You may wonder how do great restaurants prosper, does it have to do with their menu design? Yes, having a clear, professional, and well-thought menu plays a huge role in bringing your business to greater heights as it can enhance your customer dining experience and stimulate your customer’s imagination and taste buds. There are tons of things to consider when creating your menu - Food Cost, How to categorize your food on your menu, How to change those dishes that are nonprofitable on your menu etc. After all, these considerations will help you to increase the profits of your restaurant. Remember, your menu serves as a form of advertising for your restaurant as such it is important to get your menu right!
1. What is Menu Engineering
Menu Engineering also known as menu designing, creation. Menu engineering refers to how popular and profitable items on the menu can affect how to place the dishes on the menu - More popular, profitable dishes are placed at the top, less profitable ones at the middle. (E.g. $20 Truffle Fries is the most popular item on the menu and it is very profitable so it is placed on the top of the menu ) and how it helps customers in their decision making process in choosing the most profitable items on the menu. It is important to engineer your menus as it will help you to understand what your food cost is which will help you to place your items on your menu. All these will contribute to increasing your profitability earned per guest through the sale of dishes in restaurants.
2. Food Cost
Calculating food costs is vital before categorizing your food and designing your menu. Food cost refers to breaking down the ingredients you use for each dish and determining how much it costs to create each dish. This can help to know how much every ingredient cost which will help you in pricing your overall dish to sell to your customers. Knowing each ingredient price is the first step to good menu engineering as it will provide you an insight on how and where to place your dishes at. (E.g. Placing your most expensive dishes first on the menu so it will be the first thing customers will see).
To calculate your food cost, you may use the formula below:
Food costing is time-consuming but it will help you understand which dishes you should price higher.
Click here to understand more about food costing.
3. Categorize your menu items
It is important to understand how to categorize your menu items as it will allow you to understand which food items should be priced higher and which food items will help you increase your profit margin. It will also aid you in improving those dishes that are lack-luster. We spoke to some F&B owners so you don’t have to and we will teach you how to categorize your menu using the menu engineering graph. You may use this model below to understand how to price your food.
Menu Engineering Graph
Plow horses: High popularity, Low profitability
Plow horses are commonly popular menu items that people love. The ingredients used here might be on the expensive side and it will result in breakeven cost or slimmer profit margins.
You may try to vary the days you are selling the dish to adjust to the food cost price, have different menus for different days (Weekdays, Weekends). For instance, selling expensive dishes only on the weekends when there are large crowds at your restaurant.
We spoke to Ms. Sandy from Common Chef bistro/Cafe and found out that the dish “Richman” is one of the most popular burgers sold and they are only served on weekends. “Richman” is a buttered brioche bun, chorizo patty, smoked cheddar, sautéed mushroom, caramelized onions, scrambled eggs & truffle mayo and is served with a side of melted cheddar sauce and tater tots. The reason behind this is due to them having more customers on the weekends so it is more worth it to serve the dish which allows them to earn a profit. Placing dishes on certain days makes the dish feel “special” and it serves as a form of marketing that can attract customers to come back as a repeating customer.
Stars: High popularity, High profitability
Customers love the dishes in this category. The ingredients used here are cheap but they are popular and profitable. Restaurant owners should maintain the standard of dishes under this category.
We spoke to Ms. Ivy, the owner of Yan Ji Gourmet Seafood where they sell seafood soup and they currently have 2 outlets in Singapore: Far East Plaza and Funan Mall.
Yan Ji Gourmet Seafood's most popular item on the menu is their Dory Fish Seafood Soup and the soups at Yan Ji Seafood do not come with any rice/noodles so customers usually pair it with a bowl of rice. We asked Ms. Ivy on how she determines the order of her dishes on the menu and she mentioned that it depends on the popularity of the dish and the price of the ingredients used for the dish. Dory Fish Seafood's purchasing price is relatively cheap however it is the most popular dish at Yan Ji Gourmet Seafood so Ms. Ivy has placed it at the top of the menu. When the most popular dish is placed at the top of your menu, customers are more inclined to purchase it as customers' eyes move in a zig-zag formation where they scan the menu from the top left of the menu to the bottom right. This is proven to be successful for menu designing which will result in an increase in sales for popular items. In order to be successful, you should place your most popular dishes at the first or the top of your menu!
Dog: Low popularity, Low profitability
It is bound to have dishes that customers do not order in your menu, these dishes are also known as “Dog” dishes. The ingredients used here are costly and people rarely order them. These are the costs that can be eliminated. Here, restaurant owners should discuss with their chef to remove the dish on the menu as it does not bring in money. Menu Engineering should be done from time to time to ensure that the menu is up to date and the most profitable.
If you are using a POS system, your POS would be able to show you a sales report that shows which dishes are not ordered as often
Ms. Lie Wei from CHICHI Japanese restaurant felt that 1. Their menu was too long which would result in customers not wanting to read the whole menu. 2. It was costing her money to allocate ingredients needed for that dish but it was not ordered by customers, so the owner of CHICHI and its chef have decided to remove their Cucumber mushroom salad and place more of their focus on their Chirashi salad.
Puzzle: Low popularity, High profitability
Dishes under the puzzle category have the potential of making money for the business however they do not get ordered. The reason why they do not get ordered might be due to the descriptions used for the dish and there might be a few misses to the perfect dish.
To move dishes in the puzzle category to stars, you can perform R&D.
Try different cooking methods
Use premium ingredients to elevate the dish
Use portion size creatively to gain more customers
Customers are more inclined to pay for premium ingredients as they perceive more value.
Ms. Ivy from Yan Ji Gourmet Seafood mentioned the House Special soup was initially not on her menu as it was a scaled-down (S$22.80 for 1 pax to consume) version of her Premium Seafood Soup (S$38 for 2 pax to consume). Many customers wanted to order her Premium Seafood Soup but were afraid that they would not be able to finish so Ms. Ivy took the chance and added on a new item. This item consists of 50% volume of the ingredients from the Premium Seafood Soup (Instead of having 2 crayfish, there is one, etc.) and it became one of her top-selling dishes.
Start by categorizing your existing menu into either one of these categories - “Plow Horses”, “Stars”, “Dog”, “Puzzle”. By understanding what each category does, it allows you to understand which are your popular dishes that can help increase profits and R&D those dishes that are lackluster to place them in “Stars”!
4. Designing of Menus
Here are some things to take note when designing menus:
1. Split menus into different categories
By placing your dishes into different categories, it allows customers to be able to see clearly what they want to eat. Remember a cluttered menu will confuse diners which may deter them from a second visit to your restaurant.
The owner of CHICHI mentioned that it is important to place food under different categories as it allows customers to specifically choose what they want to eat and it is also neat and clear for customers to see the menu.
For example, if customers are craving fried rice, they can look under the category of Rice & Noodles which is clear and simple to understand. Customers do not have to scan through the entire menu just to find the food that they want.
2. Placing high price dishes at the top of your menu
This has to do with psychology! Going back to the zig-zag theory as mentioned above, customers often look at the first and last dish on your menu as such it would be great for you to place your popular dishes at the top as they will earn you high profits. Sometimes, placing your high price dishes in bold and boxes helps too!
3. Taking out the dollar signs
Many websites shows that it is great for restaurants to avoid placing dollar signs on their menu as it reminds customers that they are spending money. However, it is important to consider your location (Where you are going to sell your food at? Is your shop located in a coffee shop, kiosks, cafe, restaurant?) and the concept of your business (Is your shop going towards the fine- dining route or the casual dining route?) .
If your shop flows towards the pricier route, leaving out the dollar sign feels more classy and it will allow customers to momentarily forget about the price and focus on the ingredients used in the menu when selecting their dishes. On the other hand, if you are selling your food in a coffee shop and you do not place your dollar sign there, people might be confused and some might even get angry as they are used to prices being displayed with dollar signs. It's a good rule of thumb if you fall into the fine dining category!
We realized that the Common Chef Bistro/ Cafe menu does not have dollar signs attached to the number as such we asked Ms. Sandy why she left it out and she mentioned that customers are usually more sensitive when they see the dollar sign and if customers are curious on what the numbers represent, they would ask and this brings in more interaction with their customers.
4. Consider using symbols, colors
Using symbols and colors may show the character of your business.
Elephant Room is a restaurant bar that is inspired by the streets of Singapore: Little India where they showcase their traditional ingredients and use Indian ingredients and spices to concoct drinks and dishes for their customers to enjoy. Elephant Room uses elephants as their symbol as they are a representation of Courage, Wisdom, Reliable and Loyal.
Besides that, Elephant Room plays with colors such as White, Brown and Orange on their menu as it showcases the character of their business of being pure, wholesome, inexpensive, bold and fun. Using White for their background enhances the legibility for customers to see the menu. The color Brown is associated with ingredients that are healthy and it tends to make dishes seem inexpensive on menus. Elephant Room being a restaurant that sells alcohol, has tons of quirky drinks which are bold and fun thus using Orange color for their price helps to further stimulate customers' appetite which increases customers' spending.
5. Consider using photos
Usually casual dining establishments come with photos on their menu, while fine dining establishments have a menu with no photos on their menu instead they have detailed descriptions of the ingredients used and the cooking technique used. This is done to provide consumers a high-end feel.
The owner of Yan Ji Gourmet Seafood mentioned that “Pictures make everything look and feel better”. Pictures help customers to visualize the appearance of the dish and it sets the expectation for the food. With that said, do not use low-quality photos as this may backfire your intention of helping your customers visualize better.
If your business falls under the casual dining F&B establishment, the rule of thumb is to never make price the focus of the menu, instead, make the pictures the star of the menu.
6. Use creative names and short descriptions to describe your food
A well-chosen name and description can help customers to imagine and make them curious and this will influence their purchasing decisions. Using short descriptions are preferred as it is easier to capture the reader’s attention.
During peak hours of their business, Elephant Room staff are unable to explain the iconic ingredients used in the drinks and dishes so it is important to place it below the name of the dish so that customers are able to imagine how the food tastes.
In a nutshell, no matter what the mixes are on your menu, Menu Engineering has to be performed cumulative from time to time as it is important to always think of ways to improve your restaurant - cut down on unwanted cost and to make your business more profitable while maintaining the quality and standard of your business.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
