Menu engineering is a popular search topic. It’s a buzzword and, when done right, can have a big impact on your restaurant’s sales. To do restaurant menu engineering correctly, you have to make sure you’re using proper restaurant management systems, whether it’s software or spreadsheets with formulas. If you’d like to learn a restaurant management system to improve menu engineering, click the tip below or keep scrolling to read more.
Let's first make sure we're all on the same page here. In order to perform menu engineering, you have to have current up to date recipe costing cards for every menu item on your menu. Plus you need a point of sale system that can give you a PMIX report, a product mix report, also known as velocity report or item-by-item sales mix report. This report tells you many items you sold of every item during a period of time. Next, you need to have a menu engineering tool like a spreadsheet or food costing software that allow you to easily change and analyze your data. The restaurant owners I work with use my Menu Profitability Monitor Google spreadsheet. That literally kind of gives you the best world of both software and spreadsheet, allowing you to do things automatically but be able to change and find where your numbers should be.
Whether it's a spreadsheet, my Menu Profitability Monitor or software, make sure it gives you:
Here are the steps you want to follow when you have all this information.
Number one: Sort your report by menu category and in each category in descending order – appetizers, soups, salads, sandwiches, entrees, desserts, for example. Make sure you sort what you sell the most up to whatever you sell the least of. This is important because you want to know what your top sellers are and what your bottom sellers are. It’s helpful to see it in order so you’re not searching all over the report.
Number two: Look for high food cost items. Go down the food cost percentages and find the things that jump out, like a 38 percent or 50 percent. Then start digging to figure out why the food cost is so high. It’s likely for a number reasons. First, it could be a costing issue, such as too much product on the plate. That means you have to make a change to that recipe. Second thing is pricing. Maybe you’re undercharging for the item and need to raise the price. Maybe it doesn't need to be on the menu anymore. Is there a mistake with the recipe costing cards, meaning you had full intention of doing it properly, but it’s a mistake such as double the protein by accident. It could be that the yield test was done incorrectly. There are a variety of reasons for high food cost on an item, when you see that, you need to go check those things.
Number three: Review your top one, two or three selling items in each category and raise the price. What do I mean? Well, if they're that damn popular, they're that damn popular at any price. They outsell everything by a ton, people love them, and if you do a great job, they'll continue to buy them. It also means you don't have to blanket raise prices throughout the whole menu. Raising prices on those three items because you sell so many, you can leave your value-driven products down below without raising the price most of the time.
Number four: Look at all the items you sell and look at the average per day. If you sell one or less on a day, I want you to think about dropping that item. Not enough people are ordering it. I can hear the argument, “Well, David, I sell one a day. I need to keep that on the menu.” But you don't sell one a day. You sell one on a Tuesday, one on a Thursday, the rest on a Sunday. Three weeks go by, ticket comes up, cook rips it off, pops it up, goes, “Oh, I haven't made that in three weeks.” This is why your product is inconsistent, why your profitability is not there, why customers don't come back. They get a different experience every single time because it’s not an item made often enough. You need to be making those things on a daily basis so that they're consistent.
Number five: Add or remove items, but not customers. Let's say you’re going to get rid of that loser item. How do you meet the needs of the customers that were ordering that item? Put them somewhere else in the menu. For example, if you get rid of a salmon salad, they’re likely OK with a tuna salad that you plan to keep on the menu. That would be fair to think, but what about when you have something like an appetizer sampler? You might have to divide those up among other items that are in the sampler. Use a little bit of your gut and a little bit of your knowledge.
Number six: Change the menu mix with menu merchandizing strategies. There are certain strategies that take advantage of how your customers review a menu. For example, when people review a menu, their eyes tend to follow a specific pattern and are drawn to certain things, such as a box around an item or a picture of an item. There is a list of menu engineering strategies you can employ to change your mix. And by changing your mix, you get people to buy certain items that may lower your food cost or increase your cash contribution or both.
Number seven: Watch your food cost as it drops when you make these changes. As you make the changes, whether it's getting rid of a loser, changing it, moving it over, raising a price on popular items, reducing a cost, fixing an item, watch how your sales increase overall, your food cost goes down and your cash contribution goes up. Yes, you want lower food cost in many cases, but sometimes you don't. To really figure that out, you need a budget. If you don't know about budgets, make sure you check out my YouTube channel. I've got plenty of videos talking about why budgets are so important. Or search blog articles for "budget."
Follow these steps to be on your way to reducing your food cost by three to seven points the first time you employ the system. From there, you'll be able to make subtle changes to keep your restaurant menu profitable every quarter or even on a monthly or weekly basis. If you want menu engineering to really be the power to drive your profit engine, follow that system and you'll be on your way.
If you would like to learn how to own a restaurant that doesn't depend on you to be successful, watch this free video course that teaches you three key principles to running a successful restaurant.
Be sure to visit my YouTube channel for more helpful restaurant management video tips.
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