As the owner planning to run a profitable hospitality business, cost-cutting is key. You have tried multiple things – reimagined staffing tightened the inventory, streamlined operation costs and more.
However, when was the last time you looked at your menu?
When customers enter a restaurant or look it up online, they first seek the menu. Your menu is your arsenal’s ultimate sales tool—it instantly answers the “Why should I try this place” question.
The food you serve, the specials available, and your weekend bestsellers each have a story and contribute massively to success.
So, businesses must carefully consider the menu and design it for profit. This article will explore the intricacies of which food items should stay, what needs to go, and how to prioritise profit.
Menu Engineering and Why It Matters?
So, first things first—what is menu engineering? In hospitality terms, it simply means evaluating the menu, the pricing, and what needs featuring. The process relies on tangible data and food costs and helps categorise the menu for profit and popularity.
Now, profit is something you already understand; however, popularity is a different ballgame altogether. Popularity here means having a dish that is unique to your space, attracts new customers, and is profitable in the margin.
Menu Engineering lets you understand the items served, their pricing, investment, ROI and contribution to the business. It helps categorise what to keep, what to feature and what should go.
Remember, when the objective is business success, every menu dish and drink must be profitable, popular or both.
Analysing The Restaurant Menu – The Right Way
Now, if you are planning to analyse and restructure the menu, there are a few things to understand –
- The Right Timing
- The Right Prices
- Popularity
The Right Timing
Most venues generally have a selective period during which they switch up their menu.
They get enough time to rethink their offerings and have the data on what has worked best as well as what new items can be offered. However, restaurants that rarely switch menus get the least opportunity to analyse the offerings.
The market demands, the produce prices and the seasonal vibes must be reflected on the menu. This means that if the value of the ingredients has increased so must the cost of the dish. Otherwise, you are signing up for a low-margin dish with barely any profits.
The Right Prices
Every renowned restaurant follows set metrics in hospitality when pricing its dishes: the food cost per serving and the contribution.
Say you have an Italian restaurant that serves delicious spaghetti and meatballs. While this simple Italian delicacy includes meatballs and spaghetti, other ingredients are involved: Parmigiano-Reggiano, basil, parsley, Marinara sauce, eggs and more.
Though the cost of food per serving is around $22, the cost of everything else that goes into the meal may be more than $22. The fuel cost and staff charges also add up.
So, while you sell the dish several times daily, you lose $$$ per plate.
Popularity
Your data must be a major decision-maker when analysing the menu. So, when updating the menu items, you will know what to feature and what needs to go.
Every POS system has reports that indicate the items that have been sold the most and the dishes that have not been on the tables for months.
Even if an item is not selling, the inventory is always stocked up, which goes to waste and loss. Similarly, when an item is a bestseller, the wise choice is overstocking it to meet customer needs. A customer behaviour study is essential to track the unique demands while maintaining the ROI.
Measure the Impact of the New Menu
There is not a one-size-fits-all restaurant menu template that works. This data-oriented process balances out which dishes are low margin but popular or high margin with more sales.
The tweaks you make in the menu always require A/B testing, and you can reach a final spot until another change.
- Finding the Best Dishes
These are high-profit and popular items. They are inexpensive to prepare, and customers tend to repeat orders and return for the same.
Your best dishes are best to be left alone and have a decent performance trajectory.
- There are the Puzzle Dishes
They are highly profitable but have low popularity. Identify why these are not a popular choice. Are they not easily visible on the menu? Is the description not worth the hype? Does the price need some alteration?
Several factors create a popularity bottleneck. However, there are means to experiment and review the sales factors.
- The Below-Par Dishes Need to Go
There are items on the menu that are expensive to make but not popular. The ingredients take up a lot of inventory, and the dishes use culinary efforts with zero ROI.
They also distract the customers from the star dishes. The idea is to re-emphasise them or completely remove them from the menu.
Mastering a Profitable Menu
While menu engineering is daunting, the results do not appear overnight. Select a timeframe powered by some expert measures that have the potential to create an impact.
Remember, this is an ongoing process, and each change may bring unique and profitable outcomes. Keep analysing and refining the menu to achieve the ultimate sales success.
For professional hospitality food consulting and operational guidance, you can always connect with Sixth Sense Consulting. We have over 30 years of industry experience and can help you reach greater heights.
