Menu Engineering Bootcamp

8/18/2019 Menu Engineering Bootcamp

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Menu Engineering Bootcamp:How to Increase Restaurant

Sales in 30 Days or Less


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Introduction

You’ve all seen the headlines.

The Science of Menu Engineering.The Psychology of Menu Design.How to Make your Menu Work Smart, Not Hard .

It’s a fact: Menu engineering is the latest restaurant industry buzzword. Most peopleknow it involves analyzing restaurant sales data. Most people know it has to do withplacing menu items where they’ll stand out.

However, most people don’t know where to start. Or, more accurately, they don’tmake time to start. But every second you don’t look at your menu prices, food costs,and contribution margins, you lose money on your best menu items.

The Menu Engineering Bootcamp will give you a regimen to follow as you engineeryour menu to increase restaurant sales. From day one, you’ll have actionable lessons,takeaways, and assignments to follow. By the end of the 30-day course, you’ll have anoptimized menu, the menu engineering worksheets you need to track your success,and a better idea of menu statistics to follow for years to come.

I know you’re eager to get started, but before you do, I recommend printing out thisPDF, especially the following page, which has a calendar to follow on your journey.Cross off the days as you go along, and let each lesson and assignment sink in beforemoving on to the next one.

Let’s get started!


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Table of Contents & Lesson Calendar

Record Your Day of Download ___ /___ /_____

Week 1/Lesson 1:Open an Investigation Into Your Menu..........................................................................................................................1Complete by ___/____/____ (6 days after downloading)

Week 2/Lesson 2:Stars, Puzzles, and Dogs, Oh My!.....................................................................................................................................6Complete by ___/____/____ (11 days after downloading)

Week 3/Lesson 3:Put Up Your Feet, Relax, and Learn About Menu Psychology .............................................................................10Complete by ___/____/____ (16 days after downloading)

Week 4/Lesson 4:void These Common Menu Gaffes At All Costs.........................................................................................................15Complete by ___/____/____ (21 days after downloading)

Week 5/Lesson 5:Experiment With Your Menu Like You Would In the Kitchen..............................................................................19Complete by ___/____/____ (26 days after downloading)

Conclusion (congrats you made it!)...............................................................................................................................21


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Lesson 1:Open an Investigation Into Your MenuRestaurant data is your friend.

Before you start thinking about stars or dogs -- whatever those are -- you needto delve into the nitty-gritty details of your menu with a comprehensive food costanalysis.

In this lesson, you’ll learn how to calculate:

● cost of goods sold● menu item food costs● food cost percentage● contribution margin● menu item popularity

You’ll learn how to calculate this in the following section.Gather your information in a spreadsheet so you can access it at all times.

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Costs of Goods Sold (COGS)

Cost of Goods Sold is beginning inventory + purchased inventory -nal inventory.

Cost of Goods Sold refers to the cost required to create each of

the food and beverage items on your menu. COGS is really just arepresentation of your restaurant’s inventory during a speci c timeperiod. In order to calculate COGS, you need to record inventorylevels at the beginning and end of a given period of time, and anyadditional inventory purchases. Every dollar shaved off COGS isanother dollar added to your restaurant’s gross pro t.

For example, If you have $5,000 worth of inyou purchase another$2,000 duringMenu Item Food Costs

Individual menu item costs is cost of each ingredient + cost ofpurchasing.

Yes, this is a painstaking exercise when dealing with severalingredients and portioning, but it is the pillar of menu engineering,especially when calculating food cost percentage and contributionmargin, arguably two of the most important restaurant metrics… well,

ever.“Cost of purchasing” not only includes the price you paid on the item,but any delivery fees, interest, return charges, or other expensesrelated to purchasing inventory (excluding labor costs).

Here’s an example: an onion costs 25 cents + $1 for delivery, so$1.25, and each onion yields eight slices, the onion cost for a dish thatincludes two slices would be 30 cents. If you’re making tomato soup,your menu item food cost might be one stick of butter ($1) + 2 sliceswhite onion ($0.30) + 3 tomatoes ($2) = $3.30.

Costs of Goods Sold (COGS)

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Food Cost Percentage

Food cost percentage is menu item food cost / menu price.

Calculating food cost percentage requires you know exactly what you’re payingfor when ordering food, which ingredients match with which recipes, and howmuch each ingredient costs (which you now have after the past section). Food costpercentage can be a benchmark that you track on a weekly, monthly, or quarterlybasis. It’s a good way to identify trends in your menu engineering. However, it isnot the end-all be-all to restaurant success, and there is no “perfect” food costpercentage number.

Contribution Margin

Contribution margin is menu item sales - food costs within a certain time period.

Contribution margin is an ef cient way to measure pro t, analyze how sales affectnet income, and ultimately explain how different factors of your food businessreact to changes. It’s basically the net amount of dollars you take to the bank.

Bonus Section: Food Cost Percentage vs. Contribution Margin

While it’s never constructive to compare your restaurant to someone else’s, it is fair to compare your restaurant against itspast success, evaluating your goals based on that historical data. Do you want to save more money or make more money?Depending on your current situation, you may want to look at food cost percentage or contribution margin.

For example, say you have two menu items: a sirloin steak for $20 that costs you $10 and a pizza for $10 that costs you$3. The food cost percentage is 50% for the steak and 30% for the pizza. However, the contribution margin for the steak

is $10 compared to $7 for the pizza. So it seems like you’re making more money on the steak, although the item could bepriced higher to net you even more. Neither metric is solely indicative of restaurant success, but examined together, theycan be used to make important business decisions.

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Menu Item Popularity

To calculate menu item popularity, add together the amount of times a menu item was sold. You can also look at menu itempopularity percentage with this equation: individual menu items sold / total menu items sold x 100.

How many times did someone buy that tomato soup, that pizza, or that sirloin steak in the past quarter? How aboutcompared to last quarter? Menu item popularity is a good indicator of a dish’s “perceived value,” and might be a sign thatyou’re already marketing this item well on your menu.

Menu ItemPopularity

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Assignment TO DO: Use the next few days to dig deep into your restaurant data. Look out for growing trendsto get ready for the next lesson.

1. What metrics do you need to track in a food cost analysis?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What’s the difference between food cost percentage and contribution margin?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. Why is it important to look at individual menu item food costs?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. What are some ways to minimize restaurant food costs?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. What are growing trends, if any, that you see in the data before you?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Puzzles

Lesson 2: Stars, Puzzles, and Dogs, Oh My!

You’ve done a food cost analysis. If you’re tired of staring at numbers, don’t worry;now, it’s time to visualize your restaurant sales. Create a scatter plot graph with yourmenu items’ contribution margin and menu item popularity using data from a certaintime period, such as this past quarter.

After creating this graph, with your spreadsheet, you should be able to draw a trendline through these items to determine whether you’re trending towards dogs, puzzles,stars, or plowhorses. Let’s look at each of these menu items individually to learn howto optimize them.

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P o p u

l a r i t y

Proftability

Plow-

horsesStars

Dogs

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STARS: High Proftability and High Popularity

Your stars are the upper crust, the cream of the crop, the creme de la creme… They’resuperstars! These are your most popular and most pro table dishes.

On The Menu: Your menu design should highlight your stars. Rather than change upthe ingredients in these items, keep them consistent, and promote them any way youcan.

PLOWHORSES: Low Proftability and High Popularity

Your plowhorses are popular staples at your restaurant… that are actually costing youmore money than you’re making. They have low pro tability and high popularity.

On The Menu: You might try experimenting with less expensive ingredients in thisdish to create a more pro table version. If there’s a larger menu item in this category,see if portion size is killing pro t; are customers leaving these menu items on theirplates?

PUZZLES: High Proftability and Low Popularity

Your puzzles are your hidden gems. They’re valuable, but they’re also “diamonds inthe rough.” Customers don’t see them as viable options. They’re highly pro table, butdif cult to sell.

On The Menu: Investigate whether customers like the taste of these items. You mayneed to reinvent these items, but sometimes simply lowering prices will increasepopularity enough to produce higher overall pro ts. You may also want to featurethese items on your menu, make them specials, or position them in a different way.

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DOGS: Low proftability and low popularity

Dogs? More like duds. Your dogs are your menu items that just aren’tcontributing to pro t or pro tability.

On The Menu: Consider omitting your dogs. However, be careful. You mayhave a menu item that is a staple among some customers but not others (yourkid’s mac and cheese, for instance). Instead of removing these dogs, you can de-emphasize them by hiding them on your menu.

Different Strategies for Different Menus

In addition to this data and analysis, you should also factor in your gut instincts; after all, you know your

restaurant best. With this information in mind, you can make great decisions about its future, with numbersto back you up. Once you get the hang of it, you can use menu engineering to optimize other aspects of yourfoodservice:

● Speci c menus (breakfast, lunch, dinner, dessert)● Online ordering and delivery items● Cocktail and specialty drink menus● Weekly specials and happy hour

How will you use menu engineering in your restaurant?

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Assignment TO DO: Make your own scatter plot graph with these tips . What trends do you see? Are youalready getting ideas for how to improve your menu? Next week will be a quick lesson in menu

psychology, so you can learn some of the best strategies for optimizing your best menu items.1. What are the two axises on the Menu Engineering Graph?

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. Which category of menu item is most important? (Opinion.)___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. What do you do with dogs?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. What do you do with stars?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. What are some different ways of looking at your restaurant data?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Lesson 3: Put Up Your Feet, Relax, and Learn About Menu Psychology

You thought we were going to start designing next, right? Not so fast. There’s still somuch to learn - every day - about menu psychology. This week’s lesson is a primer onthe top six psychology principles used in menu design.

For more, subscribe to the Toast blog .

1. Paradox of Choice

According to George A. Miller, a founder of cognitive psychology, most guests mayonly remember seven pieces of information (plus or minus two) at a given time.When looking at a restaurant’s menu, guests have loads of choices. The more menuitems crowded in there, the more anxiety they feel to choose, and choose right. Thecheapest option? The most delectable option? Nah, I’ll just stick with my usual. This isthe paradox of choice. We think that with more choices, we’ll be able to make a betterdecision, but the reality is that we end up getting bogged down.

Do This: To combat the paradox of choice, menus typically “cluster” similar piecesof information together: there’s a category for pizzas, a category for appetizers, acategory for pastas, and so on. This helps guests remember the highlights of each list.Make it easier for guests to scan your menu by offering up to seven options per foodcategory. You don’t want customers to leave with a bad taste in their mouths — withthe anxiety that they could have made a better choice.

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2. Decoy Effect

The decoy effect is a psychological phenomenon that says guests are morelikely to change their preference between two options when a third, lessappealing option, is introduced to show the “value” of the most expensiveoption.

According to Dan Ariely, the decoy effect really works. He ran a study on100 MIT students, asking them which newspaper subscription they wouldbuy — the combo deal (digital and print), the more expensive deal (print), orthe less expensive deal (digital). When all three options were present, theychose the combo deal. But when he removed the redundant option (the printsubscription), they preferred the cheaper choice. The print subscription actedas a decoy, giving guests a frame of reference for just how good the combo dealwas, and enticed them to pay more.

Do This: If you’re looking to increase sales of a particular menu item, you mightwant to show its pricing against other items. It could help increase the saleson the item you ultimately want guests to order, especially for those who areprice-sensitive. Try bundling items together so guests see obvious results; forexample, fries $5, hamburger $10, hamburger and fries $10.

3. Social ProofSocial proof is the theory that people will adopt the beliefs or actions of a groupof people they like or trust. It’s the “me too” effect.

Do This: This is an easy win on your menu. As well as including pictures ofyour food, why not also include quotes from customers or family members?Show why people love the item. You may also want to encourage customers towrite an honest review of your restaurant or a particular menu item on Yelp or

Facebook.

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4. Semantic Salience

Semantics refers to the relationship between signs and symbols and their meaning(s).

Salience, however, is the relative conspicuousness of something in a given situation.So when we’re talking about semantic salience, we’re referring to how noticeable (andpotentially important) a symbol’s meaning is to a speci c situation or decision-makingprocess.

Do This: In menu design, this can apply speci cally to pricing. It’s not about what themenu items actually cost, but rather how they’re presented to the guest. Considerhow symbols affect your menu price presentation. Here are a few ways to think aboutdisplaying prices:

● $14.00● $14● 14.00● 14● fourteen dollars

The dollar sign makes the price more conspicuous, adding salience. While all of these

prices are indisputably equal amounts, they differ in saliency. A dollar sign tends tobe associated with having to pay, and having to pay tends to be associated with losingmoney, which is never someone’s rst option.

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5. Eye Movement Patterns

Eye movement patterns are a tricky science. Most restaurant experts will say thatpeople’s eyes will immediately it to the top of the page or the top righthand corner.However, according to a Korean research study , a third of your diners are more likelyto order the rst item they see on the page. And this San Francisco State study , using

scanners and video cameras, revealed that guests read menus like a book.

Do This: Most research shows that the top of your menu - whether right or left - isimportant. Place your stars at the top, your puzzles at the very bottom, and yourworkhorses, or your most expensive items, in the middle. Emphasize menu items witha box, different font color, or a picture of it, but remember that the more often youimplement these tactics, the less impact they will have. If you want to attract the eyeto speci c menu items, a good practice is to only emphasize one item per category(appetizer, entree, dessert, etc.)

6. Descriptive Language Labels

The names and descriptions of the dishes on the menu are what diners tend to basetheir ordering decisions on, so you better be precise and captivating with your menudescriptions.

A eld experiment conducted by Dr. Brian Wansink at Cornell University found that

descriptive menu labels resulted in customers feeling more satis ed with their meal.This allowed for more favorable comments — assuming that the item lived up toexpectations. Comparing dishes labeled with sensory descriptors such as “tender,”“succulent,” and “satin”; cultural or geographic terms like “Cajun” and “Italian”; andnostalgic terms like “homestyle,” “traditional,” and “Grandma’s” versus the same mealswithout those extra descriptors revealed an important insight: the descriptive labelsincreased sales by 27%.

Do This: Showing the details and craftsmanship of how a dish is prepared will help

diners appreciate it more. Work with a copywriter to get guests’ taste buds tinglingwith phrasing that is mouth-watering, scrumptious, and delectable.13

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Assignment TO DO: Take your current menu, place it next to you, and stare at it. Are your stars and puzzleshighlighted? What about your menu prices? How do you scan it; how does your business partner

scan it? What ideas do you have for the future design?1. How can you highlight your puzzles to turn them into stars?

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What is the decoy effect, and how can you apply it to your menu items?_________________________________________________________________________________________________

__________________________________________________________________________________________________________________________________________________________________________________________________

3. What is an important symbol on your menu?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. What is the “me too” effect and how can you apply it to your menu items?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. How many menu items should be in each category to address paradox of choice?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Lesson 4: Avoid These Common MenuGaffes At All Costs

You’ve learned the do’s of menu engineering; now let’s learn the don’ts. No more bestpractices; let’s learn some worst practices. Here are 10 menu mistakes you need toavoid at all costs.

1. DON’T Make It Hard to Read

This is a case of “over-designing” your menu that needs to be addressed - fast. Anyrespectable graphic designer will tell you that simplicity is always best. So don’tovercomplicate your font size, paper color, or font style. Don’t make font size toosmall or too large, and de nitely don’t print your menu on light paper with light ink, ordark paper with dark ink. Instead, think about the usability of your menu; will the lowlight in your restaurant affect its readability?

2. DON’T Use Space Poorly

There are two ways to use space poorly: cluttering space with too much, or using somuch white space that the customer wonders where the menu actually is. If you needto ll space, use pictures, or boxes, or even include information about your restauranthours, website, or social links.

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3. DON’T Forget About Your Branding

If a guest took your menu home as a souvenir, would they remember your restaurant? If yourmenu matches your restaurant branding, then most likely the answer is yes. Guests should be able

to visualize your décor, type of food, price range and whether you were casual or upscale dining,all from your menu. If your menu doesn’t match the branding in your restaurant, you’re missingout on an opportunity to make the guest experience that much better.

4. DON’T Make the Menu Itself Too Big

The size of the menu needs to take into account the size of the table, the place setting andthe table appointments. Oversized menus can be awkward to hold and handle while having aconversation with other guests, and overly cumbersome for waiters to collect.

5. DON’T Over ow It With Too Many Menu Items

While you may be tempted to offer your guests the world, it is possible for your menu to be toolong. At a certain point, additional menu items stop improving the guest experience and starthurting sales. When it takes longer for guests to place their orders, it slows down the table turntime or the time it takes to get guests through the line. The result is that you end up serving fewerguests during each shift. Keep your menu simple. Remove those dogs.

6. DON’T Oversell Your Menu Items

Here’s a common mistake: instead of simply emphasizing what they’re most proud of, somerestaurants shout it in their menu. Don’t go overboard; when highlighting certain menu items, itshould subtly guide your guests.

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7. DON’T Be Avant-Garde With Organization

It seems obvious, but it’s worth noting: menus should be organized logically. Items should be listed by menu groups. Allappetizers should be in one section of the menu, all of the burgers listed together, etc. The desserts should not appearbefore the appetizers. Menu groups should be listed in order of course. If guests nd the main courses rst, they mayignore the appetizers section entirely.

8. DON’T Ignore Upsell Opportunities

While your servers are likely trained to upsell certain items, the menu can also play a role. All potential modi cation add-ons should be listed on the menu. If there is a burger on the menu, note the option for bacon, mushrooms, and otherofferings and the additional price associated with each. If it’s right there on the menu, you won’t have to rely solely on theservers or risk missing out on easy upsell opportunities.

9. DON’T Print A Flimsy Menu

If you create menus that are overly susceptible to wear and tear (food, grease, water stains), you’ll have to spend that muchmore money replacing them. Consider laminating your menu, or using thicker paper to print on instead.

10. DON’T Have Your Chef Write Your Menu Descriptions

Unless your chef was once a professional copywriter, he or she should not be the only one writing menu descriptions.Instead, let a copywriter or publicist lead the project, with the chef and key wait staff giving their feedback.

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Assignment TO DO: Keep all of this in mind… and start designing! Or, give this guide to a menu designer youknow. Also give them an updated list of prices, your #1 star with directions to emphasize it, and alist of your puzzles with directions to emphasize them. Make sure your menu designer gives you aproof, or mock-up, of the menu design so you can approve it before it goes live. Notice any of thegaffes above? Return the menu for another draft until it’s perfect.

1. What is white space?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What are some ways you can accidentally “over-design” your menu?

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. What are some examples of upsell opportunities you can include on your menu?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. What are key ways to design the menu book itself?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

5. What do you think is the worst menu gaffe? (Opinion).___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Lesson 5: Experiment With Your Menu Like YouWould In the KitchenIt’s time to implement everything you’ve learned into a workable menu! You’veworked with your menu designer, your graphic designer, or your photo editingsoftware until your new menu is perfect. Congratulations!

Now, do this at least twice a year. When you change up your menu, change up yourmenu design, too. Or, if you don’t do a complete menu overhaul, A/B test your menu.

A/B testing is marketing jargon for testing one element on the menu to see if itincreases sales. Keep copy, font, and design the same, but change up which menu itemis highlighted in a box. It might increase purchase rate, a fancy term for the amount oftimes someone orders, based on your changes.

As the data changes, and it will quarter by quarter and year by year, you may nd yourpriorities change as well. Maybe you don’t want to focus on raising sales but insteadwant to focus on lowering costs. Whatever your “theme” may be, make sure yourmenu sticks to it.

With your menu engineering spreadsheet, you can also compare each time periodside-by-side with separate sheets to see where you’re improving and where you’renot.

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Assignment TO DO: Keep an eye on your restaurant metrics, and bookmark this course for next quarter (orhalf-year, or year, etc.) Congratulations, you did it!

1. What is A/B testing?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

2. What is purchase rate?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

3. What metrics should you look at when comparing different time periods?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

4. How often should you engineer your menu?__________________________________________________________________________________________________________________________________________________________________________________________________

_________________________________________________________________________________________________5. How has your menu evolved over the course of this course?

___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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Conclusion

Toast Restaurant POS has the advanced functionality you need to dig deep into your restaurantmetrics, automating sales, labor costs, food costs, and so much more.

Get to know your couch better with Toast POS; sign up for a demo today.

Whip YourMenu into

Shape.

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Documents

Menu Engineering Bootcamp