Menu Engineering: Focus on Profitability

This edition of MRM's "Ask the Expert” features advice from Buyers Edge Platform on the topic of menu engineering.
Please send questions to Modern Restaurant Management (MRM) magazine Executive Editor Barbara Castiglia at

With restaurants reopening their patios and doors with limited menus and seats, now is the perfect time to make sure your menu is designed for margin, profitability and strong sales. However, effective menu engineering requires an honest look at your menu, your purchasing patterns and your data.

When is the last time you costed out your recipes?

To do this, ask yourself honestly: When is the last time you costed out your recipes?  Do you even have a system that ties recipe ingredients to actual purchases for real time recipe costs? 

To figure out the answers, pull sales reports from your POS system and rank the items sold by the number of covers sold. What is the food cost on your top moving items? 

Now reverse the list and ask: What is the food cost of slow moving items? If the costs are too high, now is the perfect time to take those slow moving, high cost, low profit dishes off the menu — and check your emotions at the door! If Grandma’s meatloaf isn’t profitable, Grandma would want you to remove it from your menu. 

Imagine that each of your menu items fits into one of four quadrants on a “Menu Engineering Matrix:"

  • Stars are high profitability/high popularity. Your guests order these items all day and put profit into your business. Focus on marketing these items and continue to leverage their popularity.
  • Workhorses are low profitability/high popularity. These movers keep revenue flowing, your kitchen is comfortable with cranking them out and enable the sale of higher-profit items from your bar and dessert menus.  Upsell workhorse orders and seek opportunities to reduce costs through ingredient and/or labor savings.
  • Puzzles are high profitability/low popularity.  Puzzles don’t see a ton of action through the POS, but when they do ring in, so does the cash. Work to market and tweak Puzzles in the name of driving.
  • Dogs offer low profitability/low popularity.  Items in this dreaded category have no business being on your menu, in your walk-in or even on your long list of things to think about. 

SKU Rationalization

Ensuring that ingredients are cross-utilized is paramount in driving profitability at your restaurant and is very helpful in the front-line operation. When looking at menu item performance and food cost metrics, walking through each of the ingredients in a particular menu item – to know how many dishes this ingredient is utilized in – is a perfect exercise to run through with each menu change cycle and addition. Your Star items (high profitability and high popularity) have enough performance and profitability to have a few unique ingredients in them.

But where this practice becomes more valuable is when looking at those items flagged as puzzles (high profitability, low popularity). If you have a menu item that is particularly profitable, but may bring in a lower volume of orders, it makes the most sense to make sure that every ingredient in that dish is utilized in at least one or two other dishes. This serves several purposes for successful operators:

1. Those ingredients get used more often than the low popularity of that dish in its entirety, so the operator lowers the chance of spoilage. 

2. When that puzzle item gets ordered, the operator recoups getting a good profit margin on these ingredients as they leave the kitchen. 

3. The items do not need require additional space in an already crowded line cooler or prep schedule just for a menu item that is not ordered as much as the restaurant’s mainstay stars and workhorses.

Prepared vs Scratch Items 

Consider what, if any, value you are adding to products by producing them from scratch. There are many great ingredients and menu items produced in factories that may just need some finishing touches rather than a full from-scratch production. Ask your distributor reps and brokers to introduce you to value-added products and make sure that they fit your brand and menu application. 

Look at your core menu and what you’re known for. Focus on that and continue to simplify your menu, and figure out what will translate best for your customers’ takeout and delivery demands. Then, if there are areas where you can incorporate convenience items into your menu, do it. 

Do not replace items you’re known for with convenience items, but look at what switches you can make in order to continue to follow through with labor and cost savings goals.  Key areas to look at may be breads, dressings, sauces, and soups.

Labor Considerations and Frozen vs Fresh

Supply chains are going to be interesting over the next few months as distributors work to level the supply to the wave of demand coming from re-opening as well as manufacturers and producers running into their own labor and supply issues. 

Do you even have a system that ties recipe ingredients to actual purchases for real time recipe costs? 

As such, utilizing frozen goods as a replacement of their fresh counterparts offers a good option for more flexible applications. When looking at what can be made from frozen ingredients vs. fresh, try to think of the structural integrity of the ingredient in the final dish. Take chicken noodle soup as an example: The chicken in this soup will have been cooked, diced or pulled, and left in the soup for a longer period of time. Do you really need fresh 6-ounce breasts to be roasted off for this soup? Or could you utilize an IQF chicken breast of any size to accomplish this? 

You can save additional dollars on this ‘commodity chicken’ by working with your distributor to understand what they have in their warehouse at the lowest cost per pound. Even if it is frozen, with good planning you can have an adequate supply of chicken and save on the food cost built into this soup. But it doesn’t stop at that chicken, let’s also look at the vegetables as well, because products like diced mirepoix can be purchased frozen in mix form or as separate vegetables from your distributor. 

Now, not only are we saving food dollars, but your prep cook can get back to the rest of their list instead of wrestling a knife through a carrot.