How to make menu engineering work

This post was written by David Scott Peters – an author, speaker, restaurant expert and coach who coaches restaurant operators on how to stop being prisoners of their businesses and to finally achieve financial freedom.

Do you know what the number one sales tool is in your restaurant? It's your menu. Your menu is critical to your restaurant's success. 

In fact, if you can control your menu, you can adjust your cost of goods sold without giving up guest satisfaction, without cutting the quality of the products you serve and without raising your prices. But there are a couple of things you have to have in place to adjust your menu for a lower cost of goods sold.

To make your menu engineering effective, you have to have two things in place:

Number one is accurate recipe costing cards. They need to be updated in pricing, ingredients, measurements and portions. You can do them by hand, in a spreadsheet, or in fancy software (software is great because it automates the process and ensures your recipe costing cards are accurate - but it's not mandatory). All that matters is accurate recipe costing cards are critical to menu design. Without them, you are throwing your profitability away to what I call dumb-ass luck.

If you don't have recipe costing cards, you don't really know which items you should be merchandising, and you could lose money faster instead of making more money.

Second, you need to use the product mix report from your point of sale (POS) system. This is also known as the daily sales report, PMIX report, velocity report and item-by-item sales report - whatever you call it.

Every item you sell on a daily basis is listed on the product mix report. When you have this information – what you sold, how many you sold, and what you sold it for – you can figure out your ideal food cost. This is the food cost you'd have if you had no waste, no theft, no spoilage and a perfect restaurant. Your ideal food cost is a key component in managing your budget, your ordering and your profits.

If you have this data, you can impact your bottom line by 3-7 percentage points the first time you make adjustments. This is with the same items and the same customers. This is because you would know where to increase prices and where not to, and where to put items on your menu to increase their sales and your cash contribution. You would have an idea of which pictures to include or which items to box for emphasis. With this knowledge, you can take control of your business.

✨ Pro Tip: How your menu is designed is critical to how effective it is as a sales tool. When you have accurate, up-to-date recipe costing cards and you use your product mix report, you should find a professional to help you fix your menu’s design. And look for a company that uses data, such as that on your product mix report, to guide the menu engineering process and end design. Avoid the company that asks you what your top money-making items are - that's not menu engineering.

With these systems and the right data, you can use menu engineering to improve your bottom line. 

About the author

David Scott Peters is an author, speaker, restaurant expert and coach who coaches restaurant operators how to stop being prisoners of their businesses and to finally achieve financial freedom. His first book, Restaurant Prosperity Formula: What Successful Restaurateurs Do, teaches the systems and traits restaurant owners must develop to run a profitable restaurant. Thousands of restaurants have worked with Peters to transform their businesses. Get his free 30-minute training video http://www.davidscottpeters.com.