[00:00:00] Hey there, Chip Close here, host of the Restaurant Strategy Podcast. I want to talk today about menu engineering. Of course, a lot has been written on the topic over the last, I don't know, 40, 50 years. Menu Engineering is how do you use design and layout and fonts to guide the diner to order the things that you want them to order. Your menu shouldn't just be a list of all the stuff you're prepared to make, but it should guide people through a certain experience and drive sales. It is one of the most important sales tools out there. Today. I want to talk about how you use menu engineering to your benefit.
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[00:01:06] Thanks for tuning in. My name is Chip Close and this is Restaurant Strategy Podcast dedicated to helping you build a more profitable and sustainable business. Each week I leverage my 25 years in the industry to help you build that more sustainable and profitable business. I give talks all over the country. I wrote a book, it's called the Restaurant Marketing Mindset. I put out content here on the podcast twice every single week. I have a YouTube channel. You'll find me on Instagram, on Facebook, on TikTok. You also know that I run a coaching program. It's called the P3 mastermind. It's a group coaching program where I help restaurant owners and operators increase the profitability of their restaurants. I don't want to bore you with any of that. I have one request of you today. If you get any sort of value from this show, please take two minutes. Leave us a five star rating and review on Apple Podcasts. Easiest way to do that is go find Apple Podcasts. Leave us that review. You literally just let people know what you get out of the show, why you keep tuning in, and why you think they should tune in. That more than anything else, would help us grow this show.
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[00:03:02] Okay, so today I want to talk about menu engineering. I want to talk, I want to talk about this in two sections. Number one is how do we get the data that we need? Right? Because our decision making is only as good as the data we use to make those decisions. And then I want to say, okay, well, now we got all the data. Now I know, now I, now I know what's going on, but what should I do with that? So we're gonna have two parts to this conversation. How do we gather the data so that we can make more informed decisions? And then what decisions should we be making? What do you need to know about menu design? This is really important. For the first time ever, I'm really going to spend some time talking about the digital component as well because there are things you can do on your online ordering platform, you can do on your third party delivery platforms that will help you increase revenue. Okay, so menu and menu engineering. Menu engineering was topic that was sort of, I don't know, coined in the 70s and then a lot has been written about it since. You might know that menu matrix where you got your stars, your dogs, your plow horses, right? We'll talk a little bit about that. But if you say, hey, I don't know if I'm utilizing my menu to its greatest, to its fullest, how do you begin this conversation? The conversation I want to have today? You begin by collecting two important pieces of information. You need to understand the profitability of your menu and you need to understand the popularity of your menu. Now, you find those answers, number one, by looking at your food costs, right? So your recipe cards, that's how you determine the profitability of the menu you're serving. And then, and in order to determine the popularity, you run your product mix or your pmix, right? Let's start with that part first. The product mix report, right, Is you can generate that from your POS system or you can use a program like Aero to do it. But you're going to figure out how many of each item, right? Of, of each menu item you sold over a given period. So over a week or a month or a year, right? That's how you figure out the popularity. The best way to do this right so your POS system should allow you to do this. Do not just put all of the items into thing. You want to split it up by category so we can compare apples to apples, oranges to oranges. Meaning I don't care that you sold so many more steaks than you did fried calamari. I want to look at your appetizers and say, what were my most popular appetizers? What were my least popular appetizers? Same thing with your entrees, then your side dishes, then your desserts, then your signature cocktails, then your wines by the glass. Understanding where things are in the pecking order within your category becomes really, really crucial. That is an important, an important report that if not running at least once a month, you're missing a key opportunity. So if you run a product mix report every single month, you should see what was the most popular item you sold and how many of those you sold. What you'll do, what you'll figure out, you're going to determine that your most popular items sell 2 to 1 or 3 to 1 to probably the second place or third place item. Your, your leaders, right? The most popular items you sell a ton of. And those leaders should also be your most profitable items, right? Because they are popular. You want also be making a lot of money from those items. That's crucial. So you run a product mix report and you see what's sold, what's your most popular dishes, what are your least popular dishes? And then you run, you look at your recipe cards, right? So you look at your real time plate costs and you see how many, what, what dollar amount, right? What gross profit do I make from my items? And what you're looking for is to determine the pro, the popularity and the profitability of each item. Now, I was talking about this menu matrix, right? It's an x, Y axis. You can Google menu matrix, you can Google menu engineering and you'll see an image of this, but basically on your X axis. So the horizontal line on your matrix, you want to put profitable item, I'm sorry, popular items on the right and least popular items on the left. And then your Y axis, meaning the vertical line, is mapping profitability. So the most profitable items are at the top, the least profitable items are the bottom. And when you map all of your items, meaning when you build a matrix for your appetizers, you're going to see that there are some appetizers that are very popular and very profitable. Great. You sell a lot of them and you make a lot of money every time they sell perfect you're also going to notice a whole lot of items in the lower left corner, meaning they don't sell a lot and you don't make a lot of money from them. What happens is when you plot everything on this matrix, you're going to determine, you're going to determine what stays, what goes and what you can do with them. We're going to talk about that. That's the next part of conversation. But immediately right off the top of the bat, we need to understand the popularity and profitability of the items, right? So that you run your products, product mix, report your PMIX to see which items sell more than others, and then you look at your recipe cards so you can see the real time plate cost. And that's become more important now than ever before. But you want to be able to see which are your profitable items. And then you plot them right. What happens is when you plot them and you see which items are both popular and profitable, or which ones are unprofitable and unpopular, or sort of the, you know, complicated ones, which are the ones that are very profitable, you just don't sell a lot of them. What do you do with that? And then the other side, which are the ones that are very popular, you sell a ton, but you don't really make a lot of money doing it right. There are things you can do depending on what quadrant it lines up in. And again, you can Google this, you can learn a lot more than just what I'm telling you here. But in the beginning, if you're not doing this at least once a month, I can't impress upon you how crucial this is. You'll be able to make determinations about your menu. Now, let's take a step back. There's something important you have to understand. Your menu is not just a list of all the items that you're prepared to make that night. Your menu is a sales tool. Your menu, you know, side by side with your servers, your bartenders, you know, are tools to help guide, to help guide the diner through, to make sure they have the best possible experience and to make sure they experience as much of the menu as possible. And if you've got an item that's a signature item, so it's very popular and it's really profitable, you want to sell a lot of them, then you need to determine how you utilize your servers and your menu to sell more of those items. Perfect example, best one that comes to mind are the McDonald's french fries. They're the number one item on the McDonald's profit mix, which makes sense. They're sort of the natural side with whatever you're getting. But they're also the most profitable item on the McDonald's menu, right? So everybody gets them and McDonald's loves when they sell them because they make a lot of money every time somebody orders one. That's really crucial to understand those things, to understand how those two components work together. Your menu, guess what, can be arranged in a way that will guide people, that will guide people to what you actually want them to order. And if you didn't know that before, you know it now. And we're going to talk about the other side of this conversation, meaning once you got the data and you know what your profitable items are, you know what your popular items are, it begs the question, what are we supposed to do about it? That's we're going to talk about in just a second after a word from another one of our sponsors.
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[00:11:52] Hey, so chip close here. Welcome back to the restaurant strategy podcast. We are talking all about menu engineering. Talked about something called the menu matrix. You need to Understand the population popularity of your menu items and you need to understand the profitability of your menu items. Something that we talked about when John Taffer was on the show, he spoke about this, this idea of compression. Is it something that's happening in the year 2024, 2025, and it will certainly continue. Is this idea that restaurant footprints are getting smaller, menus are getting smaller, our staffs are getting smaller, we're figuring out how to do more with less. Less oversight, less management, less team to prep, cook and serve our items. Right. When we look at the future of our restaurants, you have to understand we can't out cheesecake the Cheesecake Factory. You can't succeed having 60, 70, 80, 90 plus items on your menu. Better to have a really tight, focused menu, right? To be able to have the things that are all, all stars, that are all superstars, that all punch above their weight, that people will love everything you serve. You don't need to have 14 appetizers. It's okay to have six in some instances. Just make sure those six are awesome, are very profitable and are going to be crowd pleasers. When we talk about using your menu, I want to talk in two different areas. Number one, the paper menu, which we'll get to in a second. It's still ubiquitous, it's still mostly what we find. But I want to spend just a couple of seconds talking about the digital menu because things are going digital that people order online, both on desktop and on mobile. They order through third party delivery apps, they order on kiosks. All of this is crucial. Make sure. Here's the thing I want to make sure you understand. Number one, pictures are worth a thousand words. If you do not have pictures on your online menu, you lose. You absolutely are failing to drive additional revenue, crucial revenue. So you've got to make sure every single item has pictures. It's clearly articulated. It's not a ton of descriptions there. It needs to be simple to follow. Make sure that your online ordering portal and or your kiosk has those upsell opportunities. They will sell better than a server or a cashier. It's just true. We've got now enough data to show it, so make sure it says, oh, would you also like to add or people like the, you know, people who ordered this also ordered that. Make sure you're utilizing those tools. A lot of kiosks have them in there. A lot of the online ordering portals had them have them in there. You just have to enable them and program them. They're so crucial. Make sure everything is Pictures. Make sure you're enabling all those pop ups and those recommendations, absolutely important. On your online ordering portal as well as on Uber Eats, DoorDash, Grubhub, etc. Make sure you have featured items and, or bundles or signatures, whatever you want to call it, right? Popular items, you know, fan favorites, signatures, you know, most popular, whatever it is, make sure you've got stuff right front and center. So before your appetizers and your soups and your salads and your entrees and all that, put some of those heavy hitters. It doesn't matter what kind of restaurant you have, you can and should be utilizing that feature. Those things are absolutely crucial. Obviously, as you go and look through online ordering portals and kiosk portals, you want to look at the functionality of it, right? If you're not spending time thinking about the user experience, you're missing a key point. Make sure you understand that the consumer doesn't make any difference between you, an independent operator, and a massive, massive organization like Taco Bell or Wendy's or McDonald's. They are still a place that they're spending their money and they're getting food. So they will expect your digital experience to be as good as the digital experience they have with McDonald's. They're not gonna, they're not gonna give you a pass. It's really crucial you understand that. So your digital, your digital ordering, the digital menu needs to be as dialed in as your paper menu. And I know you guys spend a lot of time on your paper menu. Let's talk about your paper menu. Once you figure out which of the ones you want to push, which are the ones you don't want to push. I talked about compression. John Taffer talked about this. It's okay if you're going to cut, let's say 10 to 20% of your menu. For many of you out there, you're going to have to cut more than that. But to get rid of 10 or 20% of your menu, if they're not, if items aren't selling and they're not profitable, just get rid of them. Every single time I go through like a menu engineering exercise with my clients, inevitably we cut about 20% of the menu. It's almost always my recommendation and I tell them it's not my job, it's not my restaurant. I'm not going to tell you what to do. I can make some recommendations, I can make some recommendations based on what the data is telling us. Now in my book the Restaurant Marketing Mindset, I wrote about this. It's chapter, I don't know. I think chapter nine or ten in the book page, I don't know.
[00:16:35] I talked about a bunch of rules that are worth remembering when it comes to laying out the menu. And I want to share some. I'm going to paraphrase some of them, but things that you should be. That you should be aware of, right? So I shared 10 insights in my book, 10 insights for better menu Design. It's all in the air. It's all in the chapter about menu magic, right? First thing I talk about in that chapter is that, is that usually the first and last item, typically the first and last item in a given category will sell more than everything in between. So think really carefully, carefully about what items you want to put in those areas, right? So if you've got a famous chocolate cake, maybe it wants to go front and center. But if you've got a famous chocolate cake and people are going to order it anyway, maybe just put that in the middle. If there's other things, maybe more profitable items, maybe items that you're trying to make a signature, you know, on the other hand, if you get a chocolate cake and it sells three to one, you know, to the next dessert, maybe you put it front and center, right up top, and you charge more for it. So if all your desserts are 10 bucks, maybe you charge 13 bucks for your famous signature chocolate cake. You put it in the pole position where everybody's going to see it, where people are most apt to order it, and you make it more expensive because it's. If it's your most popular, you might as well make it one of your most profitable items. That's absolutely crucial when it comes to reading the English language, right? We, we read left to right, top to bottom. Except we don't read menus, right? We as diners do not read menus the way we read a book. We don't read one line, then the next, then the next, then the next. First thing we do as human beings when we get a menu in our hands is sort of scope it out, right? And what happens is we, the eye usually moves in a Z pattern. Upper left, upper right corner are the most powerful. And then center, center, see, the eye will move all the way down to the lower left corner unless something stops it. Which PS as you design a menu, something should be in the center to stop the eye. So upper left, upper right, center, center become really crucial areas. And then bottom right corner, because the, the eye moves in a Z pattern, upper left, upper right. And then the eye will Move down to the lower left. Unless it's stopped with something in the center, maybe a big box or a call out or a big picture of your signature item. And then your eye, the eye, the human eye, will drift down to the lower right corner. So as you're laying out the menu, make sure you're utilizing those key pieces of real estate. Can't tell you how important that is, right? This has to do the. The third point has to do with John Taffer's idea of compression, right? Less is more. I would rather have a better menu and a smaller menu than a large menu that appeals to a whole bunch of people. It's okay if your restaurant isn't for everybody. At least it should be really clear who it is for, right? So less is more. Embrace the white space on the page. I can't tell you how important that is and how.
[00:19:26] How rare it is to find. We're finding it more and more, but still embrace the white space, right? Call outs. This is the fourth point I want to make. Call outs are absolutely crucial. So boxes or different fonts or colors or pictures or icons or, you know, a circle around something then. Then says signature or fan favorite or, you know, feature or new to the menu or spicy or vegan, whatever it is, call outs are a really important way to draw the diner's attention to where you want to draw it. Now you get to decide where you draw it. Something signature. If you just call it a signature, something is new and noteworthy. If you tell people it's new and noteworthy, if you call it a healthy option, whatever you want to do, whatever you want to call attention to, just make sure you call attention to it. We don't need to weight everything evenly, right?
[00:20:15] Next point I want to make has to do with price anchoring, right? I think every category of your menu should have a premium offering. So if most of your Appetizers are between $10 and $15, you should also have a 22 DOL offering or a $32 charcuterie plate or something like that. So make sure they're all in the same range. And then there's one premium item. Same thing with your entrees. All in the range. And then a premium item. Same thing. Even with side dishes. Let's say all your side dishes are $7. Have one for 12, it's okay. And make it worth 12 by all means. Same thing with specialty cocktails. If all your specialty cocktails are 15, make one that's 19. Or make one that's 22, it's okay. Make it worth it. But what happens is that it anchors the price in the eyes of the consumer, right? Human beings are very bad at determining value. We are very good at comparing value, right? So oftentimes a high priced item will get ordered just because it's there. Somebody always wants the most expensive something. Somebody always wants to impress their date or their client, right? The other thing is that people will see the most expensive item and they won't order that. And then they'll order the second most expensive item. So there's this Opus One test, right? So let's say you got a wine list, there's 100 bottles of wine on there. And the most expensive wine is a $125 bottle of Stag's Leap. And what happens is you'll sell three or four of them every single month because it's a specific kind of person who orders the most expensive wine on the list. But then you put a bottle of opus one on the list, that's 375, let's say. And what happens is you will sell three or four of those just like you used to sell three or four of the stags leaves and you will sell 20 or 30 of the stag sleep. Because there are a lot of people out there who don't want to order the most expensive. They don't want to be ostentatious, but they will order the second most expensive. I want something nice, but we don't have to go crazy, right? And there's some people who just want to impress their date, their client, their whatever. It's really important. This is the idea of price anchoring. Simply by having it on the menu, it will get ordered, number one. Number two, more importantly, it will anchor the price and make all the other items seem much more reasonable. It's absolutely crucial. Make sure you using premium items in every category.
[00:22:29] Number six, right? If the first thing you want someone to consider is a glass of wine or cocktail or a beer, make sure that's listed first. Don't put your appetizers first, put your cocktails first. Or better yet, don't greet the menu with menus. Don't have the host seat the table with menus.
[00:22:49] Instead have the host seat the table with your wine list. So enjoy your meal folks. I'm going to leave the cocktail menu here for you. Your server will be over just a second to get you ready for drink drinks and then they'll bring menus. Let them know that you haven't brought menus, that menus will come. But make sure you let them Know what you want them to focus on? I want you to focus on a drink right now. That's the first thing. So if the first thing you want someone to focus on is a drink, then make sure you just get them focused on drinks. Again, the menu as a sales tool, as soon as you give people menus, they start thinking about what they're going to eat, and they ignore what they're going to drink. So if you want to sell more drinks, make sure you just put the drink menu in front of them and just say, hey, great. Have you had a chance to look over the drink menu? What can I get from. What can I get you from the bar? You will sell more drinks if you don't seat them or greet them with regular menus. Just do the drinks first if that's what you want them to focus on first. One of the things that I want to talk about, right, The. The seventh point here is about signature items, right? Or specialty items. Items. It's okay. Sometimes you can take your most popular item and just remove it from the menu. And I know it sounds weird, but when you give it to the server, you let them do the heavy lifting, right? So when I worked at Gotham, we had probably our most famous dessert, or what became our most famous dessert was the Zapotarte Tatin for two. And what we did is we just pulled it off the menu, and it was just a verbal. It was a verbal special every single night. What happened is that then we didn't have to annoy people by telling them hi. Just so you know, we 86 the apple tart to tan. We sold out of it, right? We could just talk about it when we arrive. So just so you know, there's one additional dessert not listed here. It's our signature apple tart to 10. Right? And just by calling attention to it in that way, by calling it the signature, by saying it's something we're famous for, it's featured in the New York Times. It would get ordered more. And guess what? People who just wanted a little something, instead of ordering one dessert, they got that dessert, which was for two. It was twice as expensive as every other dessert on there. It's crucial. We don't often think about. About omission, but, you know, addition by subtraction is a real thing. It's crucial. Right? The eighth thing, the eighth point I want to make here is you got to assume that everybody's coming into the restaurant and everyone's going to order maybe an appetizer and an entree, and you have to think really clearly about what they're not expecting to order. So maybe they're going to get an entree and a drink, right? Then your job is to sell them an appetizer. Or maybe they're going to get an appetizer and an entree and a glass of wine. Your job is to get them a side dish and a cocktail or they're going to get an app at an entree. Your job is to make sure they get dessert. There's something, there's some work that you have to do to get something else on the menu or something else on the check that they weren't expecting to order, right? So whatever that is in your restaurant, make sure you position your menu and your servers accordingly to help sell those things. Number nine, you've got to make sure there are opportunities on your menu to upsell, right? It's the simplest thing, is, oh, we offer a Caesar salad. Do you want to add grilled cheese, chicken, or grilled shrimp to that Caesar salad? Right? Offering some way, right? Either on the menu printed or offering the server something in their back pocket. To do it will be crucial. The last point I want to make, the last point I talked about in my book, the restaurant marketing mindset, is the use of numbers, right? The use of how we list prices. The best way to do it is not have decimal points and to not have cents listed on the menu. I strongly urge you to just offer dollars. Menus now, over the course of inflation over the last hundred, 200 years, right? Prices are going up. We're now out of single digits. We're in double digits. Before long, we'll be in triple digits. When you add a decimal point and cents, right? Decimal point and, you know, two numbers after the decimal point, that pretty much reminds people of money. So remove the dollar sign or the pound sign or the euro sign and get rid of the decimal point and the cents. Just have the dollars or the pounds or the euros or whatever it is, whatever currency you've got. I strongly urge you to do this. It just for just a second, it just takes people out of it and just for a second, not remind them that they're spending money so they can focus on what they actually want and you can focus on selling them the things you know they're going to enjoy, right? When it comes to menu engineering, there are all kinds of things you can do. Sometimes it's featuring things. It's putting them in a. In a pole position, right? Center, center, or at the top of a catego. Sometimes it's just getting rid of them altogether, either not serving them anymore or just offering it as a back pocket for the server to offer. You have to think about all of these things. I hope what you do is internalize all this and go back and listen to this episode again because I think there's a lot of information here, there's a lot to absorb and there's a lot to apply to your menu. Again this is the topic of menu engineering. How you get more from your menu, how you let your menu do some heavy lifting. One final reminder before I let you go again. If you get any sort of value from this show, please take two minutes. Leave us a five star rating and review on Apple Podcasts that more than anything else. You wouldn't believe it but it helps us grow this community in profound ways. Appreciate you guys being here every single week. Thank you very much and I will see you next time.
[00:28:41] It.
