Menu

engineering tool
Introduction:

Menu engineering is an analysis tool that labels menu items within a competitive menu group using
their respective popularity and contribution margin.

Please note that menu engineering is not an exact science. Conducting the analysis will give you a
snapshot of how your menu is performing from an analytical data point of view and suggest some
actions and opportunities for improvement. Findings from this tool should be coupled with your
understanding of the business, guest feedback but most importantly, make sure that you stay relevant
to your concept.

The following tool has been created following the method developed by Kasavana and Smith, who are
recognized as the pioneers of menu engineering.

The menu engineering process should not be onerous. In its simplest form, it just involves meeting on a
monthly basis (or whenever the menu is about to be changed), reviewing the classifications, and using
those classifications to guide some of the menu changes and upselling plans.
the tool
on MGS

1. Login on http://mgs.marriott.com

2. Click on Continental division > Asia-Pacific

3. Click on the Operations > Food & Beverage tab

4. Select Tools tab > Menu engineering

5. Download the Excel (.xlsx) workbook

menu metrics
calculation
COST OF GOODS SOLD

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

Cost of Goods Sold refers to the cost required to create each of the food and beverage
items on your menu. COGS is a representation of your restaurant’s inventory during a
specific time period. In order to calculate COGS, you need to record inventory levels at the
beginning and end of a given period of time, and any additional inventory purchases.

MENU ITEM FOOD COSTS

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

“Cost of purchasing” not only includes the price you paid on the item, but any delivery fees,
interest, return charges, or other expenses related to purchasing inventory (excluding labor
costs).
menu metrics
calculation
FOOD COST PERCENTAGE

Food cost percentage is menu item food cost / menu price. Calculating food cost percentage
requires you know exactly what you’re paying for when ordering food, which ingredients
match with which recipes, and how much each ingredient cost. Food cost should be a
benchmark that you track on a weekly, monthly, or quarterly basis. This metric will be needed
for your menu engineering.

CONTRIBUTION MARGIN

Contribution margin measures how much profit you’re making on one individual menu item
within a certain time period. In other words, it’s the revenue left over after the cost of
ingredients has been subtracted. Contribution margin is an efficient way to measure profit,
analyze how sales affect net income, and ultimately explain how different factors of your
business react to changes.
data information
needed for menu engineering
In order to fill and make use of the menu engineering tool, a few basic data information will be needed for
each of the menu items and menu categories that you wish to include in your analysis.

NUMBER OF ITEM SOLD ITEM FOOD COST ITEM SELLING PRICE

This simply refers to the This refers to the individual menu item
number of item sold individual menu item cost selling price as per
within the time period you (cost of each ingredient + indicated on your menu,
wish to analyze. cost of purchasing). excluding taxes and
service charge.

Where to find these information?

Data in regards to the number of individual items sold is available and can be easily retrieved from your
Point of Sales. From there, you can easily extract the data needed for the specific period you wish to
analyze. Item selling price should be as per the menu presented to the guest. For the item cost, work
with your team to collect this data for each individual items on the menu.
tool set-up

1 As you open the workbook you will be required to input some basic information to ensure the proper set-up of the calculation:

▪ Enter your hotel name (i.e. The Ritz-Carlton, Sample)

▪ Enter the outlet name for which you will analyze the menu (i.e. The Grill)
▪ Enter the period covered. This refers to the time period you wish to analyze the performance of your menu. (i.e.: If you are
analyzing the performance of your menu for Q1 2019, you will enter 01/01/2019 to 03/31/2019). Date format: MM/DD/YYYY.
▪ Finally, please select the currency you wish to use in the analysis. All data input will have to be aligned with that currency.(Selling price, Profit, etc.)

Once ready, and all boxes are green, click Get started!
Your set-up input will be reflected accordingly in the tool…

Currency is updated in All revenue related figures in the table The top-right box is reflecting
the scatter-plot chart are reflecting the currency sign selected the set-up input information
fill the tool As you fill each yellow rows, all metrics
will automatically be calculated

2 To activate the tool, fill the information related to the menu you wish to analyze. Only cells highlighted in YELLOW should be filled. Other cells
and metrics will be automatically calculated based on your input. White cells are locked to avoid any calculation issue.

▪ Fill “menu item name” column using items name as per your menu or as per your POS set-up if you’re using abbreviation. All menu items
should be unique in their names.

▪ Fill menu category accordingly. Menu category refers to the breakdown that you’re using to categorize your menu. i.e. Appetizer, Salads,
Main courses, Desserts, Noodles, Pizzas, Side dishes, Sushi, etc. Items should always be categorized within a competitive menu group. For
example, a NY Strip steak can’t be compared and under the same category as your soup of the day.

▪ Fill number of item sold, item food cost and item selling price for each individual items. Please refer to page 6 for more information on these
metrics.
 Each number / bullet reflects a menu item
Intersection for each of the four quadrant. Menu categories imputed in the table are
from the below table. Refer to the column
The cross point is calculated based on reflected here. Use this to filter each
“#” in red to identify your menu item name
average popularity and profitability categories and review the analysis

Number in this column refers to the This table provides a summary of Profit and Popularity categories are
numbers shown in the scatter-plot the key performance metrics. Note calculated for each item. These are
chart. Each individual item can be that the summary is updated determining the respective menu item class.
easily identified using this number. based on the filter that are applied.
 insights
how to interpret
the results ?
RECOMMENDATIONS TO IMPROVE YOUR MENU
menu items
classification guidelines
For each menu category, the menu engineering tool assigns
each items to one of four quadrants based on there
popularity and profitability category.
POPULARITY CATEGORY
MENU ITEM CLASS POPULARITY PROFITABILITY

The classification guideline for popularity is when an item’s STARS HIGH HIGH
selection rate (or percentage of overall sales mix) exceeds 70 PUZZLES LOW HIGH
percent of the average popularity for the group (menu
popularity factor). If the demand for a particular item is less PLOW-HORSES HIGH LOW

than 70 percent of the average popularity, then the menu DOGS LOW LOW
item is classified “Low” popularity. If the demand for a
particular item is more than 70 percent then the menu item is
classified “High” popularity.

PROFITABILITY CATEGORY PLOW-

STARS
HORSES

Popularity
The profitability dimension compares the contribution margin
of each menu items in the group (selling price minus food
cost) to the weighted average contribution margin of all
menu items within the group being analyzed. The menu
items that have an individual contribution margin greater DOGS PUZZLES
than the menu's weighted average contribution margin,
receive a classification of “High” contribution margin. Those
that do not equal the menu’s weighted average contribution
margin are labeled “Low” contribution margin. Profitability
 Stars
Popularity

Profitability

high profitability and high popularity

Your stars are your most popular and most profitable items.
These are the ones you want to maintain and highlight on your menu.

actions:

▪ Ensure consistency and do not change the quality of the product served.

▪ Your menu design should highlight your stars. Emphasize and feature them in a
prominent location on the menu. You want to sell those items, so make sure that
customers see them.

▪ Promote them any way you can. Work with your Sales & Marketing team to
promote these items during campaigns and social media activation.

▪ Educate and train your team to suggestively sell those items to your customers.
Use incentives, sales promos/contest to motivate your team.

▪ Test the possibility of increasing contribution margin by raising the price slightly.

▪ Consider menu extensions on this item (add-on, supplement).

 Plow-horses

Popularity
Profitability

low profitability and high popularity

Your plow horses are usually very popular items that customers don’t need to be
reminded of. They have low profitability and high popularity.

actions:

▪ Review Pricing. Is your pricing strategy relevant for these items? Compare your pricing vs.
the competition. A thorough study of the market will reveal the appropriate price and pricing
strategy for these items.

▪ Look at the portion size. See if the portion size is killing profit; are customers leaving these
menu items on their plates? Any particular feedback from your customers in regards to the
portion size?

▪ You also might try experimenting with fewer ingredients or less expensive ingredients. That
will help to increase contribution margin. However, make sure that it does not affect the
overall satisfaction of the guests and perceived value of the menu item. Test and learn.

▪ You might try experimenting a more profitable version by working with your suppliers to get
a better price for the same quality item.
 Puzzles
Popularity

Profitability

high profitability and low popularity

Not popular but profitable items are often a puzzle. Your puzzles are your hidden
gems. They’re valuable, but customers don’t see them as viable options. They’re
highly profitable, but difficult to sell.

actions:

▪ Engage with your customers. Investigate whether they like these items. You may
need to reinvent or rename them in a more attractive way.

▪ Shift demand to these items by repositioning them on the menu. Feature and
highlight these items on your menu, and make them specials.

▪ Encourage servers to suggestively up-sell these items. (i.e. incentives, contest)

▪ Consider decreasing the price slightly or adding value by offering a larger portion
size or add-on option. That will help increase popularity to produce higher overall
profits. However, you need to be cautious so that you do not change the item into
a popular but unprofitable item.
 Dogs

Popularity
Profitability

low profitability and low popularity

You want to have as less as possible dogs on your menu.

These items aren’t contributing to profit or profitability.

actions:

▪ These items should be “strategic dogs” which balances menu (i.e. gluten-free) or
supports and strengthen the overall concept of the restaurant.

If it is not the case, determine why these items are not selling:

▪ Engage with your customers and ask feedback on those items. Consider adjusting
and reinventing these items accordingly (price/ingredients/plating/name).

▪ Review the menu description and design. A change could help improve sales.

▪ If those items keep being neither popular nor profitable they are obvious
candidates to remove from the menu.
Example
case study
context THE GRILL
SEAFOOD, STEAK & MORE
Let’s put the tool in practice using a concrete
example !
STARTERS FROM THE GRILL SOUPS & SALADS
- - -
IBERICO HAM RIBEYE STEAK CAESAR SALAD
CASE EXAMPLE : tomato toast, guindillas pepper /18 12oz / 27 romaine, croutons, parmesan / 14

BURRATA NY STRIP STEAK CRABMEAT SALAD

heirloom tomato, olive oil / 16 14oz / 32 peanut chili sauce / 16
The Ritz-Carlton, Sample is located in New York and
MARINATED ANCHOVIES GRILLED PORK T-BONE PRAWN SALAD
has 4 F&B outlets. 1 All-Day-Dining, 1 Lobby Lounge, cappers, garlic toast / 14 roasted fennel, mustard jus / 24 watercress, balsamic / 12
1 Rooftop Bar and 1 Specialty Grill restaurant called
BEEF TARTARE WAGYU BEEF SIRLOIN FETA CHEESE SALAD
THE GRILL. Australia beef, crispy toasts / 16 Chef’s signature sauce / 35 artichoke, grilled peppers / 14

The Chef de Cuisine of THE GRILL has created and MARINATED SCALLOPS GRILLED BARAMUNDI MUSHROOM SOUP
brown butter, cappers, lemon / 15 served with guindillas pepper / 27 garlic toast, cream / 9
launched a new menu since the 1st of January 2019.
(See menu on the right). RED PRAWN CARPACCIO THE BURGER LOBSTER BISQUE
wakame seaweed / 14 served with onion rings / 23 brandy cream, chives / 12
As we are now in early April, the management team MARINATED BEETS CORN FED SPRING CHICKEN SWEET CORN SOUP
of the outlet would like to assess the performance of goat cheese, xeres dressing / 12 Spatchcock style, rosemary jus / 23 fresh herbs / 9
the new menu over the first 3 months in order to
identify what’s working and what needs attention. ON THE SIDE SWEETS
- -

ROASTED ASPARAGUS OUR CLASSICS APPLE CRUMBLE

Period covered: hollandaise sauce / 9 - vanilla ice-cream / 8

HOMEMADE FRIES CLAM LINGUINI CHOCOLATE FONDANT

1st of January 2019 to 31st of March 2019 rock salt, truffle oil / 8 chili, garlic, parsley / 19 caramel sauce, berries / 9

CHERRY TOMATO CONFIT BRAISED BEEF TONGUE PROFITEROLES

rosemary jus / 8 mashed potato / 22 hot cholate sauce / 9

MUSHROOM RISOTTO VEAL CHEEK SEASONAL FRUIT SALAD

shaved parmesan / 12 Osso-Bucco style / 24 based on market availability / 7

MASHED POTATO CATCH OF THE DAY LEMON MERINGUE TART

salted butter, chives / 8 asparagus, white wine sauce / 25 meringue crust / 8

GRILLED CORN CRISPY FISH BURGER CHEESE CAKE

manchego, lime / 8 tartar sauce, onion rings / 21 red fruit coulis / 8

CREAMED SPINACH
baked with gruyere cheese / 8 all price in USD. Tax inclusive.
Please note: This menu has been created as a sample for the only
purpose of this exercise. It should not be re-used in any case.
 MENU ITEM NAME MENU CATEGORY # OF ITEM SOLD ITEM FOOD COST ITEM SELLING PRICE

IBERICO HAM STARTERS 457 $9.0 $18.0

data input BURRATA

MARINATED ANCHOVIES

BEEF TARTARE

MARINATED SCALLOPS
STARTERS

STARTERS

STARTERS

STARTERS
520

187

420

320
$5.2

$3.9

$5.8

$3.0
$16.0

$14.0

$16.0

$15.0

RED PRAWN CARPACCIO STARTERS 212 $6.3 $14.0

As a first step, the team collected all the data required to run
MARINATED BEETS STARTERS 450 $3.9 $12.0
the menu analysis. They collected the number of items sold
RIBEYE STEAK FROM THE GRILL 429 $9.5 $27.0
for each individual items available on the menu, for the period
NY STRIP STEAK FROM THE GRILL 522 $12.5 $32.0
of 1st of January until 31st of March 2019. The Chef provided GRILLED PORK T-BONE FROM THE GRILL 270 $6.9 $24.0
the food cost for each of the items over that period. The WAGYU BEEF SIRLOIN FROM THE GRILL 393 $16.9 $35.0

selling price was then inputted as per shown on the menu. GRILLED BARAMUNDI FROM THE GRILL 384 $8.0 $27.0

THE BURGER FROM THE GRILL 594 $5.7 $23.0

CORN FED SPRING CHICKEN FROM THE GRILL 495 $5.1 $23.0

CAESAR SALAD SOUPS & SALADS 534 $4.5 $14.0

CRABMEAT SALAD SOUPS & SALADS 294 $5.8 $16.0

PRAWN SALAD SOUPS & SALADS 336 $2.9 $12.0

FETA CHEESE SALAD SOUPS & SALADS 429 $2.9 $14.0

MUSHROOM SOUP SOUPS & SALADS 375 $2.0 $9.0

LOBSTER BISQUE SOUPS & SALADS 291 $2.8 $10.0

SWEET CORN SOUP SOUPS & SALADS 435 $2.5 $9.0

ROASTED ASPARAGUS ON THE SIDE 480 $3.8 $9.0

HOMEMADE FRIES ON THE SIDE 768 $1.2 $8.0

CHERRY TOMATO CONFIT ON THE SIDE 594 $2.5 $8.0

MUSHROOM RISOTTO ON THE SIDE 369 $5.8 $12.0

MASHED POTATO ON THE SIDE 471 $1.8 $8.0

GRILLED CORN ON THE SIDE 447 $1.4 $8.0

CREAMED SPINACH ON THE SIDE 492 $2.2 $8.0

CLAM LINGUINI OUR MAINS 468 $6.1 $19.0

BRAISED BEEF TONGUE OUR MAINS 298 $9.2 $22.0

VEAL CHEEK OUR MAINS 429 $10.3 $24.0

CATCH OF THE DAY OUR MAINS 528 $8.8 $25.0

CRISPY FISH BURGER OUR MAINS 555 $6.1 $21.0

APPLE CRUMBLE SWEETS 180 $1.4 $8.0

CHOCOLATE FONDANT SWEETS 522 $2.3 $9.0

PROFITEROLES SWEETS 369 $3.2 $9.0

SEASONAL FRUIT SALAD SWEETS 330 $1.5 $7.0

LEMON MERINGUE TART SWEETS 456 $1.8 $8.0

CHEESE CAKE SWEETS 594 $1.4 $8.0

filling the tool

Once the data is collected, fill the tool and yellow cells accordingly.
Copy-paste or type-in the data. Make sure that you are using the
same currency that you have selected in your set-up. As you fill the
yellow cells, all other key metrics, profit category, popularity category
and menu item class will be automatically calculated.
analyze
To start analyzing, select the category that you wish to look at. In the example
below, the Starters menu group is being analyzed. All calculation and the chart
will be updated accordingly. Please note that for the analysis to be accurate,
each menu item group should be analyzed independently.
analyze

As you select the category you wish to analyze, the summary tab will be automatically updated.

In the above example, we are looking at the STARTERS. The number of items is 7. 2,566 starters were sold over the period of 1st of January to 31st of March 2019.

The Starters generated a total revenue of $39,052 for a total cost of $14,032.9 (35.9%). The average item gross profit is $9.8 and average item contribution margin is
$3,574.
analyze
Based on your inputs and filters applied, the chart and the calculation table are providing
insights on your menu. Menu item class is calculated based on the respective profit and
popularity category.

STARS PLOW-HORSES PUZZLES DOGS

BURRATA IBERICO HAM PLATE MARINATED ANCHOVIES RED PRAWN CARPACCIO

BEEF TARTARE MARINATED BEETS

MARINATED SCALLOPS

In this specific case, out of the Starters menu group, the Burrata, the Beef Tartare and the Marinated scallops are considered as the STAR items on the menu (above
average contribution margin and sales volume). The Iberico Ham Plate and Marinated Beets are considered as PLOW-HORSES (below average contribution margin and
above average sales volume). The Marinated Anchovies is a PUZZLE item (above average contribution margin and below average sales volume) while the Red Prawn
Carpaccio is a DOG item (below average contribution margin and sales volume).

This exercise should be done for each of the menu categories in your menu. Use these classifications to determine possible actions to take with each menu item. Please
refer to page 11 to 16 for action recommendations.
analyze
For more insight, click on the second tab “ Breakdown by Menu Categories”

Click here

This tab will provide you with a consolidated view of the performance of each items within
their respective menu group. Key metrics are provided for easy reference as well as sales rank
to understand which items are selling the most.
Menu
Design psychology
Introduction:

The menu is the most important internal marketing and sales tool for your restaurant. After menu
engineering and numbers, comes design. While you can expect that all your customers will read your
menu, they will only spend a very short time before making a decision.

Your menu needs to be more than a list of food with prices; it needs to educate and entertain your
guests. Your menu has a direct influence on what customers order and in turn, an immediate impact on
your sales revenue. Your menu should be designed to drives sales, wins loyalty and boosts profitability.
Divide the menu into logical sections
1. Paradox of choice
According to George A. Miller, [researcher in cognitive
psychology], most guests may only 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 menu items crowded in your menu, the
more anxiety guest feel to choose the right dish. This is the
paradox of choice.

To combat the paradox of choice, make it easy for

customers to search for dishes by arranging items
sequentially and in logical groups. “Cluster” similar pieces
of information together: Dim sum, Pizzas, Main Dishes,
Appetizers, Desserts, etc.

This helps guests remember the highlights of each list.

Make it easier for guests to scan your menu by offering
guest options per food category.
2. Pay attention to semantic
salience (don’t emphasize currency signs)
Semantics refers to the relationship between signs and symbols and their
meaning(s). So when we’re talking about semantic salience in menu design,
we’re referring to how noticeable and important a symbol’s meaning is to a
specific situation or decision-making process.

In the menu this apply specifically to pricing. It is not about what the actual price
of your menu items, but rather how they’re presented to your customers.
Consider how symbols affect your menu price presentation.
inspiration 1
Below is a few way to display price:

▪ $16.00 ▪ 16.00 ▪ Sixteen dollars

▪ $16 ▪ 16 ▪ USD$ 16

dollar sign makes the price more conspicuous, adding salience. While all of
these prices are indisputably equal amounts, the options including a dollar sign
tends to be associated with having to pay, and having to pay tends to be
associated with losing money, which is never someone’s first option.

Researches have shown that menus that present prices using any currency
related symbol will yield lower consumer spending than those that do not.

Consider removing any currency sign from your menu. Instead, advise
your guest the currency by adding a line on the bottom of your menu such as
“All price in USD”. One alternative is to use the currency sign once only, by
displaying it on the top of your menu price column.

inspiration 2
 GAZING PATTERNS
3. Be aware of eye
scanning patterns Eye flow

Area of most attention

Location of items on the menu is important. A common
way of focusing attention on a specific item is through its
strategic placement.

The location where the reader gazes first, “the sweet spot”
is the best location on the menu. Ideally, use these area of
great awareness in your menu to promote your Star items,
items that are unique to the concept of your restaurant 1 - Page
and provide a good return.

Call attention to these items by using special graphics

treatment, icons, boxes, highlights or colors.

2 - Page

Tri-Fold

The menu above places high-priced seafood in the upper right-

hand corner, highlighting it with a tasteful illustration rather than
a photograph. The Shrimp cocktail is also highlighted in a box
and stands out from the rest of the menu items. Multi-Page
 3. The use of
illustrations
Illustrations are a way to
communicate and add emphasis
to some part of your menu.

Illustrations can be uses to

highlight some specials or Chef’s
recommendation, tell a story (i.e.
Inspiration 2),
highlight different cooking
technique (i.e. BBQ) or menu
sections (i.e. Inspiration 1), show
guest in an attractive way a
inspiration 1 inspiration 2 glimpse of how the item will be
served (i.e. Inspiration 3),
highlighting different section of
your restaurant (i.e. Inspiration 4),
or showcased the ingredients use
in the preparation of the items
(i.e. Inspiration 5).

Before using illustration, ensure

that it relevant to your overall
restaurant or bar concept.

inspiration 3 inspiration 4 inspiration 5

3. .. Or
photography.
Similarly to illustrations, photography in menu can
help strengthen your overall concept and help to
showcase specific menu items that you want to
highlight.

However, excessive photos and poor-quality photos

is easily associated to cheap and low-end venues.
You want to avoid that.

If you do use photos, make sure that they are of

extremely high professional quality. Also, do not
photography all items. Only highlight a few
signatures or appealing dishes that showcase your Upcoming
concept. Ensure that consistency between the Siam Tea Room
pictures and what is actually being served to the
guest. You do not want to create disappointment.

Cons: If you plan to change your menu regularly, it

will involve new pictures, enhance high cost.

Upcoming
Siam Tea Room
3. Social Media
Use your menu to showcase your social
media accounts.
The menu is the most important internal marketing and sales tool for your restaurant.
After menu engineering and numbers, comes design. While you can expect that all your customers will read your menu, they will only
spend an average of 109 seconds before making a decision, according to Gallup research.
Your menu needs to be more than a list of food with prices; it needs to educate and entertain your guests. Your menu has a direct
influence on what customers order and in turn, an immediate impact on your sales revenue. Menu engineering techniques and menu
design best practices will help you craft a compelling menu that drives sales, wins loyalty and boosts profitability.
10 Best practices when designing your menu
1. Paradox of choice
2. Decoy effect
3. Bracketing
4. $ Sign – Semantic Salience
5. Eye pattern
6. Descriptive labels
7. Price not as a column – Centered justification
8. Boxes highlight
9. Chefs recommendation
10. Photography (use beautiful example from beverage Ranim menu + illustration + Marquis)
https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1752&context=articles

https://www.deepdyve.com/lp/emerald-publishing/menu-design-can-menus-sell 36m30JzWi0?articleList=%2Fsearch%3Fquery%3Dmenu%2Bdesign

https://www.theguardian.com/lifeandstyle/2010/jan/21/menus-cunning-marketing-ploys

https://www.webstaurantstore.com/article/89/me
nu-psychology-the-science-behind-menu-
engineering.html
eye pattern

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1
1
1
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5 5
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