The Science of Menu Engineering & Profitability: The Art of the Menu

[Shamir Debnath]

The cost of recipes and menu creation have been covered in depth in a number of our previous articles on restaurant cost control. By examining the fundamentals of menu engineering and how they can enhance restaurant profitability and food cost control, this article will carry on that theme. To find out about Noma Restaurant Menu, click here

The goal of menu engineering, which was popularized by Michigan State University's School of Hospitality, is to rank your menu items against one another in terms of their profitability and popularity. The results are then graphed using the BCG Matrix. Four quadrants make up this matrix, and while their names have changed slightly as they were applied to the hospitality sector, their meaning has remained largely constant.

Definitions of the quadrants

The menu items that are the most well-liked and lucrative are referred to as "stars." Due to their high contribution margin, these are frequently house specialties and the menu items you want to sell the most frequently.

"Plowhorses" are menu items that are more popular than average but less profitable. These products consistently generate revenue for the company as a whole, but because of their low contribution margin, they are not particularly standout.

Plowhorses are the opposite of "challenges." Despite being very profitable, these menu items are not very well-liked.

In comparison to your other menu items, "Dogs" are those items that are neither profitable nor popular. It should be seriously considered to take these items off the menu.

The Principles Behind Menu Engineering

Menu engineering considers both the average popularity and contribution margin of your menu items to determine the proper quadrant for each one. Each menu item is plotted on a graph based on the findings, with the average profitability and popularity acting as the x and y axes, respectively. As shown in the illustration below, each quadrant corresponds to a specific menu engineering label.
It is possible to assign menu engineering labels to menu items without actually creating a graphical representation, but we do not advise it. A more accurate and thorough understanding of how each menu item compares to others will be provided by performing a graphical menu analysis in addition to simply labeling each menu item with the appropriate quadrant tag. When menu items are actually plotted on the graph, a subtle difference between menu items that are on the edge of one quadrant and those that are firmly positioned in another becomes apparent. While it might seem difficult at first, once you understand how to do it, it can actually be quite straightforward. Furthermore, you can run many of these functions and graphs automatically by downloading our free menu engineering spreadsheet.

Popularity

Simply take the reciprocal of the total number of menu items, expressed as a percentage, to find the average popularity. For instance, the average popularity of 20 menu items would be 5% (1/20). Any menu item that sold more than 5% of the total product mix was deemed to be popular, and depending on the contribution margin, the item was either a star or a plowhorse. Our free menu engineering spreadsheet automatically calculates both popularity and profitability to keep things simple.