By Naim Maadad, Chief Executive & Founder – Gates Hospitality
The term Menu Engineering am sure would have raised a lot of thoughts in the mind as to what does the science of engineering got to do with food & beverage menus. Absolutely can understand the reason behind the query!
The history of menu engineering concept dates back to 1970 when focused efforts were conducted by the Boston Consulting Group to assist businesses to know their products in a manner in which detailed analysis and management decision could be better structured.
The term Menu Engineering was coined and credited to Professor Emeritus Michael L. Kasavana, Ph.D., The School of Hospitality Business at Michigan State University, United States of America. M
Menu Engineering is a scientific method to study the restaurant menu pricing, using available restaurant data and assist one to influence the menu’s design and content decisions. It involves distributing all the menu items into one of four menu engineering categories, based on the profitability and popularity of each item.
The term Menu Engineering is normally used specifically in the context of restaurants, with the objective to maximize a venue’s profitability by subconsciously encouraging customers to buy what you want them to buy, and discouraging purchase of items you don’t want them to buy.
Fields of study which contribute most to the science of menu engineering include:
• Psychology (perception, attention, emotion/effect)
• Managerial Accounting (contribution margin and unit cost analysis)
• Marketing and Strategy (pricing, promotion)
• Graphic Design (layout, typography)
The outbreak of the COVID-19 pandemic and its far-reaching deep impact on the restaurants it has become paramount to have a greater look on restaurant management costs than ever before. Smarter planning is needed to reduce costs in proportion when the revenue source dips.
Extremely focused efforts are needed to bring the science of menu engineering to keep a check on costs and make it bring value for money for the guests at the venue.
Let us explore a few ways on how this can be achieved.
A smartly formulated menu engineering exercise can increase the profitability of the restaurant by around 10% to 15%.
Restaurant inventory does add to the hidden costs of the restaurant – and hence the need of the hour is to have an optimum level planned.
Ensure that there are regular inventory checks – ideally weekly – to avoid any stocks beyond what is required. This would result in your venue using supplies which are fresh and locally available contributing to the taste of the dishes.
Another aspect is to have a budget which is well planned and adhered to without compromise. This would ensure that the costs are well optimized and minimized – giving a clear understanding of the restaurant spends. The best way to gauge this is to have a structured budget in place.
Food wastage is a nightmare as this directly contributes negatively to the bottom-line profits. Every ingredient must be utilized to the maximum potential. A clear preparation sheet for every chef in the kitchen would define the rules of effective utilization to ensure there is minimal wastage.
A detailed analysis is needed of the restaurant’s food costs, menu item prices, and the margins of contribution of each dish. A close study is required on the items on the menu which will then provide the base of profitability and how popular each item is. This way the content in the menu which are least profitable and not being ordered by guests can be replaced with new items.
Once the menu items have been categorized, this data can then be used vide menu engineering techniques to explore deeply the selection process of the guest so that the most profitable are chosen. Such an exercise can be repeated at fixed intervals and this repeat process is called menu re-engineering.
Sales of menu items are analysed to put menu items in four different categories:
• Popular and profitable
• Popular but not profitable
• Not popular but profitable
• Neither popular nor profitable
Another method to balance the menu is by using daily specials and Chef featured items. As an example, assume you have been tracking your food costs vide a cost control sheet. As you are fast approaching the middle of the month and you realize that you are on a higher than normal food cost for the month so far. The Chef will then choose to run daily specials that have lower food costs or having the team members feature and promote the better food cost items in order to reach month end targets.
There are also some psychological reasons that things will sell on a menu. Often the top most expensive or the cheapest item will not sell as well as other items on the menu because guests do not want to appear either extravagant or tight-budgeted. Captions such as “award-winning,” “most popular dish” does enhance the saleability of the items a great deal.