Menu Engineering: A Smarter Menu for a More Profitable 2025
As the new year kicks off, many restaurants are evaluating their operations and seeking ways to boost profitability. One of the most effective strategies is menu engineering—a data-driven approach to designing a menu that maximizes revenue while reducing waste and inefficiencies. Here’s how to create a menu that drives profits and delights customers.
Know Your Numbers
Effective menu engineering begins with understanding the financial and operational performance of your menu items.
Prime Costs: Combine your Cost of Goods Sold (COGS) with labor costs to determine the profitability of each item. Watch for dishes that may look profitable on paper but require excessive labor or lead to waste or spoilage.
Labor-Intensive Dishes: Items requiring significant prep time or unique skills should be carefully evaluated. If they aren't essential, consider simplifying or replacing them.
Hidden Food Costs: Knowing the "perfect cost" of your menu items is essential, but watch for hidden factors that can eat into profits. Ingredients with short shelf lives or those requiring specialty items that aren’t used elsewhere on the menu can lead to increased waste or spoilage.
Ideal Cost Brackets
These percentages are helpful benchmarks, but they don’t have to be hard-and-fast rules. Your restaurant’s concept and target market may influence these ranges, so use them as a starting point and adjust based on your unique needs.
Food: 27%–32%
Beer: 20%–25%
Wine: 30%–35%
Liquor: 16%–20%
Retail: Varies, but typically under 50%
Performance Metrics
Group your menu items based on profitability and popularity:
Top Performers: High profit, high demand. Showcase and promote these items.
Steady Sellers: Low profit, high demand. Adjust portions or pricing to improve their margins.
Hidden Opportunities: High profit, low demand. Consider repositioning or featuring these items more prominently.
Underperformers: Low profit, low demand. Consider phasing these out.
Looking to better understand your menu’s financial performance? View our sample reports or schedule a meeting with ACE’d Accounting Solutions today.
Highlight High-Margin Items
Your menu design is one of the most powerful tools to guide customer choices.
Strategic Placement: Highlight your most profitable items in ways that draw attention, whether through design, special callouts, or unique framing. Use your menu layout strategically to support your strengths.
Cost-Effective Displays: Consider options like QR codes or handwritten chalkboards for flexibility. These tools allow for quick updates, keep costs low, and can add a personal touch.
Suggestive Pairings: Pair high-margin items with complementary dishes or beverages. For example, a slow-moving wine with strong profit margins might be featured as the perfect pairing for a Steady Seller.
Tap Into Emerging Trends
The restaurant industry thrives as a community, and you don’t need to reinvent the wheel to stay competitive. As important as it is to stay true to yourself and your concept, it can be beneficial to follow popular Instagram pages, culinary publications, or restaurant groups for inspiration. Spark ideas on how trends might align with your operation and adapt them in a way that makes sense for your business.
Seasonal Ingredients: Feature dishes that utilize fresh, in-season ingredients to reduce costs and add appeal.
Dietary Inclusivity: Incorporate plant-based, gluten-free, or allergen-friendly options to attract a broader audience. These items often carry higher profit margins.
Experiential Menus: Introduce chef specials or limited-time offerings to create excitement and a sense of exclusivity.
Simplify for Success
A streamlined menu reduces complexity in the kitchen, improves consistency, and helps control costs. Simplifying your menu isn't just about cutting items—it's about focusing on your strengths. Know what you do best and execute it exceptionally.
Smaller Menus: Focus on fewer items that you can execute exceptionally well. A streamlined menu leads to faster prep times and lower inventory costs.
Cross-Utilization: Incorporate the same ingredients across multiple dishes. This approach minimizes waste and simplifies inventory management.
Easier to Train: The restaurant industry is known for high employee turnover. While there are ways to combat this (check out our blog on restaurant labor), having a simpler menu can make training new employees easier and ensure consistent quality standards.
Regular Reviews
Your menu isn’t static—it’s a living document.
Seasonal Updates: Evaluate your menu quarterly or seasonally to ensure it remains relevant, profitable, and operationally efficient.
Performance Monitoring: Use reports to track the success of individual items and overall menu performance.
Need help tracking food costs? Check out our blog on restaurant food cost management for actionable tips and insights.
Closing Thoughts
Menu engineering is equal parts art and science. By analyzing data and staying responsive to trends, you can build a menu that drives profits while delighting your customers. At ACE’d Accounting Solutions, we specialize in helping restaurants turn numbers into meaningful insights that fuel growth and success.
