An effective menu is one of the best tools that any restaurant has when it comes to engaging customers and enhancing profitability.  For example, the right menu layout and design can increase profit by up to 5%. Creating a menu that will optimise your business’ potential for profit isn’t a question of guesswork – it requires the insight and knowledge that only menu engineering can add to the process.

What is Menu Engineering?

Essentially, it’s a process of evaluating menu pricing – both today and in the future – and using insights drawn from data about your business to create the right design and content. It can be effective in terms of helping to steer customers towards the decisions that you want them to make about your menu and helping to ensure that the menu items that generate the most profit for your business get picked. It’s a tool that can benefit every restaurant, no matter what your cuisine or target audience.

Using Menu Engineering Effectively

How often do you want to change your menu? Menus change frequently for many businesses and it’s essential to use the tools of menu engineering each time you update a menu if you want them to be effective. So, the first step is to be honest about how often you’ll have time to go through the process e.g. once or twice a year.

What’s the food cost for every item on the menu? It’s key to start with this data. You can work it out by adding the cost of each ingredient to the purchasing cost and dividing this by the number of portions it will make.

How profitable is each dish? You can calculate this by taking the food cost from the sales price. Another key metric that can be useful is food cost percentage (which will show you if dishes are correctly priced) – this is worked out by dividing food cost by menu price e.g. a £5 dish with a food cost of £1 will have a food cost percentage of 20%.

How popular is each dish? This is often easiest represented on a menu engineering matrix with one axis showing the number of times the dish was sold within a timeframe and the other its contribution margin (the difference between the selling price and the item cost).

What do your customers think? Often, the most effective way to evaluate menu performance is to ask those who are using it – what do they order, do they like the menu, what else drives them to the restaurant and what changes would they suggest?

Creating a New Menu

Using the data you now have you can engineer your menu to make it more effective, for example:

Using visual clues and highlighting colours to direct customers towards the dishes you know are the most profitable for you based on food cost, profit per dish etc.

Improve your descriptions – descriptive menu items are chosen 27% more than those that don’t include much information. Apply the most detail to the dishes you want to sell more of.

Consider two portion sizes. Depending on the costs of each dish it can advantageous to offer a smaller size dish, as customers often assume this is better value but may actually be more profitable for you.

Use the ‘golden triangle.’ When reading a menu we generally look at the centre first then our eyes move to the right and then the left. Bear this in mind in terms of where you place the items you most want customers to focus on

Once you’ve taken the time to engineer your menu it’s essential to track the progress to see whether your assessments have been correct. This will help you to evolve the process of menu engineering for greater profitability over time.

Find more about our menu management system.

The hospitality sector is not immune from this pressure to act and reduce its entire waste footprint, from energy and packaging, to food and deliveries.

Sustainability is not simply about swapping plastic straws for paper ones though; it needs to run through the DNA of the entire business.  And the changes don’t have to be big to have an impact, it’s the small incremental changes that, when added together, have a positive effect.

Taking food waste as an example, the total amount of avoidable food wasted in the UK every year from the hospitality sector is one million tonnes (source: WRAP).  In total, businesses throw away food worth an estimated £5bn –a significant sum of money to be literally chucking in the dustbin.

And let’s not forget that leading the sustainability march is the influential Generation Z, aged up to 24 years old.  That’s the same Gen Z that makes up a large proportion of the hospitality industry’s front line workforce.  By giving them the right tools, you are empowering them to deliver the company’s sustainability targets and win their hearts and minds at the same time.  Highly engaged employees are 87% less likely to leave their companies than their less engaged counterparts (Source: Corporate Leadership Council).

Stock, recipe and menu management is the simplest – and arguably the best – way to reduce food waste, food miles and food packaging.  And this is where technology comes into its own.

Through a complete stock and menu management system, operators can produce creative, comprehensive and accurately costed menus as well as store, manipulate and utilise critical information including ingredients, allergens, prices, recipes and supplier details.

Using a Menu Management tool to control the portion size, ingredients and cost of a dish, doesn’t just make sense from a commercial perspective, but makes an invaluable contribution to sustainability objectives too.   Menu composition analysis, based on actual historical sales data to forecast the volumes, revenue and profitability of a planned menu becomes easy.  But best of all, when this information is hooked up to your purchasing platform you can move from ordering ‘Just in Case’ to ‘Just in Time’.  Optimising stock holding and automatically avoiding costly and, more importantly, wasteful over ordering becomes a piece of cake.

Put simply, the more accurately you can plan and forecast your menu performance, the more accurately you can order. Not ending up with superfluous perishable goods is a sure fire way of avoiding waste.

A truly integrated system also saves hours, with a single point of data entry which will then flow through recipes, menus, stocks and EPoS, to purchasing and invoice reconciliation.  Change data once and it updates everywhere, giving everyone the real time, accurate information they need to optimise their operation and minimise their waste – instantly.

This in turn gives the power and confidence to adapt and react rapidly to market conditions and changing customer demands.  Switching an ingredient or dish on a menu, for instance to make use of seasonal or more locally sourced ingredients, becomes an operational reality, not just an ambition.  In a few clicks of a mouse , it moves it from the ‘nice to have but too difficult’ pile to ‘no brainer’.  And once again, the commercial needs of the business and the sustainability expectations of both customers and staff alike are fulfilled.

I saw evidence of this in action on a menu recently, where a high street casual dining brand was offering smaller plates, for smaller appetites.  There wasn’t much of a cost incentive, so the margins were going to be very good, wastage would be reduced, and the customer would have their needs better met.

For hospitality it’s never been easier to contribute meaningfully to sustainability targets by using readily available tech with common sense and a commitment to make a difference – on every level.

This kind of smart approach will not only contribute to financial targets, but will enhance ethical credentials too – essential for building brand loyalty and earning confidence, respect and credibility with employees, customers and investors alike.

By Zonal’s director of online commerce, Helen McMillan