The objective with menu engineering is to maximize a concept’s profitability by leading the customer to certain purchases, and avoiding others, in addition to ‘engineering’ recipes to maximize profits at product and category level.
Menu Engineering is comprised of five key areas:
• Psychology (perception, attention, emotion/effect)
• Recipe construction and the best balance between quality and cost
• Managerial Accounting (contribution margin and unit cost analysis)
• Marketing & Strategy (pricing, promotion)
• Graphic Design (layout, typography)
Psychology of menu engineering
Visual perception is inextricably linked to how customers read a menu. By strategically arranging menu items and categories within the pages of the menu, operators can promote high profit dishes while allowing less profitable dishes to be under stated. This strategy enhances the sales mix profitability, and thus represents a key element in the business’s strategy.
The primary goal of menu engineering is to encourage purchase of targeted items, generally the most profitable items, and to discourage purchase of the least profitable items. With this in mind, restaurants should first calculate the true cost of each menu item, (including condiments and non-menu foods such as salt, pepper, oil etc.) therefore extending to all items listed on the menu, and reflecting all costs incurred to produce and serve [each item]. Optimally item costs should include: food cost (including wasted product and product loss), incremental labor (e.g., cost in on site production, dessert production, or additional preparation), condiments and packaging. Only incremental costs and efforts should be included in the item cost, as there will be a static labor requirement in all cases.
After an item’s cost and price have been determined (see pricing in the Marketing section), evaluation of an item’s profitability is based on the item’s Contribution Margin. The contribution margin is calculated as the menu price minus the cost. Menu engineering then focuses on maximizing the contribution margin of each guest’s order. Recipe costing should be updated (at least the ingredient cost portion) whenever the menu is reprinted or whenever items are re-engineered. Some simplified calculations of contribution margin include only food costs.
Production tools: master ingredient lists, recipe specifications, order guides, prep and production schedules, product manuals.
Integrated systems to develop and roll-out menus and recipes for all fresh food operations, restaurants, grocers, markets.