Menu engineering: Popularity and contribution to gross margin
Menu engineering is defined as an excellent tool for choosing dishes and setting prices in a restaurant. Experts use it to improve restaurant management and profits.
What is menu engineering: translation "Menu engineering" or how to increase the profits of your restaurant by 15% or more. First of all, menu engineering is the study of the profitability and popularity of menu items. It is the way in which these two factors influence the placement of dishes on a menu. The objective is therefore very simple: to increase profitability per customer.
The purpose of menuengineeringin catering is to maximise the profitability of a restaurant by subconsciously encouraging customers to buy a certain dish. These dishes will therefore be the ones that bring in the most money.
Exploration fields that contribute to these studies include:
- Psychology: customer perception and attention
- Analysis of the contribution to the gross margin of items and their unit cost (food cost)
- Marketing and pricing strategy
- Card Design and Graphic Design and Sales Support
- Learn how to design your restaurant's menu to get more profit.
- Get 15% continuous improvements from the time you redesign your menu.
- These strategies apply to all types of ranges: traditional menu, wine list, dessert, drinks and more.
Analysis of your card by the Engineering Menu
How to measure the contribution of dishes to the gross margin of the restaurant, using the method called "Menu Engineering". With this tool, products (dishes, drinks) are classified in a table or matrix with 4 boxes according to the gross margin on one axis and according to the reputation of the dish on the other axis. This technique allows you to see a highly regarded and profitable dish at a glance.
Thus, dishes are classified into ranges to compare them more effectively:
The contribution to the margin in a restaurant
Within a range, a dish is ranked according to its unit margin in value. The higher the profit, the higher its contribution to the restaurant's overall margin and vice versa. The unit price of the dish does not take priority.
The popularity of your dishes
Within a range, a dish is ranked according to its sales relative to other dishes in that range.
Popularity Chart / Margin
We divide into 4 cases corresponding to the two criteria reputation and gross margin of a dish.
Popular low ratio product or dish.
they often constitute the reputation of the business
Popular and profitable dish.
|Low Popularity||Dead weight
dishes or products
neither popular nor profitable.
The products and puzzle dishes are not highly regarded but their margin is good.
Highlighting of dishes according to their classification
Star products :
They must be "highly visible" on the map and recommended by the sales staff.
Products Work horse (or cash cow) :
Don't spend energy putting them on first, they sell themselves.
The Product Riddle (or dilemma):
Check their visibility on the map or change their name.
Products Dead weight :
Try to remove them or at least not promote them.
Limitations of using the engineering menu calculation
This calculation is a statistical method and therefore requires a minimum of sources. Moreover, it is difficult to use it for the dishes of a menu or for the menus? Finally, it is possible to compare each menu with each other, but it is more difficult to compare their composition dish by dish. The menu will have its own selling price but it is composed of several dishes, so the ratio is calculated at the level of the menu and not of the dish.
For products that are not on the menu all the time, such as daily specials, the presentation must be included in the calculation. That is to say the number of times the dish has been proposed in the month for example.
In this case, the number of sales of the dish is divided by the presentation percentage of the dish. Percentage of presentation of the product = number of presentations of the product / number of presentations of all products in the range)
Method of calculating the engineering menu
What data and how to calculate?
- The first step is to group the products on sale by range (category): starters, main courses, desserts, red wines, soft ...
- Then, in each range, we will group together the figures and compare the different products on sale: quantity sold, selling price excluding VAT, unit material cost or purchase cost of the product. (see example below)
The material cost is the total of the recipe's technical sheet or, more simply, the cost of the dish in food ingredients.
- The third step is to calculate the values needed for ranking in the BCG matrix (Popularity/Margin Matrix above).
We need two clues:
- popularity: the number of sales.
- contribution to the margin: what the dish brings in. This is the selling price of the article - the cost of the article.
- The fourth step is to construct the table and to do this we need the medians (middle rows). Here we take the average sales and the average cost/price ratio, the profit.
Average sales = total sales / number of dishes
Average margin = total gross margins / number of sales (food profit margin)
- Finally, the various items in this table are classified according to their number of sales and their contribution to the margin. They are then placed in one of the 4 boxes.
Example of the analysis of a restaurant menu
This table allows you to analyse each red wine sale and price by the menu engineering method, for example.
What do we do with these results?
Once this matrix is built, the analysis work begins. Turnover and especially earnings will increase by increasing the choice of the most profitable and popular items for your customers. Using neuromarketing, you can review the layout of the dishes on the menu, perhaps review some of the unit prices or rename some of the unattractive dishes.
STAR dish: duplicate these products or dishes in similar products. They should be promoted. These dishes are very profitable and your customers love them.
Dilemma dish: Check the visibility of these dishes on the menu. If necessary, change the name of the product to something more attractive. The price of the dish can also be reduced.
Plough horse dish: These products or dishes sell themselves. They bring in less money, so no unnecessary expenses. The customers of your restaurant like them, these dishes are essential to your reputation. If the price of the dish is well priced, an increase in the price of these dishes could lead to a drop in sales.
Dead weight dishes: If it is not compulsory for certain constraints to keep them, remove these dishes from your menu! If some customers still order them, they are on average in the minority.
In Koust, the data is represented graphically with the number of sales on the x-axis and the gross margin on the y-axis. In Koust we have added the price to complete the information, the unit price is represented by the size of the circle, the larger the circle the higher the price. Even if the selling price is important, here it is the margin and the popularity that take precedence.
Finally, Omnes' laws bring together other techniques that complement this article, such as the customerprice response index to your price proposal for a range of dishes. How the price of restaurant dishes affects sales.