How to use the Menu Engineering to cope with inflation?

Foodservice professionals are thus encouraged to look for effective strategies to reduce their costs and adjust their rates, while maintaining customer satisfaction. We propose to analyze together, the existing solutions to calculate its food cost and use the Menu Engineering method to optimize your margin despite inflation.‍

What is Menu Engineering?

Menu Engineering is a strategic method of studying the profitability and popularity of dishes on a restaurant's menu. This approach involves analyzing your food cost as well as your margin in order to determine menu placement and pricing. Studies have shown that customers are naturally attracted to certain areas, particularly in the center of the menu. As you can see, product placement has an influence on consumer choice. It's an excellent way to boost restaurant profits!‍

Cost analysis and map adaptation

To increase the profitability of your establishment and keep foodcost under control, it's essential to carefully examine the costs associated with each dish on offer. The value of the goods used and the adjustment of your offer must take into account variations in inflation. The following lines detail the steps you need to take to successfully carry out this analysis and update, including considerations on goods flow management and finished product traceability.

Identifying high-margin dishes

Start by identifying the dishes that generate the highest gross margins, in other words, those whose selling price significantly exceeds the cost of the ingredients required to prepare them.

To do this, you need to ask yourself the following two questions:

• Is my plate profitable?
• Is my dish often ordered by customers?

It will be necessary to position each plate in this table with 4 boxes:

To accurately classify and control key indicators, you need to calculate the gross margin and turnover rate (frequency of orders over a given period) for each dish. Use the data provided by Inpulse, which also enables you to track supplies and deliveries, to help you better control logistics operations.

Optimizing ingredient costs

The next step is to reduce ingredient costs, a key element in goods flow management. Here's how to do it, taking into account the importance of traceability in guaranteeing the safety and quality of finished products:

• Negotiate with your suppliers to benefit from the best price and delivery conditions. Comparing offers, grouping your purchases, building loyalty with your partners or changing supplier are all strategies to consider.
• Minimize food waste and losses by controlling your stocks with Inpulse, scrupulously complying with hygiene and preservation standards, adjusting portions served and adding value to unsold products.
• Evaluate the possibility of replacing or eliminating the most expensive or least-used ingredients. Take care to preserve the quality and taste of your dishes. Whenever possible, favor local and seasonal products, or those on special offer.

Inflation-adjusted prices

The final step involves revising the prices of your dishes to reflect rising costs. To do this:

• Increase the price of unprofitable or high-demand dishes, taking into account what your customers are willing to pay (willingness to pay) and the price elasticity of demand. Use price psychology to highlight your dishes and justify price increases.
• Reduce the price of dishes that are highly profitable but in low demand, to make them more attractive and accessible. Promotional or cross-selling techniques can also stimulate demand for these dishes.
• Maintain the prices of highly profitable, in-demand dishes, by highlighting them on your menu as exclusive or limited offers. Creating menus or formulas that include these dishes can also encourage your customers to increase their average bill.

Maximize profits with the Engineering Menu

To increase your restaurant's profitability, once you've analyzed your costs and adjusted your menu, it's essential to apply Menu Engineering strategies. These methods aim to guide your customers' choices by integrating principles of marketing, psychology and design.

Let's make an example together using these two dishes:

• a Pizza Margherita
• a Cheeseburger

1) Inventory of your products

Make an inventory of your plates according to these different criteria:

• The wording of the product on the card
• The number of sales made through this product over a defined period
• The % of popularity of the dish in your menu. The following formula can help you define it: (100 x number of sales of the dish) / (number of total sales)
• The selling price of the product on the card
• The material cost for the production of the dish
• The unit gross margin generated by the product
• The total gross margin generated over the defined period (number of sales x gross margin per unit)

2) Calculation of the popularity and profitability rate

Once this first step is done, you must define the positioning of each of your dishes (star, cash cow, enigma, dead weight). To do this, study :

• The popularity rate: if the number of sales of your dish is higher or lower than the average number of sales.
• The rate of return: and whether the unit gross margin is higher or lower than the average gross margin per dish on your menu.

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3) Tapping into Menu Psychology

Play on the psychology of menus to guide your customers' choices. Use tips based on their emotions and perceptions:

• Display prices without currency symbols or pennies to reduce the feeling of expense.
• Introduce a varied price range to guide choices towards preferred dishes.
• Organize dishes in a logical hierarchy to simplify decision-making.
• Choose terms that evoke positive, desirable images.

You will then be able to create your menu by positioning the dishes according to the different categories:

• The stars: popularity rate > average and profitability rate > average. Highlight these dishes on your menu! You can digitize your menu with Zenchef or Tastycloudor highlight them on your interactive ordering terminals with Tabesto. This is the case for Luks Kebab which has already chosen solutions :

"Via Inpulse's data analysis, we can notice which product has a better food cost than the other, and via Tabesto highlight them in order to customize our menu, to have the best foodcost highlighted."

• Les vaches à lait : taux de popularité > moyenne et taux de rentabilité < moyenne. Proposez-les en seconde partie de menu, les clients sauront les trouver.
• Les énigmes : taux de popularité< moyenne et taux de rentabilité > moyenne. Vous pouvez changer leur nom pour les rendre plus attractifs.
• Les poids morts : taux de popularité < moyenne et taux de rentabilité < moyenne. Retirez ces plats de votre carte ou bien, proposez-les uniquement à des moments phares de l’année ou pour attirer la clientèle.

More expert advice to develop your Menu Engineering!

1. Change your recipes without the taste! Replace some of your products with similar, alternative products that are cheaper to buy. Offer the "dish of the month" with a particularly advantageous recipe, without protein for example.
2. List the dishes on your menu with diversified prices and not in ascending order. This will encourage the consumer to make a choice based on the product and not on the price.
3. Write catchy titles! Don't hesitate to add the origins of the ingredients or the method of preparation.
4. Set your prices according to the multiplier method and the Omnes principle. The price of your most expensive dish must be at most 2x higher than your opening range.
5. Invent new recipes at food cost . Use products for which you have negotiated a good purchase price with your suppliers. This is the case of Keyvan Badri who founded Mersea:‍

Now, thanks to Inpulse, we have several ways to act: we can rework our purchases with our suppliers, we can rework our recipes in another way, introduce new ones. We are lucky because we have more than 80 recipes. So thanks to Inpulse, we can react very quickly and get these new recipes on the menu."

Thanks to a tool like Inpulseyou can automatically calculate your food cost based on your recipes. Inpulse is a inventory management solutionInpulse is an inventory management solution that connects directly to your restaurants' cash registers, providing real-time stock updates. As a result, you can make decisions based on the actual food cost of your dishes. In these times of unstable prices, having access to reliable data in real time means you can react quickly.

Don't wait any longer request your demo to see how Inpulse can help you recover margin points!