Article

How to use menu engineering and design to craft a profitable menu

March 20, 2025 · Authored by Brian Campbell, David Foster of Foster and Associates

For the majority of restaurant operators, solid profit margins can be difficult to achieve. Simply raising prices can alienate guests as can cutting portion sizes. One of the most effective ways to improve profit margins does not involve simply cutting food portions or raising prices across the entire menu. Instead, it involves utilizing menu engineering to identify those menu items within each category: appetizers, salads, entrees and desserts, that have the highest profit margins.

Let’s define menu engineering. Menu engineering is a strategic approach to designing and pricing your restaurant's menu with the goal of maximizing profitability. This means analyzing the performance of each menu item in terms of both popularity and profitability and then using this key data to optimize the menu layout, pricing, and promotion.

Key components of menu engineering

Item categorization

Menu items are classified into four categories based on their profitability and popularity:

• Stars: High profitability, high popularity.
• Plow horses: Low profitability, high popularity.
• Puzzles: High profitability, low popularity.
• Dogs: Low profitability, low popularity.

Menu analysis:

Using sales data and cost information, you can calculate the contribution margin (price minus cost of goods) for each menu item and assess their sales volume. Your costs should be determined by looking at the recipe cost per item based upon the most current cost of your ingredients. To do this means that your recipes/plate builds must be accurate and complete (be sure to include garnishes and condiments in the costing process). You may do this the old-fashioned way with Excel, but programs like Restaurant 365's recipe costing software can automatically calculate recipe costs using your standardized recipes, vendor price lists, and an ingredient cost database. Your sales information by menu item is typically available directly from your Point-of-Sale system and can usually be seamlessly integrated into your costing software.

Strategic adjustments:

David Foster is the Principal of Foster and Associates, a restaurant, bar and hospitality consulting firm. He may be reached at dfoster@fosterandassociates.net.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.