Menu Engineering Analysis with a side of Profits

Many Restaurateurs possess an undying passion for their business and rely upon skills such as creativity, communications and a great service approach.  Sadly there remains the “red-headed” step-child known as operations often overlooked since it’s not sexy or flashy such as a new culinary creation or hyped-up marketing campaign.

            Chief among these operational “devil-in-the-details” is optimizing sales through analytics.  The menu is the single most important sales and marketing communications tool for any restaurant and needs to be much more than just a “list” of offerings.  The format of your menu often can drive sales of low contribution margin items and drag sales of high contribution margin items depending entirely upon the location of the menu items and equally important their category.

            A recent analysis of a clients’ tri-fold menu determined that although they are a casual dining operation with a full menu, guests were primarily ordering sandwiches and soups (at over 70% of sales) while higher profits items such as appetizers, desserts and some beverages were a combined less than 20% of sales.  This imbalance in the sales mix can contribute to a diminishing contribution margin over time.  Their sales data suggests that guests’ perception of the operation was of a casual, sandwich and soup shop that is primarily an option for lunch.

            We discovered it was the location within the menu that was driving the sales imbalance of the top two menu sales categories.  Furthermore the sandwich category had a combined food cost of 37% while the entrée category had a combined food cost of 26% suggesting an increase of entrée sales could drop more to their bottom line over time.  Combined with the operators desire to have a better balance to their sales mix across the menu we suggested to re-direct the sales mix through menu engineering.

            Simply put menu engineering is the practice of creating a menu format, layout and design appropriate to the operation that will deliver a sales mix of menu items that will maximize the sale of high contribution margin items.   From our list of suggestions it appears the best option for this operator may be to use two menu formats, one for lunch and another for dinner.

            The lunch menu option is a single page format with items listed on the front and back.  Categories and items within them will be arranged to drive sales of high contribution margin items and slow the drag of high food cost items on sales.  The dinner menu option is a single-fold ‘book style’ menu format that offers information about the concept and boilerplate information on the front cover while the interior pages will be dedicated to the major menu categories.  The back cover will host beverages, sides and details on catering.  Focusing the major menu categories on the two interior pages, in the appropriate manner, will assist in driving sales of lower food cost items with a higher contribution margin.