Proper Restaurant Menu Engineering

Last week I wrote about the 5 Profit-Driving Factors of your business. The upcoming

weeks will be a deeper dive into each factor. Restaurants primarily have two major

income streams……the sale of food and the sale of beverage. Profit margins on these

sales must be protected and optimized since those dollars must pay for every other

expense on your P&L, Labor, Direct Operating Expenses, Occupancy Cost, Insurance,

etc. It is important to take the opportunity to assess the productivity and profitability of

your business.

Proper Restaurant Menu Engineering Will Optimize Your Menu for Higher Margins: The core of

menu engineering is about analyzing the performance of each dish on your menu. It

involves a comprehensive examination of each dish’s popularity and profitability.

 The first step in the process is to calculate the food cost for each item on your

menu. This will involve having detailed recipes with the exact cost of each dish. I

recommend using the menu mapping features of Margin Edge or Toast Xtra Chef

to ensure updated inventory pricing and keeping all recipes (batch and plated)

current.

 It is crucial to remember that when setting an ideal targeted food cost for your

business it varies widely in our industry depending on your concept and location.

 Remember the $Dollar$ contribution of a menu item is more important than the

cost %Percentage%. Would you rather sell a 40% cost item that yields $18.00 in

profit or a 25% cost item that yields $7.00 in profit?

 Use your product mix report to analyze the popularity/sales of each menu item. I

recommend categorizing each menu item into 4 quadrants. Drivers (high

profitability, high sales) Plow Horses (low profitability, high sales), Question

Marks (high profitability, low sales) Dogs (low profitability, low sales)

 Drivers are the superstars of the menu. They are the items you want to

prominently feature. They are not only popular with your customers but contribute

significantly to your bottom line. Train your team to recommend these items.

 Plow horses are popular but not contributing as much to your profitability. Sales

reflect that your customers like them. Look for ways to increase their profitability

by tweaking a recipe to reduce ingredient cost, slightly increasing the price, or

pair them with high margin side dishes, desserts or beverages.

 Question Marks are a challenge. These are profitable but aren’t selling as well

as they could be. Possibly rename the dish, improve the menu description to

make it sound more appealing, move into a more prominent position on the

menu, hold contests with your service team to promote the sales and or run the

item as a special.

 Dogs are items that are neither popular or profitable. Unless it is an item that

offers a single purpose such as a health benefit, for example vegan and there is

no compelling reason to keep it, replace it with a new dish that could become a

plow horse or even a driver.

To learn more about how our Operational experts and Chefs can optimize your menu, contact us today!