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The importance of restaurant menu engineering and pricing strategies
Published September 29, 2022
Your menu may dazzle diners in your restaurant, tempting your guests to order "one of everything," but if the menu doesn't support your restaurant's bottom line, it's not doing its job of making money for your restaurant. With record inflation on food and other restaurant-adjacent items, and the continued fallout from pandemic supply chain issues, it’s never been more important to take a deep dive into your menu — and adjust accordingly.
There's both an art and science at play when it comes to food pricing, menu layout and item description, the complexity of food prep, and popularity — all factors that play a vital role in the health of your restaurant. That's where menu engineering comes into play.
What is restaurant menu engineering?
In a nutshell, menu engineering is analyzing every aspect of your menu (from its physical layout to what items you serve to the ingredients that you use to make them) and making adjustments that drive growth and profit. You'll need to do an analysis of each menu item to find the sweet spot.
When it comes to restaurant menu engineering, data and inventory management are key to getting the information you need to create a menu that works for everyone. You'll want to build on good inventory management, which eliminates food waste and the expense of ordering too much or too little. And tools like a real-time analytics app will help make sales forecasting simple, allowing you to pull up past sales and order data quickly.
When you have tools to analyze historical data and identify sales trends, you'll be in the driver's seat to predict what and how much you need to order any day, week or month (including holidays), so you can plan for everything from ingredients to takeout containers.
Why is restaurant menu engineering important?
Engineering your menu will help you get your restaurant pricing strategy to a place where your customers are happy with your food and your prices, and you're confident that you're making enough money on each food item — and across your menu as a whole. If you haven’t reassessed your pricing since inflation started taking a bite out of your bottom line, now is the time to reanalyze your menu items.
How do you engineer a successful restaurant menu?
1. Calculate how much each menu item costs to make.
Figuring out exactly how much food cost goes into each menu item is key to the rest of the restaurant menu engineering process. You won't be able to evaluate your menu and make ingredient and recipe changes that benefit your bottom line without knowing your food cost. Knowing this information will help you decide how to adjust your restaurant pricing strategy for each menu item as well. In the current climate of sky-high inflation, you may have to tinker with your menu more often. Considering the annual inflation rate in May 2022 was 8.6% (the highest level since 1981), it's a good bet that even tried and true menus that have worked for years are going to need a tweak to keep making money, either through a change-up of ingredients or with a price increase (or perhaps a bit of both).
2. Slot your menu into buckets based on profitability and popularity.
You'll want to categorize each dish into one of four buckets: (1) high profitability and high popularity, (2) low profitability and high popularity, (3) high profitability and low popularity, (4) low profitability and low popularity. Think through each item and decide whether or not it belongs on your menu, especially if it's not popular nor profitable. Or, come up with ways to tweak an item so that it's more profitable and popular. Consider prep time and labor in these equations as well.
3. Adjust your menu.
Use the information you've learned to make adjustments to what you serve. That might mean switching up ingredients to reduce an item's cost, eliminating some dishes altogether, or expanding on an already popular item that’s highly profitable. Once you've got your restaurant pricing strategy down, you'll want to adjust your physical menu to reflect the changes based on the principals below.
How COVID-19 has changed restaurant engineering from top to bottom
The COVID-19 pandemic has changed just about everything in restaurants, and that includes the menu. In the last few years, QR codes have become more popular as restaurants moved from hard, paper menus to contactless menus and ordering systems. And while many diners prefer a paper menu over pulling up one on their phone, there are a few advantages to online menus, mainly the restaurant's ability to change them on the fly — whether that's because a menu item is sold out, or because you want to experiment with a new dish, new ingredients, or simply a different menu layout.
The pandemic also saw staffing shortages and supply chain problems, which led restaurants to trim and simplify menus. And with inflation now challenging restaurant bottom lines even more, restaurants around the U.S. are embracing shorter menus as a way of doing more with less. This also allows restaurants to bulk order ingredients, better manage inventory, and focus on just a few dishes and do them well.
The importance of your menu layout
The way your menu looks to the eye and how diners "read" it also plays a part in your restaurant menu engineering strategy. Once you have clarity on the dishes you want to serve, the ingredients you'll use to make them and how you'll price everything, you'll want to lay it out on the page (and/or on a phone screen) in a way that's easy for diners to read. How you do this can also push diners to notice and prefer certain dishes you want them to order.
Design techniques for highlighting specific menu items include putting those items first or last on the menu (where the eye tends to linger), with the real sweet spot being the upper-right hand corner of the menu in most cases. You may also choose to highlight items by adding a small graphic illustration or putting a box or some kind of decorative flourish around it. Or perhaps you use a larger font for a few of the dishes you really want to push, or use a different background color behind your chef specials.
Graphic design techniques like these can and will draw attention to certain elements of your menu. Take note from some top restaurants to see how different businesses approach their menus and see where your eye is drawn and what you're inclined to order from the menu alone. And put that knowledge to work on your own menu.
As 2022 proves to be yet another challenging year for restaurants — exacerbated by high inflation, continued supply-chain issues, and a shrinking workforce — some factors are still in your control. And using restaurant menu engineering to streamline your menu and pricing is an excellent place to start.
