Why a Data Strategy Is Key to Menu Engineering Success
Amid a growing travel market and steady inflation, hoteliers are under increased pressure to differentiate themselves from competitors and remain profitable. While room rentals are often considered the greatest source of hotel revenue, your culinary offerings also serve as a valuable opportunity to attract and retain business.
According to the World Food Travel Association (WFTA), four out of five guests research food options before travelling to a new destination. Menu engineering, the process of optimising your menu’s profitability, is crucial to appealing to food-minded visitors and ensuring that your restaurant remains profitable and contributes to business growth. This strategy is a data-driven approach to restaurant success, requiring smart solutions for collecting and analysing hospitality metrics.
Data is king for menu engineering
With menu engineering, restaurant owners and hoteliers make informed changes to menu design and offerings, aiming to increase profit margins without compromising customer satisfaction. Rather than making adjustments based on observation or instinct, however, a successful menu engineering strategy uses accurate, up-to-date metrics on menu performance and customer behaviour. As a baseline, restaurant operators must track:
- Precise costing for menu items.
- Sales data indicating menu item popularity.
- Customer feedback and sentiment from sources like online reviews or social media.
Hoteliers can take this analysis a step further, examining sales data over different periods to understand menu performance seasonally. Customer demographics play another role, helping hoteliers better understand clientele dining preferences. Analysing historical menu performance alongside other information, like market trends, also allows restaurants to forecast demand and anticipate which menu items are most likely to appeal to future guests.
Interpreting this information at scale is best accomplished with specialised data analytics tools. Whereas relying on guesswork or manual analysis for menu engineering is inefficient and error-prone, sophisticated software ensures that insights are timely and accurate, and account for a variety of relevant data sources. In many cases, analytics software powered by technologies like artificial intelligence (AI) can surface valuable menu performance trends that may have been overlooked by human analysis alone.
How data-driven menu engineering drives value
Menu engineering is an effective way to maximise restaurant margins. However, this approach also optimises supply chain and inventory management and can even boost customer loyalty.
1. Optimise your menu’s profitability
Data-driven menu engineering enables hotels to achieve a granular understanding of restaurant performance, down to the profitability of each ingredient. This knowledge empowers hoteliers to fine-tune menus and make a measurable impact on business growth.
For example, analytics may indicate which menu items are the most popular, the most profitable, or commonly ordered together. From there, you may look for alternative suppliers to improve margins on customer favourites, remove underperforming items altogether, or reformat your menu to raise visibility on highly profitable items. Menu engineering also informs strategies like smart portioning or custom menu options, approaches that reduce waste and further streamline restaurant resources.
Hoteliers that continuously monitor performance and make small adjustments over time gain more control over restaurant profitability and can adjust levers according to their evolving financial goals. According to Menu Cover Depot, these changes can leverage your restaurant’s profitability by up to 15%.
2. Make smarter inventory and supply chain decisions
Restaurants must navigate a fine balance between ensuring menu items are readily available without creating excess food waste from overstocking. Because menu engineering makes customer demand more transparent, inventory management teams can accurately gauge purchase order volumes and avoid overconsumption. This is essential for maintaining customer satisfaction, ensuring that popular menu items—those that may attract guests in the first place—are always available.
Menu engineering can also support procurement in sourcing and negotiating with suppliers. For instance, demand forecasting or customer sentiment analysis may show that diners want more local options. Procurement can then prioritise sourcing from nearby suppliers, working with chefs to find ingredients that balance quality and cost. If bulk order discounts or other strategies are necessary to keep expenses down, menu engineering data can help procurement teams enter supplier negotiations with greater confidence.
3. Set your customer experience apart
Menu engineering requires restaurants to routinely monitor sales data and customer feedback. This due diligence allows restaurant staff to identify and address quality or service issues promptly, helping maintain customer satisfaction. Menu engineering also requires restaurants to clearly define portion sizes and ingredient costs, giving kitchen staff a reliable source of truth for recipes. This enables more accurate meal preparation and consistent guest experiences.
Having a constant awareness of menu performance is also valuable information for restaurant staff, who can make smart recommendations based on customer preferences and item profitability. What’s more, making changes to your menu over time promotes brand loyalty by keeping guests engaged and interested in your offerings.
Enhance menu engineering ROI with procure-to-pay
Leading hoteliers and restaurant operators understand that adjusting menu design, options, and ingredients is key to satisfying customer demand while addressing your bottom line. However, these changes must be validated with sound data and insights to provide a return on investment, especially since an effective menu engineering strategy relies on highly accurate costing metrics.
To avoid the errors that come with manual calculations and costing, consider using procurement software to implement menu engineering. Procure-to-pay (P2P) platforms, such as FutureLog, can fully automate menu costing and profit monitoring, even as ingredient prices fluctuate. This ensures that performance insights stay accurate and up-to-date so your business can focus on what it does best—delivering exceptional gastronomic experiences.
Creating an effective menu engineering strategy
You can read more information about the FutureLog Recipe Management Solution here.
Keen to know more about optimising your menu's profitability and driving value through data-driven menu engineering? Contact the FutureLog team today to discuss how you can set your customer experience apart.
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