It started in the 70`s when Bruce D. Henderson created the growth-share matrix for the Boston Consulting Group. Its aim was to help businesses to analyze a particular product performance within the entire product line. It is simple yet effective approach if correctly applied.
Restaurant owners and managers can benefit too. The growth-share matrix, also known as the Boston Matrix has its restaurants’ custom-made version, called menu engineering. It is a data-driven approach to boosting a restaurant` profit. In this blog post, we are going to share with you how to do it easy and effective as possible.
Why is menu engineering so important for restaurants?
Every customer order is a piece of business and piece of data. Anyone aiming to turn his business into (even) more successful enterprise should dig within that data. Orders, dishes, recipes, clients, hours, pricing, and staff – all of the above can be turned into data, then measured and analyzed. The greatest thing about data is no one can argue with it. One more thing – the data has the natural property of changing. Digging within data helps to evaluate changes and to examine if there are trends behind such alteration.
Menu engineering relies on historical sales data to outline the best products, which in the end of the process have been placed on the most eye-catching spot on the menu list. Experts say that if correctly applied, menu engineering is capable of boosting a restaurant profit with 15%. Skilled professionals can extract 10% more on top of this.
Each dish should contribute to the profit. How much?
Menu costing is not the same as menu engineering, even though they are closely related. Knowing the exact production cost of a menu item is a vital part of the menu engineering process but is not the only one. This is where the contribution margin comes out. For instance, if you offer a steak for, let us say, $25 and the purchasing cost of all ingredients in the dish plus delivery bill at $7.50, this means the contribution margin is $17.50.
It is not just about the contribution margin but also about the popularity of the steak among the restaurant visitors. Menu item popularity is the percentage you`ll get by performing following formula:
Individual steaks sold / Total menu items sold x 100 = menu item popularity
This is how restaurants owners and managers do not just review the profit generated by a particular menu entry but also its overall profit contribution compared to the rest of the menu items.
The logic behind menu engineering
By evaluating menu items on their profitability and popularity, you are able to rank them in 4 different groups:
- Stars—high profitability and high popularity
- Plow-horses—low profitability and high popularity
- Puzzles—high profitability and low popularity
- Dogs—low profitability and low popularity
Obviously, we all want more stars and fewer dogs. By aligning your menu offering by this chart, you`ll be able to extract the benefits offered by menu engineering. The question here is how to do it fast and easy? Give a try to our menu engineering tool which is capable of not just automatically displaying the products in their category but also to show its progress back in time. A4Menu Engineering comes with useful graphics in order to visualize data sets in an intelligible way.
Having such insights for menu items popularity and profit contribution, the restaurant manager should undertake appropriate actions by applying new menu design.
Strong menu design selling what you want to be sold
Top right corner of the menu is the best pick
Researchers found out that the majority of us first scan the top right corner of the menu list. So this is the place where restaurant manager should place its most profitable dishes.
Limit the menu items
There are studies proving that if a client is forced to select among too many options he could be confused. Such behavior is based on the natural feeling that if you have too many options, whatever you pick, you`ll miss something probably better.
Highlight novelties and specials
You can multiply the top right corner effect by highlighting some of the menu items. Specials, novelties, seasonal, etc. should stand out one or another way. Graphic designers are capable of creating good examples. Just keep in mind that the online menu and its physical sibling are completely different menus since the scanning pattern on the screen and on paper are completely different.
Get well-arranged menu
Well-arranged menu lists comply few small but important things. The first one is the currency mark drop. Psychologists say that if you miss the currency sign positioned next to the pricing, clients wouldn’t feel they are spending that much. The second one is the amount. Do not play the .99 game, it looks kind of cheap and is reminding for a teleshopping experience. Instead, opt for the .80 or similar and the clients would not get the feeling they are tricked. The third one is the ordering, which is a key guiding factor. Years of testing has shown that diners are more likely to order the first item of a group of offers like pasta, beef, chicken, etc. Because of this, the successful menu engineering process should end with the PUZZLE offerings positioned on the top of their own group. This way, the menu-engineered new list will push clients to opt for a more profitable but not enough popular menu entries.
Last but not least, take a look at this lovely infographics made by the consultants of Aaron Allen & Associates and explaining how to arrange your menu listing with efficiency in mind.