The pricing and placement of items on the menu does not only impact revenue but also operational efficiency.
A survey by Menu Cover Depot, a menu cover manufacturer and supplier, found that strategically monitoring performance and organizing the items on the menu can raise a restaurant’s profit by up to 15%.
Menu engineering is all about testing, tweaking, making adjustments, and repositioning dishes till you find a sweet spot that brings in the most revenue.
Diving headlong into this with no defined strategy can be daunting. This is why we would be looking at the best practices guaranteed to bring you results.
Key components of successful menu engineering
Let’s look at the menu essentials that help in boosting sales.
Menu design
Gallup research found that customers spend an average of 109 seconds scanning a menu. Visual strategies that can be used to make an impression within this timeframe include the golden triangle, menu QR code, visual cues, and recommendations.
Most people will first scan through the items from the top-right corner of the menu, then the middle, and the top-left. The Golden Triangle strategy involves harnessing this pattern and placing high-margin items in these areas.
Additionally, visual cues can be used to draw attention to the more profitable dishes on the list. This can be done with images, boxes, or bold fonts. The recommendations strategy involves limiting the menu options to ease decision-making.
Item categorization
The grouping of items greatly impacts value perception, allowing you to subtly influence the choice of diners to more profitable combinations.
This can be placing a high-priced item near a similar item with a slightly lower cost. This will prompt customers to select the second most expensive choice, hence improving profitability.
Pricing psychology
Strategic pricing is all about fixing prices in a way that aligns with customers’ perceptions of value, encouraging them to spend more without feeling manipulated.
The charm pricing approach involves ending prices with “.99″ or “.95″ as it makes customers feel like the price they are getting more for less. Another tactic, price anchoring, is the display of high-priced items before other dishes, making them appear more affordable.
5 best practices to maximize profit margins
Here are five best practices to boost revenue based on data and psychological principles:
Menu item performance analysis
The “Menu Engineering Matrix” categorizes menu items based on their popularity into four groups: Stars, Plowhorses, Puzzles, and Dogs.
Stars are high-demand, high-profit items, while Plowhorses are popular but low-margin.
Puzzles have high margins but low demand, and Dogs are low-profit and low-demand.
These categorizations enable you to make data-driven tweaks based on the performance metrics from POS systems or sales analytics software.
Low-demand and low-margin items can be removed to reduce operational costs, while high-margin items can be repositioned with targeted promotions.
Menu layout optimization
This is basically about guiding customer’s attention to high-margin offerings. Following the “Golden Triangle” reading pattern, these items can be placed in these strategic locations to ensure higher visibility and selection.
This can be complemented by an effective visual menu design that uses section headers, white spaces, and dividing lines to improve readability.
Use of psychological pricing strategies
Menu pricing strategies such as menu decoy, charm pricing, and price anchoring, as discussed earlier, greatly influence spending behavior. Another trick that can be used is price presentation.
A study by Cornell University found that the way prices appeared when customers were looking to purchase fast food impacted the total amount they spent.
Prices written out with currency signs created a subconscious awareness of spending, leading customers to opt for less-priced items. Employing the three pricing strategies and leaving out the currency when drafting the menu can help influence customers to spend more.
Use of enticing item descriptions
The best descriptions convey the quality, origin, and uniqueness of an item in the most concise language. Including words that give off an emotional appeal and evoke the senses can improve perceived value and feeling of satisfaction after purchase.
For sensory appeal, consider including words like “slow-cooked,” “succulent,” “crispy,” “juicy,” “aromatic,” and more. In conveying the origin of the item, using words like “locally sourced” or “farm-to-table” can increase the item’s perceived value to health-conscious diners.
Menu testing and adaptation
One of the core principles of menu engineering is alternating between different menus until you find the one that works best for your restaurant or food chain. Ideally, menus should be adjusted routinely based on customer feedback, seasonal trends, and sales data.
This way, the menu will only contain high-performing and profitable items, ensuring operational efficiency and sustainability.
Key performance indicators (KPIs): How to measure success and profitability
Tracking and analyzing menu performance metrics will help you gauge your approach’s success and profitability properly. Key metrics to consider when assessing items include contribution margin and sales mix.
The contribution margin measures the net profit made from each item, helping to identify items with high-profit margins that may require better promotion.
The sales mix approach entails assessing item popularity to strategically re-classify or re-group for increased profit.
Additionally, analyzing customer behavior and data collected through menu QR codes can help you understand the sections of items that attract the most attention.
Employing menu QR codes for enhanced engagement and ROI
A study conducted by Deloitte in 2022 found that customers tend to spend about 20% more when making orders from technology services like QR codes.
Using menu QR codes will allow you to engage customers in a more interactive way while providing quick access to menus and promotions. This lets the diners browse through the menu at their own pace, ensuring they are fully satisfied with their choices.
The real-time data provided can also help inform adjustments to offerings and pricing, leading to higher customer retention and a better return on investment (ROI).
Making menu engineering work for your restaurant
Employing these strategies and working around the key components of your menu will maximize your profit margins, retain more customers, and drive long-term success.
In addition, using the real-time insights from menu QR codes will enable you to adapt quicker to trends and make smarter decisions.
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Contact Person: Benjamin Claeys
Website: https://www.menutiger.com/
Email: info@menutiger.com
Country: United States
