How to create a profitable menu
When starting a new restaurant, creating a menu is one of the most important steps. The items you place on your menu will be responsible for bringing in revenue. If your restaurant menu options aren’t profitable or have low margins, your business likely won’t succeed.
In order to create a high-margin menu that propels your business forward, a restaurant owner like you need to combine menu design, psychology, and engineering. Read more to learn how to create a profitable menu.
What is menu engineering?
Restaurant menu engineering is the science of maximizing your menu through design. Any menu can be redesigned to increase profit margins, but it’s best to do so from the start.
By using menu engineering best practices, you can do a menu redesign to use layout and design elements to point your customers towards higher-margin items. These tactics are sleek, and your customers likely won’t recognize that you’re upselling them. That’s because a lot of these methods target the subconscious.
Creating a menu design for maximum profitability
Your restaurant’s menu should capture the spirit of your brand, and reflect that in your menu’s design. To create a menu based for maximum profitability, you should focus on highlighting and promoting your options with the highest margins, and that's not always your most expensive dishes.
You can do this by using a different color for the text, highlighting it with a backdrop, or adding a star or other design element next to the listing. How you choose to accentuate these options will depend on your restaurant’s brand and what works best with the menu design you’ve chosen.
Whether it’s your main dine-in menu, dessert menus, or even cocktail menu, there are a few different routes you can take to creating a new restaurant menu! Working with a designer is expensive, and you won’t have the same access to frequent changes and modifications as the seasons change.
By using a menu making tool, you can easily change any modify your menu designs whenever you want without having to pay extra. These menu design templates often have built-in features, allowing you to easily highlight or showcase a specific item as you see fit.
Choose a timeframe to analyze your restaurant menu
Optimal menu performance requires frequent analysis.
Before making the changes to your menu, you should analyze how your current menu is performing to gather insights into what may need altering.
Choose a time frame in which you’ll take note of your menu data. You should keep track of the frequency in which items are ordered off of each menu (dinner, lunch, dessert, drink).
After making changes to your restaurant menu, you should complete this process again and update your menu as needed until it’s performing how you want it to. Choose a span of a few weeks or a month or two (within the same season) to keep track of this data.
How to analyze the profitability and your menu prices
Now that you’ve set a time frame, it’s time to make a game plan. How exactly are you going to analyze your menu?
Before you make any changes, you should look at your existing restaurant menu and analyze whether or not your menu options are even profitable. If they’re not, some changes will need to be made.
How to calculate the popularity of a menu item
Many different POS systems allow you to track items purchased throughout the day. You can use this information to understand how certain menu items contribute to your gross profit margin.
For example, to check the popularity of a menu items on the lunch menu, you’d want to look at the data for each meal ordered during lunch time. The same is true with dinner.
For desserts and drinks, you can check these specific categories as well. You can also use this information to evaluate your online menu vs your dine-in menu’s efficacy.
How to calculate the food costs of your menu items
To calculate the food cost of your restaurant menu items, you’ll need to take a look at your inventory and how much money you’re spending on all the items necessary to create a specific food item.
To calculate how much the food costs to make, say, one cheeseburger, you’ll want to add up your orders for buns, cheese, and meat, and divide that number by how many meals you can make.
Total Inventory / Items Made = Food Costs
By knowing how much the food costs to make a specific dish, you can more expertly experiment with new menu options.
How to calculate the food cost percentage of your menu items
By optimizing your food cost percentage, you can increase your profit. Your Food Cost Percentage (FCP) shows you how much you’re spending for each item. For example, if your FCP is 30%: 30% of the cost of the item goes toward food costs. But how do you calculate this percentage? To calculate your Food Cost Percentage, you’re going to want to use the following equation:
Food Cost Percentage = (Beginning Inventory + Purchases - Ending Inventory) / Food Sales
For example, if your beginning inventory totals in at $15,000, and your ending inventory equals $16,000, with $4,000 in purchases and 10,000 in food sales, you end up with a Food Cost Percentage of .3 or 30%.
Aim to fall between 28 and 32% to maintain good profits. Higher-end restaurants will have a higher Food Cost Percentage while fast food restaurants or fast casual restaurants will likely have a lower number.
What is a menu contribution margin
The restaurant menu contribution margin is the menu price of your menu item minus the standard food cost of the item.
The menu contribution margin isn’t all profit,though. It helps to cover labor costs, prep time, rent, and other costs of doing business.
How to calculate the contribution margin of your menu items
To calculate the contribution margin of your menu items, you’ll want to use this equation:
Contribution Margin = the selling price of the menu item - the cost of the item
Key strategies for a well designed menu
While you need to keep in mind your margins and food cost percentages, the design of your menu can play a huge role in which items sell and which items don’t. Use the following tips to optimize the design of your restaurant menu.
How to categorize menu items
A menu should guide your guests through their dining experience, meaning you should categorize menu items based on a way that follows the flow of dinner.
Most restaurants place appetizers at the top, on the first page, and entrees in the middle. If you’re opting for a one page menu, you should list your basic drinks at the bottom to increase sales.
When it comes to listing menu items within each individual category, you should always list the profitable items you’re looking to upsell at the very top of the list, ensuring that they’re the first thing the customer sees. You can also highlight these options or change the text color to make them stand out even further. Lower-margin items and other items can be placed after a highlighted option, encouraging customers to skip over them entirely.
Use photos sparingly
When photos are used too heavily, they can make the menu look cramped or unprofessional. Instead, you should use photos to your advantage. If you’re trying to increase the sales of certain dishes, you should add a photo next to that one. You can do this in each section, drawing the customer’s attention to a specific appetizers, entree, or dessert. Make sure you’re taking the time to capture professional food photographs, though. Nothing is less appetizing than a cold, flat image taken on your phone.
Craft beautiful menu descriptions
You shouldn’t have an image for each menu option, so you’ll need to evoke the senses in another way. Use menu descriptions to make your customers’ mouths water. Really use this as an opportunity to get them excited about the food you have to offer. Don’t just list the ingredients, add a little flare, but make sure it matches your brand’s voice.
Include menu modifiers to upsell
Each menu should include a section with a few modifiers. Think of this as your “add protein” section. If the cost of the modifier is low relative to pricing of the menu item, it increases the perceived value of the upsell.
However, there are limitless options for modifiers. While adding protein to a salad is the most common one, you can offer a scoop of ice cream for desserts, or cheese and bacon atop fries.
Having menu modifiers is an easy way to add more profit to your bottom line and perceived value by your customers.
Analyze your current menu for pairings
Including pairing options is a great way to increase the sales off your dine-in menu. Not everyone will want to open the wine or drink menu, so including pairing options on the dine-in menu might persuade customers to try something new. You should also educate your staff so they’re able to upsell on the spot, offering wine pairings and modifiers table side.
Give discounts for pairings
You don’t need to only increase your sales by selling more items, you can also give discounts. This is a common technique used in the bar industry, but it can work for restaurants as well.
For example, you could offer a percentage off the menu price of an entree when a customer orders a bottle of wine, or charge a low cost for a extra fries or a salad. It's a quick and easy way to increase the gross profit margin for your restaurant.
Limit choice to guide buying decisions
Trying to please everyone with a long menu often leaves no one pleased. Customers will feel overwhelmed and paralyzed by choice, and you’ll end up spending more on ingredients than you actually need in order to keep a back stock for all potential options.
Instead, limit yourself to a few select profitable menu items per category, making your customers’ choice easier while also reducing the amount of dishes you have to purchase for. That way, too, you can specialize and really ensure you’re nailing your most important and profitable dishes.
Add menu psychology in the mix
The colors you use, the fonts you select, and even where you place menu items can all have an impact on a customer’s decision.
For example, by using blue text or images, you can subconsciously give the feeling of trust and reliability to customers.
Colors are often used in menu psychology tactics. Red is often used to stimulate appetite. And yellow can create feelings of happiness and seemingly make food look more appetizing.
When it comes to placing your most profitable items on a menu, you can also impact how customers order. Placing popular items at the top of lists will naturally entice customers to order them first because they recognize the dishes from seeing other people order or on social media.
You should also place your low profitability items after a highlighted item to make it blend in with the rest of the menu.
You should also place desserts towards the end so customers will have already filled up by the time they get there.
There are lots of little psychological tricks you can use to increase customer spend. Just be sure not to go overboard and make your menu too busy or confusing.
Try having separate lunch and dinner menus
The best restaurant menus are short and sweet, between one and two pages. By having fewer options, you can easily draw your customers’ attention to the menu items you’re hoping to upsell. If you’re not having success upselling during the lunch rush of your restaurant, you might want to try out a separate lunch menus with dishes with a smaller portion size and lower menu prices to maximize profits. You can even try out showcasing different options on each menu to see which customers are more drawn to.
Analyze your new menu's success
The most important thing about crafting a high-margin menu is keeping an eye on your progress and changing things when necessary. If your menu isn’t showing signs of success or you aren’t selling as many of a high profitability product as you’d like, it’s time to make changes to your dishes. By viewing your menu data, you can decide to move things around, take items off the menu, adjust menu prices, or try out new dishes. Just remember to keep monitoring it whenever you make a change!
Involve your kitchen staff in the menu engineering process
You don’t have to work on this project alone! Get your staff’s opinion, too. You can always test drive new menus by hosting a lunch in for your staff, allowing them to order whatever they’d like. By monitoring their options, you might be able to get a good idea of what the general customer might want. You should also ensure that they’re familiar with the menu at all times, knowing it like the back of their hand. This way, they can upsell customers who might not fall victim to extensive menu engineering efforts.
Use these tips and tricks to monitor your menu data, make changes as necessary, and ensure you’re keeping your food cost percentage and margin contributions in the right place. A profitable restaurant menu is the key to your restaurant’s success —don’t throw it on the back burner!
This blog was contributed by Megan Prevost is a senior writer for MustHaveMenus. When’s she’s not writing about restaurant marketing, she’s hanging out with her three cats and binging the latest television shows. Her work has appeared in App Institute, Bar Business, BevSpot, CLH News, FanSided, FSR, International Bowling Industry, Miss Details, Modern Restaurant Management, PMQ, QSR, RestoBiz, RestoHub, Site Social SEO, Small Business Currents, The Daily Fandom, and Total Food Service.