Small daily decisions can have major impacts on the profitability of your restaurant. Eskalab provides you the tools so you can decide being always updated and optimizing your time. Your Dashboard consists of several types of analysis that control the state of your restaurant, help you decide and measure results. Today we’ll talk about Menu Engineering, and how it will help you develop your potential.
Menu Engineering is a study that analyzes graphically a portfolio of businesses and products comparatively observing their growth and participation. Since this is a powerful tool for strategic marketing and management, Eskalab has developed a platform that uses it to analyze the dishes on a restaurant’s menu and make decisions about them.
¿How does Menu Engeneering work?
The system compares all main dishes together considering their popularity and profitability and places them in a cartesian coordinate system showing four large groups where they get classified.
Since this is a comparative analysis, we don’t mix “apples and oranges”, or to give a more accurate example: desserts with mains. This is because both categories have different prices, costs and demands and require individual analysis.
Plotting this study using these two axes, we see how the dishes are dispersed in 4 groups. Let’s see their names and meanings:
This dishes have a small profit margin but high volume of sales. It’s the classic case of the dish of the day. While unitarily it doesn’t leave a large percentage of profits, this dish has two major advantages:
- It can be part of a volume strategy: if sold in large quantities, can still generate big profits for the restaurant.
- Generates a purchase occasion: the person is already consuming, so it is much easier to sell an extra drink, dessert or side dish to that customer than to attract a new one.
Workhorses are interesting dishes both to use the purchase situation to sell extras, and to create premium versions improving margin. By using more appealing names and adding flashy ingredients you can increase prices without compromising cost and turn a Workhorse into a Star. Fresh herbs butter is a good example of this strategy: it doesn’t cost much but it upgrades a simple dish.
Star dishes are loved and celebrated by restaurant owners as they have both good profit margin and high performance in sales. The traditional and logical advice for these dishes is to keep doing what you are doing because you’re doing great!
These dishes are the ones that make your restaurant unique and give it personality. Customers love them so much, they are willing to pay what they cost.
Dogs are opposite to stars: they leave a very low profit margin and low sales. The general recommendation is to eliminate these dishes. However, do not let this description discourage you. While mathematically it shows a bad performance, sometimes it could be object of status and positioning. A restaurant that displays proudly a pond with live lobsters to choose for dinner can consider this a dog product while this display is the main attraction of customers that end up ordering other kinds of see food. If you prefer an example from another industry, you will be surprised to know that expensive luxury cars are often dogs if you compare them to the others in the portfolio.
This group includes those dishes that have little amount of sales but a very good profit margin. They are the ones to apply strategies to strengthen its sales and become stars.
Menu Engeneering is a comparing tool, and since there will always be dishes that sell more than others or cost more than others, they will always spread in the 4 groups and this doesn’t always mean you should automatically make this or that decision.
The first observation sheds a good trend on what should be done with each course, but it’s not enough to take a course of action and just stick to that. In restaurants there are variables involved as seasonality, price changes, trends, periods of more or less work, menu changes and intrinsical efforts of the restaurant to sell this or that course through strategies. All these changes get reflected in the Menu Engineering and dishes go jumping from one group to an other at different times. This is why Eskalab added the time variable to the two previous axes, repeating the observation every month and comparing their results. Through these movements, comparisons and conclusions, restaurant owners will have much more clarity on what kind of strategy should be applied to each dish as they get better understanding of their behavior.
The result of the Menu Engineering analysis is clear and intuitive. It provides very concrete and specific suggestions on what should be done with each course and in each case. It also has a huge advantage, which is that the same system can learn about the decisions made by measuring its results and enabling continuous learning about the restaurant. Especially when there are different locations with different behaviors to compare.