When a customer comes across your restaurant, either in person or online, your menu is the first thing they look for. This simple document is one of your most important assets — the dishes and design affect every aspect of your business, from the average order volume to the number of customers who come through your doors. In other words, it’s critical to get the menu right. That’s where menu engineering comes in; this data-driven method helps you create a menu that increases revenue, uses resources efficiently, and boosts your bottom line.

What is menu engineering?

Menu engineering is the process of designing and optimizing your restaurant menu offering in a way that maximizes profitability. Start by collecting data for each menu item:

• Calculate food costs
• Identify contribution margin
• Analyze sales data to determine popularity

This data enables you to categorize items based on how popular and profitable they are. With that information, you can create a menu that strategically increases the profit for every diner.

In some cases, menu engineering is as simple as writing a more compelling description or altering the menu design to promote profitable items. However, you might need to take more drastic steps to boost profits, such as switching to cheaper ingredients to reduce portion cost, increasing the price, shrinking the portion size, or altering the side dishes.

How to calculate your food costs

The first step in menu engineering is calculating food costs for everything on your restaurant menu. To start, write down all the ingredients, including garnishes, condiments, and seasonings. Then, assign a quantity to each ingredient and calculate its cost based on the price.

For example, imagine a recipe calls for a 15-ounce can of tomato paste. Your restaurant pays $45 for a case of six cans, which means each can costs $7.50. The recipe makes 25 servings, so every serving uses $0.30 in tomato paste.

Add up the individual ingredient costs to get the food cost for each dish. Use this data to calculate your contribution margin — the amount of money you make from each sale. To do so, subtract the food cost from the menu price. If you sell a serving of lasagna for $15 and the food costs are $6.50, the contribution margin is $8.50.

You may already have key menu engineering data on hand; many restaurants use food cost percentage and profit margins when setting menu pricing.

What are the benefits of menu engineering?

Revamping your menu can be a big job, especially if you’ve been working with the same menu for years. By investing in a systematic and thorough menu engineering process, your business benefits in a few key areas:

• Increased profitability. Menu engineering helps you identify popular, high-margin dishes. That way, you can adjust your menu design to promote these high-profit items — usually, by placing them at the top of the page or using graphic elements to draw customers’ attention. This extra visibility can lead to additional orders; it also helps your servers decide which profitable menu items to upsell.
• Improved operations. By collecting data on each dish and analyzing it carefully, you can make small changes that improve your restaurant workflows. For example, you might be able to remove a low-profit dish and save space in the storeroom or switch out an expensive ingredient for a more affordable one to improve profit margins. The more efficient your operations, the easier it is to reduce waste and use your resources effectively.
• Better customer satisfaction. When you design a menu that’s clear and easy to understand, your customers can find the dishes they want at a glance. Because the menu sets the tone for the interaction — even before they set foot in your restaurant — this process can improve the entire customer experience. Potential adjustments might include categorizing menu items, marking allergens, and creating a clear visual flow.

Creating a menu to maximize profits: A step-by-step guide

Ready to revamp your restaurant’s menu? Let’s dive into the menu-engineering process.

Creating a menu-engineering matrix

A menu-engineering matrix is a simple tool that helps you categorize the dishes on your menu. To start, gather the food cost and profit margin for each restaurant menu item. Then, bring in the sales data. For every item, note the number of sales over a given period. The higher the sales volume, the more popular the item.

Use your contribution margin and sales volume to plot each item on a menu-engineering matrix. The x-axis should show profitability (contribution margin) from low to high; the y-axis should show popularity (sales volume) from low to high. Based on the placement of items on the matrix, you’ll be able to visualize how they fall into four categories:

• High profitability, high popularity
• Low profitability, high popularity
• High profitability, low popularity
• Low profitability, low popularity

Reworking your menu based on profitability and popularity

Now, it’s time for the heart of restaurant menu engineering: identifying concrete ways to maximize profits in each of the four categories in your matrix.

1. High profitability, high popularity

The items in this category are the most important — they have high profits, and customers love them. There’s usually no need to make changes to the dishes themselves. Instead, find ways to increase sales by altering the menu design.

The trick? Make popular and profitable items more visible. You might place items near the top of the page, for example, or create a special section delineated by a colored box. This simple strategy can increase profits, even when the price and ingredients stay the same.

2. Low profitability, high popularity

These dishes are popular with customers, but they use high-cost ingredients. To boost the profits, you have a few options; each one comes with benefits and risks.

• Raise menu price. This strategy maintains the existing quality and taste of the dish and increases profitability. It can be effective if your customers aren’t price-conscious; if diners are on tight budgets, you risk a drop in sales.
• Adjust ingredients. Ask your kitchen staff to swap in cheaper ingredients. If you can do so without changing the flavor and texture of the dish, you can boost profit while keeping prices the same.
• Change portion size. When portions are too big to finish comfortably but not so big that they produce leftovers, consider reducing the size. Your customers will still be satisfied, you’ll make more money, and you’ll reduce food waste.
• Create more profitable specials. Take a popular dish and pair it with high-profit items to create a special. If customers love a low-profit appetizer, for example, you could create a happy-hour special that includes the appetizer and a cocktail with a high contribution margin.

3. High profitability, low popularity

When you have dishes that are profitable but largely ignored by customers, it’s time to do some digging. To start, offer the item as a freebie to a few select customers and ask them about their experience. Is the dish too expensive? Is the flavor unappealing? Are they turned off by the ingredients? If so, you can adjust accordingly.

If you find that customers like the food and the price, it’s probably time to change the menu design. It could be an awareness issue — a problem that’s easily solved by putting the dish in a more prominent position on the page. You can also consider writing an appealing menu description that whets customers’ appetites and describes why the dish is special. This strategy uses the psychology of menu design to create curiosity and appeal to the senses.

4. Low profitability, low popularity

It might seem alarming to find menu items that have high food costs and low sales volume, but it’s actually a valuable opportunity. After all, this category tells you a great deal about what your customers do and don’t want.

In most cases, your best bet is to remove these items completely. You’ll free up space on the menu and create an opening for new, more popular dishes.

As a restaurant owner, it can be difficult to give up menu items. If you’re passionate about the dish, you can try to salvage it by improving the flavor or using ingredients with higher profit margins.

Building a profit-focused menu structure and design

After you’ve analyzed the profitability and popularity of each dish and created a final list of menu items, you can start redesigning and restructuring the document. As you work, keep two guiding principles in mind: increasing profits and improving the customer experience.

Set a timeline

Explain the changes you intend to make and establish an approximate timeline for the project. Then, communicate it to your team — kitchen crew, restaurant management, graphic designer, copywriter, marketing staff, and printer — to set expectations. With clear milestones and delivery dates, everyone who’s involved in the process can prepare or adjust their output accordingly.

Menu engineering isn’t a one-and-done initiative; it’s most effective when repeated regularly. You might decide to repeat the process twice a year or even once per quarter to keep up with shifting customer preferences, changing ingredient prices, and seasonal variations in demand.

Determine a new structure

Based on your menu analysis and final menu mix, choose a structure that suits your goals. For example, your high profitability, high popularity dishes might go into a “Customer Favorites” or “House Specialties” section at the top of the first page.

From there, you can organize dishes using a standard system. Categorize them into groups and arrange them to reflect the flow of the meal: appetizers, entrées, sides, and desserts. Depending on the selection and available space, drinks might get a separate sheet or a small section at the back of the menu.

Use your profitability analysis and expected popularity to determine the order of items within each category. Put the profitable items and/or popular items at the top of the list, with the rest appearing in descending order.

Design with profits in mind

Use graphic design to highlight your most profitable items. Draw attention to these dishes with:

• “Bestseller” icons
• Bold text
• Contrasting fonts
• Decorative frames
• Linear separators

Consider color psychology and design best practices

Design can go a long way toward improving the customer experience. Here are a few ways to create a menu that streamlines guest interactions:

• Choose colors that coordinate with your restaurant’s branding.
• Select red and orange tones to encourage customers’ appetites.
• Use shades that reflect the nature of your food; green is ideal for vegan or healthy dishes.
• Leave ample white space so customers don’t feel overwhelmed.
• Choose letter spacing that’s easy to read.
• Stick to two fonts for readability.
• Help category names stand out by using a large, heavyweight font.

Get your menu in front of customers

You’ve analyzed menu items and invested in the menu engineering process — now, it’s time to get your new, profit-focused restaurant menu out to customers. For in-house diners, all you need to do is replace old menus with the updated versions. To reduce costs and allow easy future menu adjustments, replace physical copies with a QR code menu. Print the code on table tents, stickers, and signs so customers can access the digital menu easily. Make sure to keep a few paper copies on hand for tech-averse diners.

Keep in mind that many customers check out your menu online before making a reservation or ordering for delivery. To ensure they’re seeing the newest menu, follow these steps:

• Update the menu on your website and Direct site.
• Update your menu on Grubhub Marketplace.
• Add the menu to your Google Business profile photos.
• Change your Google Business website link to the new menu.
• Link to the menu from social media profiles.
• Upload photos of the new menu to your social media albums and delete old versions.

Do you use a food delivery platform? You’ll also need to update the menu in your profile. Grubhub for Restaurants streamlines the process with a simple update system — edit the menu after closing and it will be visible to customers during the next shift. Any changes you make automatically flow through to your Direct branded ordering websites, saving time and ensuring every menu is consistent.

Show off your restaurant’s mouthwatering menu

When you’re a restaurant operator, the menu is your most important marketing tool. Menu engineering is an effective way to streamline and refine the menu to ensure every item is pulling its weight. Ready to get your menu in front of more customers? Get started with Grubhub today to gain access to 33+ million hungry diners.