changing consumer preferences and trends more quickly.
Overall, menu engineering is not only valuable but also an essential tool for menu optimization, helping restaurants identify which menu items are the most profitable and popular, and which ones need improvement or elimination.
Menu Engineering Matrix
The menu engineering matrix as shown below is a four-quadrant chart that categorizes menu items based on their profitability and popularity, using the data from menu sales and cost analysis.
[Reference photo below]
The two axes of the matrix are the profitability of the menu item and the popularity of the menu item. The vertical axis represents the profitability of the menu item, with high-profit items at the top and low-profit items at the bottom. The horizontal axis represents the popularity of the menu item, with high-popularity items on the right and low-popularity items on the left.
Menu Engineering Matrix Quadrants/Categories
Menu Engineering- Stars
The first category is the Stars. These are the real MVPs of the menu – they’re high-profit and popular with customers. Keeping them consistent and constantly on the menu is the best way to go with such items, after all, if it’s not broken, there’s no need to fix it!
Menu Engineering- Horses
Next up, we have the Plowhorses. These are the reliable workhorses of the menu – they’re popular, but not quite as profitable as the Stars. Your goal here is to find out how to make them more profitable, by either combining them with a more profitable but unpopular menu item or considering a modest increase in price that won’t affect its popularity. Both options could be a great way to make the product more profitable as long as it doesn’t reduce the quality.
Menu Engineering- Puzzles
Now, here’s where things get interesting. The third category is the Puzzles. These items are high-profit, but for some reason, they just don’t seem to be flying off the shelves. For these items, it’s best to have a good look at why they’re not selling well, whether that is lack of good marketing, unappealing menu descriptions or high menu pricing. You can then optimize what you can to increase their popularity by offering limited time discounts or decreasing prices to make it more profitable.
Menu Engineering- Turtles (a.k.a Dogs)
And last but not least, we have the Turtles. They’re low-profit and unpopular with customers – a real double whammy. Consider tracking them over time to see if there’s a change in behavior to redesign them as necessary, if there’s no change, take quick action to remove them from the menu entirely to make space for new innovated products.
So there you have it – the four menu engineering categories.
Things to Know About the Menu Engineering Matrix
The matrix is not a one-time fix: Menu engineering is an ongoing process that requires regular analysis and adjustment. Restaurant owners and managers should regularly review their menus and update the matrix based on new data and customer feedback.
The matrix is customizable: While the basic structure of the menu engineering matrix is the same for all restaurants, each matrix can be customized based on the specific needs and goals of the business. For example, a restaurant may choose to focus on profitability rather than popularity, or it may use different criteria to categorize menu items.
The matrix is just one part of menu optimization: While the menu engineering matrix is an important tool for optimizing menus, it is just one part of a comprehensive menu optimization strategy. Restaurant owners and managers should also consider other factors such as food quality, service, ambiance, and marketing when designing and promoting their menus.
Menu design plays a crucial role in menu engineering as it can impact how customers perceive the restaurant and influence their ordering behavior. A well-designed menu can help guide customers towards certain items, highlight the restaurant’s unique offerings, and ultimately increase profitability. Here are some ways that menu design can impact menu engineering:
- Layout and structure: The layout and structure of a menu can influence how customers read and process information. For example, a menu with clear and concise categories can help customers quickly find what they are looking for. Additionally, the placement of certain items on the menu can influence their popularity and profitability.
- Visuals: The use of visuals such as photos or illustrations can make menu items more appealing and encourage customers to order them. However, it’s important to use visuals selectively and in a way that aligns with the restaurant’s brand and aesthetic. Interestingly, way back in the 18th and 19th centuries, high luxury dine in restaurants never put pictures on their menus. They knew their rich customers could read. But simpler places used pictures, as they were catering to folks who might not read so well. Fast forward to today, and it’s pretty much the same! Fancy places still shy away from pictures, unless it’s for items with straightforward names like a ‘Chicken Burger’ or ‘Fish and Chips’.
- Descriptions: The descriptions of menu items can impact how customers perceive them and influence their likelihood of ordering them. Descriptions that highlight unique ingredients or cooking techniques can make items more appealing and increase their perceived value.
- Pricing: Menu design can impact how customers perceive pricing. For example, by placing high-profit items next to more expensive items, restaurants can make the latter seem like a better value. Additionally, using “charm pricing” (e.g. pricing items at 29.99 instead of 30) can make items seem more affordable.
Overall, menu design is an important aspect of menu engineering as it can impact how customers interact with a restaurant’s menu and ultimately influence profitability.
How Can Fruits360 Assist in Menu Engineering
Fruits360 software is a cutting-edge tool that can be integrated with a restaurant’s Point of Sale (POS) system to create menu matrix dashboards and other reports. By analyzing sales data, Fruits360 can categorize menu items into four categories – Stars, Horses, Puzzles, and Dogs – and help restaurant owners make data-driven decisions to optimize their menu mix and pricing strategy.
With Fruits360, restaurant owners and managers can access real-time insights into menu performance, allowing them to identify the most profitable and popular items on their menu. They can also use this information to reposition menu items, adjust prices, and discontinue underperforming items to increase profitability and improve customer satisfaction.
Fruits360’s integration with a restaurant’s POS system allows for seamless data sharing and simplifies the process of generating reports and dashboards. The software’s user-friendly interface makes it easy for restaurant owners and managers to access and interpret the data, allowing them to make informed decisions about menu optimization.
How to Utilize the Menu Engineering Insights in Fruits360
Click the “Menu Engineering” tab under Deep Insights within the software. From there, you’ll be able to access the following three reports.
Product Cluster Report
The Product Cluster report displays a visual representation of the popularity and profitability of each menu item. It enables you to easily identify the “Stars” that are both popular and profitable, the “Horses” that are profitable but require marketing efforts to boost sales, the “Puzzles” that sell well but with a low margin, and the “Turtles” that are neither popular nor profitable.
The Menu Analysis report categorizes each menu item based on its matrix classification and provides specific metrics, such as Food Cost margins and Product Sales Mix to aid in decision-making. Filter by business date, category, or tags for further breakdown.
The Recommendation section offers suggestions on how to manage menu items within each matrix group. See what you can do with each category of item- stars, horses, puzzles, and turtles- to increase your revenue.
Gathering data is the primary step in increasing your restaurant’s profitability. Experimenting with various promotions, bundles, and pricing strategies will help you optimize it. Fruits360 provides valuable insights and recommendations to assist you in becoming a more successful manager and maximizing your restaurant’s profits.
Overall, Fruits360’s integration with restaurant POS and creation of menu matrix dashboards and reports is a powerful tool for restaurants looking to optimize their menu, increase profitability, and improve customer satisfaction.