People like to sit in restaurants for hours to soak into the atmospherics and savor the mood. Yet, they spend a mere 109 seconds on the one thing that would define their whole evening – the menu!
The proof of the pudding may be in the eating but the preference for the pudding is in the menu and when that item is hidden, missed or overlooked by the customer, the restaurants have none, other than themselves, to blame!
Restaurants need to carefully curate and update their menu to ensure it lists only the bestsellers and leaves the bombshells. They need to carefully update their menu and constantly refine its contents to help drive more sales and, consequently, profits. There is a simple way to do it. It is called Menu Engineering!
Menu engineering is the systematic process of studying restaurant sales and inventory data to understand the popularity and profitability of the items in a restaurant menu over a period. By engineering menu carefully, restaurants can understand how it performs over time and effect changes so every item stays popular and profitable.
Menu engineering requires a robust Restaurant POS system that generates food costing, inventory reports, and the wherewithal to analyze historical sales data. This would help create a Menu Engineering Matrix. Here are Three key data that your POS system needs to generate to create a Menu Engineering Matrix.
1. Food cost per serving
Food cost is the cost of preparing an item, per serving. The cost of preparing an item includes every ingredient that goes into its preparation.
In this example, chicken curry includes five-ingredients and the cost of preparing one serving is Rs. 71. (Cost per quantity). Note, the cost of serving includes only ingredient costs and does not include other expenses like equipment, electricity, staff salary, etc.
2. Contribution Margin and Food Cost Percentage
The selling price of one serving of chicken curry on the menu is set at Rs. 150. Profit margin or contribution margin of chicken curry is the difference between the selling price and the cost of preparing it, i.e., Rs. 150 – Rs. 71 = Rs. 79.
The percentage of food cost is the ratio of cost of serving per serving and the selling price in the menu, which in this case is 71/150, i.e., 42%.
3. Menu Item Popularity
The popularity of the items helps you identify the ones that are popular. It is based on sales data. Item popularity can be pulled from a POS system based on sales made over a period.
Here’s where Gofrugal’s Servquick comes to your help. It allows you to generate and schedule a detailed summary based on item sales and profit margins. After fetching the data from your POS, the next step is to arrive at the Menu Engineering matrix.
Menu engineering matrix based on menu item’s profitability and popularity
The menu engineering matrix is popularity (items sold in the date range) vs profitability (items profit margin per serving) graph categorized into four quadrants. The four quadrants are termed Plow horses, Stars, Dogs, and Puzzles.
Items that have low-profit margins but are crowd favorites generate a huge amount of sales. These items enjoy popularity and when you study its ingredients and reduce the cost of serving, it improves your profitability. Also, look at the consumption levels and if the customer is seen wasting the dish, reduce the portion served that will help bring down your food cost.
Items in this category are already performing well in terms of profits and popularity. Add these items to your specials and promote them aggressively. Ensure that your stewards suggest these dishes to guests. It increases your profit margin.
Items in this category suffer low profitability and low popularity. It would serve you better to remove them. Alternatively, you can rework them and refresh their chances.
True to its name, the items in this quadrant are enigmas mixed in a riddle! These items enjoy high profitability but are less popular. Since they can ring in the cash register loudly, such items should be placed prominently on your menu. Ask your staff to promote them for good measure and you will see them move to the Stars quadrant and start shining with higher profits!
While such detailed analysis helps, it’s imperative to understand and appreciate the opinions of your staff and stewards too. After all, they know what sells and which one doesn’t. So, you end up getting not just quantitative numbers but qualitative opinions too, which will help you rework your menu and refresh your profits.
Should restaurants reprint menu cards every time after making changes based on the menu engineering matrix?
Probably not. In the Post COVID-19 era guests will be increasingly hesitant to use traditional menu cards that have been handled by many people and contains some deadly germs. According to recent research done by Times of India, restaurant menu cards are 100 times dirtier than toilet seat covers. To improve health safety measures, restaurants can switch to digital menus which can be accessed by guests on their mobile phone by scanning QR codes displayed on the table.
Benefits of setting up QR code-based Digital Menu’s
By implementing digital menus, restaurants can engineer menus frequently and change their menu easily without having to worry about investing in printed menu cards. Digital menus also give restaurants the opportunity to update the menu daily and include everyday specials on the menu without much effort. Also, restaurants will be able to reduce the number of touchpoints and offer guests contactless dining options.
Remember, the restaurant menu is your multi-page, multi-color trump card. Play your cards well with scientific Menu Engineering and you are bound to hit jackpot. It may sound a trifle difficult to do, but with a robust Restaurant POS system, it’s just as easy as ABC!