Menu Engineering - How to Design a Profitable Restaurant Menu?

Menu engineering is the process of designing and analyzing a restaurant’s menu to increase profits while keeping customers happy. It helps restaurant owners understand which items sell the most and which bring in the highest profits. 

For new restaurant owners, especially those preparing for a soft opening, menu engineering is a game-changer. It ensures that every item on the menu serves a purpose—either by attracting customers or boosting profit margins. 

A well-engineered menu can improve customer experience, reduce waste, and make pricing more strategic. In this article, you’ll learn everything about menu engineering—from analyzing your menu items and pricing strategies to designing an effective menu layout. 

Let’s get started!

Analyzing Menu Items

Analyzing your menu items is a critical step in menu engineering, enabling you to identify which dishes enhance your restaurant's profitability and which may need reevaluation. 

This process involves assessing both the financial performance and popularity of each item, allowing for strategic decisions that can lead to increased revenue.

1. Collecting Sales and Cost Data

Begin by gathering detailed data on each menu item:

• Sales Volume: Track the number of units sold over a specific period.
• Food Cost: Calculate the total cost of ingredients for each dish.
• Selling Price: Note the price at which each item is sold.

For example, if your grilled salmon sells 150 units in a month at $25 each, and the ingredient cost per dish is $10, this data will be foundational for further analysis.

2. Calculating Contribution Margin

The Contribution Margin (CM) indicates how much profit an item contributes after covering its food cost. It's calculated as:

Contribution Margin (CM) = Selling Price - Food Cost

Using the grilled salmon example:

• Selling Price: $25
• Food Cost: $10

Contribution Margin: $25 - $10 = $15

This means each grilled salmon sold contributes $15 towards covering fixed costs and generating profit.

3. Determining Item Popularity

Assess the popularity of each item by calculating its sales frequency relative to total sales. This is done using:

Popularity Percentage = (Number of Units Sold / Total Units Sold) × 100

If your restaurant sold 1,000 dishes in a month, and 150 were grilled salmon:

Popularity Percentage = (150 / 1,000) × 100 = 15%

This indicates that grilled salmon accounts for 15% of your total sales.

4. Classifying Menu Items

With contribution margin and popularity data, categorize each menu item into one of four groups:

• Stars: High profitability and high popularity.
• Plowhorses: Low profitability but high popularity.
• Puzzles: High profitability but low popularity.
• Dogs: Low profitability and low popularity.

For instance, if the average contribution margin of all dishes is $12, and an item's CM is above this average while its popularity exceeds 70%, it's classified as a Star. Conversely, an item with a CM below $12 and popularity below 30% would be a Dog.

5. Making Data-Driven Decisions

Once items are categorized, implement strategies for each group:

• Stars: Feature prominently on the menu and consider slight price increases.
• Plowhorses: Explore cost reduction or slight price adjustments to improve margins.
• Puzzles: Enhance marketing efforts or adjust pricing to boost popularity.
• Dogs: Consider removing from the menu or reinventing the dish.

By systematically analyzing and categorizing your menu items, you can make informed decisions that enhance both customer satisfaction and your restaurant's profitability.

The Menu Engineering Matrix

Now, let’s explore each category in detail and discuss strategies to optimize your menu for maximum revenue and customer satisfaction.

1. Stars (High Profitability & High Popularity)

These are your best-selling, high-margin items, the backbone of your restaurant’s profitability. Customers love them, and they bring in good profit.

Example: A best-selling steak dish priced at $35, with a food cost of $12, gives a contribution margin of $23. If it’s among the top 20% of your menu sales, it’s a Star.

Strategies for Stars:

• Keep them visible – Highlight Stars on your menu with visual cues like boxes or icons.
• Slightly increase prices – Since customers already love these items, a minor price increase can boost revenue without affecting sales.
• Ensure consistency – Maintain high-quality ingredients and preparation standards to keep customers returning.
• Use for promotions – Feature Stars in marketing campaigns, combos, and special deals to maximize their sales.

2. Plowhorses (Low Profitability & High Popularity)

Plowhorses are frequently ordered but have lower profit margins due to high food costs. Restaurants often hesitate to remove them because they attract customers.

Example: A best-selling burger that costs $5 to make but sells for $10. The contribution margin is only $5, making it less profitable despite high sales volume.

Strategies for Plowhorses:

• Reduce food costs – Find ways to lower ingredient costs without affecting quality (e.g., negotiating with suppliers).
• Increase price cautiously – A small price adjustment, like $0.50 to $1, can improve margins without scaring off customers.
• Bundle with high-margin items – Offer Plowhorses in meal combos with Stars or Puzzles to balance profits.
• Control portion sizes – Reducing portions slightly while maintaining customer satisfaction can help improve margins.

3. Puzzles (High Profitability & Low Popularity)

Puzzles are high-margin items that don’t sell well, often because of poor menu placement, lack of awareness, or pricing issues. These items have potential but need better marketing.

Example: A seafood risotto priced at $30 with a food cost of $10. It generates $20 in profit, but customers rarely order it.

Strategies for Puzzles:

• Improve menu placement – Move Puzzles to more noticeable sections or create a “Chef’s Recommendation” highlight.
• Use suggestive selling – Train waitstaff to recommend these items to customers.
• Adjust pricing – If the price feels too high, test a slight reduction to make it more attractive.
• Rebrand the dish – A more appealing name or description can spark interest. Instead of Seafood Risotto, try Creamy Italian Shrimp Risotto.
• Offer limited-time deals – Promote these items as seasonal specials or exclusive dishes to create demand.

4. Dogs (Low Profitability & Low Popularity)

Dogs are neither profitable nor popular, making them the weakest performers on your menu. They take up space and ingredients that could be used for better-selling dishes.

Example: A fancy gourmet salad priced at $18 with a food cost of $12. It only brings $6 in profit and barely sells, making it a bad investment.

Strategies for Dogs:

• Remove them – If an item isn’t selling and isn’t profitable, consider taking it off the menu.
• Rework the recipe – Change ingredients, preparation, or presentation to make the dish more appealing.
• Test a price drop – If pricing is the issue, try lowering the cost and monitoring sales.
• Repurpose ingredients – If a Dog dish uses unique ingredients, find ways to use them in more profitable items.

Designing the Menu Layout

Your menu isn’t just a list of dishes, it’s a strategic sales tool. A well-designed menu can increase sales, improve customer experience, and boost profitability.

The Psychology of Menu Design

Studies show that customers scan menus in a predictable pattern, and understanding these patterns helps in placing high-profit items in the most visible spots.

Key Eye-Tracking Areas:

• The Golden Triangle: When opening a menu, customers typically look at the middle first, then the top right, and finally the top left. These are prime spots for high-margin items.
• Upper Right Corner: The best place for Star items (high-profit, high-popularity dishes).
• Bottom Left Corner: Often ignored, so avoid placing your most profitable items here.

Pro Tip: Use bold fonts, boxes, or icons to highlight best sellers, chef’s recommendations, and high-margin items.

Choosing the Right Menu Format

The number of pages in your menu should match your restaurant’s concept, customer expectations, and ease of navigation.

One-Page Menu (Best for Small Restaurants, Cafés, and Fast Casual Dining)

A single-page menu is visually appealing and easy to navigate, making it perfect for fast-service restaurants or places with limited but specialized offerings.

Advantages:

• Faster customer decision-making = faster table turnover.
• Easier to highlight high-margin items.
• Simplifies printing and updating.

Design Tips for One-Page Menus:

• Use sections with clear headings (e.g., Appetizers, Entrées, Desserts).
• Place the most profitable items in the center and top-right areas.
• Keep descriptions short and engaging (1–2 lines per item).
• Use icons for vegetarian, spicy, or gluten-free options instead of cluttering text.

Two-Page Menu (Best for Full-Service Restaurants, Upscale Dining, and Family Restaurants)

A two-page menu balances variety and simplicity, giving diners more options without overwhelming them.

Advantages:

• Allows for more categories while keeping the layout clean.
• Customers feel they have enough choices without decision fatigue.
• Easier to create visual balance and strategic placement of items.

Design Tips for Two-Page Menus:

• Place high-profit dishes on the top right of the right-hand page.
• Use negative space to avoid overcrowding.
• Keep category headers bold and distinct for easy scanning.
• Add chef recommendations or a “must-try” section to drive interest.

Multi-Page Menu (Best for Large Restaurants, Buffets, and Specialty Cuisine Restaurants)

For restaurants with extensive offerings, a multi-page menu might be necessary, but it should still be structured logically.

Advantages:

• Helps showcase a broad range of dishes.
• Ideal for theme-based or specialty menus (e.g., Italian, Sushi, Steakhouse).

Design Tips for Multi-Page Menus:

• Categorize effectively (e.g., Starters, Soups, Main Courses, Desserts).
• Use a separate section for signature dishes to draw attention.
• Ensure consistent font, color scheme, and imagery across pages.
• Keep pricing subtle (avoid listing items in a straight column, which encourages price comparison).

Visual and Structural Elements for an Effective Menu

• Use High-Quality Images Wisely: One or two professional images can enhance appeal, but too many pictures can make your menu look cheap.
• Choose Readable Fonts: Stick to clear, elegant fonts (avoid decorative fonts that are hard to read).
• Use Contrast & Colors: Dark text on a light background is easiest to read. Warm colors (red, orange) create hunger, while cool tones (blue, green) feel refreshing.
• Pricing Strategy: Avoid using dollar signs ($), as they subconsciously remind customers of spending. Instead of "$12.99", simply write "12.99".
• Limit Options Per Section: The "Golden Rule of 7" suggests keeping each category between 5 to 7 items to avoid overwhelming customers.

When Should You Change Your Menu?

Your menu isn’t meant to stay the same forever. Regular menu updates help keep customers engaged, improve profitability, and ensure you’re offering the best-selling and high-margin items. 

However, changing a menu too frequently can confuse regular customers and disrupt kitchen operations.

Here’s a quick guide to help you decide when to update your menu:

Pro Tip: Instead of a full menu overhaul, consider gradual updates—removing one or two low-performing items at a time and introducing new dishes strategically.

Conclusion

Menu engineering is more than just listing dishes—it’s about understanding customer behavior, optimizing profitability, and creating a seamless dining experience. By analyzing sales data, using strategic placement, and designing a clear, visually appealing menu, you can guide customers toward high-profit items without them even realizing it.

If you’re a restaurant owner preparing for your soft opening, now is the perfect time to build a menu that is both customer-friendly and profit-driven. With the right approach, your menu can become a powerful tool for business growth, leading to higher sales, happier customers, and a stronger brand identity.