Menu engineering: Use psychology to boost profits

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So, you’ve done your marketing and customers are walking in the door. Great! The next step is for them to sit down and order something. That means they’re going to look at your restaurant menu, and your menu engineering needs to direct them to the items you’d like them to order.

Restaurant menu design has come a long way in the last few decades, and menu design is itself a valuable tool to boost your profit margin. Menu engineering is intended to lead customers to good decisions for both parties—a profitable menu helps restaurateurs make money and keeps customers coming back for more.

Menu engineering covers everything from managing the food cost of menu items to setting menu prices correctly. Your menu is really the most valuable bit of information potential customers have about your restaurant before they’ve tried anything you serve—so putting some forethought into its design is crucial to success. Just by considering your menu design, you’re already ahead of the curve—the majority of restaurants don’t do menu design, and only a small fraction does it thoroughly.

So, what makes a well-designed menu? Where should different menu items go? How can menus help maximize both customer satisfaction and restaurant profits? Let’s explore all these ideas here.

Menu engineering basics

Before you set about making a new menu or doing a menu redesign, you’ll naturally need to figure out what’s going to be on that menu—what items will help define your restaurant and what customers want, of course. You’ll need to determine your most and least profitable items. While it’d be nice for every dish to have high profitability, that’s just not the way the world works—so you’ll have to factor that into your menu engineering.

The simplest way to keep a menu workable is to ensure your offerings are limited to dishes you can do well without overwhelming inventory needs. Generally, smaller menus make life easier for restaurateurs while at the same time simplifying customers’ demands. This is especially valuable in an era of supply chain shortages, where reliably high-quality ingredients are critical to success.

As a personal note, at my pub, I made sure to keep the number of items on our menu to 10 or less, not including specials. That way, we could have all ingredients fresh, and our chefs were intimately familiar with making the dishes, guaranteeing consistency.

We’ve written on menu pricing before, but let’s take a quick refresher to note some basics since they’re a key part of menu engineering:

The standard pricing for menu items is 3x ingredient cost.
Anchor items (highest and lowest price) help “anchor” price expectations in customers’ minds.
Prestige items can be marked up more than normal because some customers order them regardless of or even because they’re expensive.
Loss leaders are items that you make little to no profit on but are very popular and get customers in the door.
Your immediate competitors and neighboring restaurants will give you an indication of what “normal” prices are in your area, so study neighboring restaurants’ menus.

It’s important to specify what you’ll serve and your food cost percentage of each item before you design your menu. To make food cost percentage accurate, make sure you keep track of portion size—since portion sizes that are too big can really eat into a restaurant’s bottom line.

Once you’ve run a cost and metric analysis, you’ll need to figure out your menu item popularity—because most popular doesn’t always mean most profitable. If you’re running a new restaurant and don’t know what will be most popular yet, that’s ok—you can gather data and begin tweaking your menu engineering later.

Categorizing dishes

When you’re designing your menu, you can optimize what items go where to nudge customers towards choosing dishes that they’ll love—and that are profitable for you. Dishes can be generally broken into four categories:

High-profit, high-popularity items (often called stars)
High-profit, low-popularity items (called many things but often referred to with colorful expletives)
Low-profit, high-popularity items (often called plowhorses)
Low-profit, low-popularity items (often items that have to be on a menu to satisfy specific clientele, i.e., vegan dishes—no disrespect meant to vegans)

Dividing dishes into these categories will help you determine just where they should go on the menu. We’ll get into how to do that in just a moment.

Menu design

Once you’ve determined what specifically will be on your menu and categorized your dishes, you’ll need to determine your menu design style. There are a lot of ways to get creative with this, but there are a few standard formats for menu engineering:

A single page for small menus—often one for food and one for drinks—that is one-sided or double-sided and can be aligned horizontally or vertically
A classic fold-out menu, with two or more pages, printed front and back
A three-panel menu, usually arranged horizontally

Of course, you can make any variation of design you like, but keeping things simple helps customers feel at ease—and makes sure you don’t have to reinvent the wheel.

The color scheme you choose for your menu should match your overall decorative theme as well as your restaurant style. The same can be said for photos—well-done photography can help increase sales and give customers a better idea of what they’re ordering.

There’s nothing wrong with black and white in menu engineering, of course, but compelling artwork and graphic design can give your menu a bit more pizazz. Additionally, colors stimulate feelings, and can be used to a restaurant owner’s advantage.

Menu psychology

Determining where to place items on the menu and how to emphasize them is the coup de grace of the menu engineering process. One of the first things you should consider is the way people read and look at menus—because there’s a lot of psychology in reading a menu.

Specifically, there’s a maxim in menu design known as the Golden Triangle. It goes like this: When people look at a menu, we tend to look at the middle first, then the top right, and then the top left.

For this reason, it’s a solid bet to place your most profitable items in the top right and top left, with top right being the star position for high-margin, high-cost entrees. Your plowhorses can anchor the top left part of the page since customers are likely to order these—but you may still want to nudge them to the higher-profit item.

Alternatively, because readers’ eyes are drawn to blank spaces, they’re a good place to put items you want customers to order—potentially with embellishments like boxes or borders to draw further attention.

So, the top of the page is where your best items should go. Conversely, the bottom of the page is where less profitable and less popular items should go. This is true regardless of your menu layout.

Consider also removing dollar signs from menu items, especially if you tend towards upscale. This will help customers think less about the cost. Additionally, the specific selling price you set sends a signal. Items that end in numbers less than a dollar, like $7.99, tend to tell the customer that’s a value item. Additionally, people have had decades of training to know that the 99 cents or 95 cents is just a trick, so making your menu item prices whole numbers may make you come across as honest.

Menu descriptions

It’s a good idea to provide a description of many, if not all, of your dishes. Your star dishes, especially, should come with a complete description full of colorful adjectives. Feel free to use humor where appropriate, too—customers like seeing the human side of an establishment.

Menu descriptions can be especially valuable if you’re serving cuisine that’s not intimately familiar to your customers. For example, if you’re running an Indian restaurant, describing just what’s in the dishes can help customers branch out from items they’re familiar with. Even familiar dishes can be embellished with good copywriting.

Consider as well the color you use for menu item text—assuming you choose to use color. Green represents freshness, red encourages action and triggers hunger, and yellow often represents something reliable. You only need to look to fast food iconography to notice how common red and yellow are, for example—this combination is often called the ketchup and mustard theory.

Get smart and savvy with menu engineering

Conducting a thorough menu analysis requires a lot of thought, but it’s worth it. Knowing the numbers behind each dish as well as its popularity can help you design a menu that increases profitability while keeping customers happy. Menu engineering is a key step in restaurant management, and it’s also one that can separate successes from failures in the restaurant industry.

To keep track of all the data that can help you make the right decisions, software does a lot of the heavy lifting for you. That’s where Yelp Guest Manager comes in—paired with a good POS system, it can give you the edge you need to make sure your menu is the best it can be.

That’s what we’re all about here, too—we’re thrilled when restaurateurs survive in this challenging industry. So, to put our money where our mouth is, we’d love to show you just how our software can help. Reach out to us for a free demo and see if Guest Manager is right for you—and while you’re at it, think about how it can help you design your menu.