Case Study: The Brasserie
Menu Engineering & Its Revenue Impact
Menu engineering is a strategic process that helps restaurant owners optimize their menu offerings for maximum profitability. By evaluating the popularity and profitability of each item, managers can adjust pricing, reposition dishes, or even remove underperforming items to enhance overall sales.
The aim is to drive revenue by promoting high-margin dishes and minimizing low-performing items.
Key Categories in Menu Engineering
Stars: High profitability and high popularity. These items are the best sellers and should be highlighted prominently.
Plowhorses: Low profitability but high popularity. These dishes sell well but need optimization to improve margins.
Puzzles: High profitability but low popularity. These items are profitable but not ordered frequently. The challenge is to increase their appeal.
Dogs: Low profitability and low popularity. These dishes may need to be removed or completely revamped.
The Restaurant: The Brasserie
Name: The Brasserie
Cuisine: Upscale casual dining, focusing on contemporary American dishes
Location: Downtown Chicago, IL
Size: 150 seats with both indoor & private event spaces
Annual Revenue: $6 million
Operating Hours: 7 days a week, serving breakfast, brunch, lunch, and dinner
Our Challenge
Despite a loyal customer base, The Brasserie struggled with consistent growth and a lack of clear direction in menu profitability.
The team noticed a varied performance among menu items, and though the restaurant had steady traffic, per-table spending and overall profitability were suboptimal.
The recommendation was to implement menu engineering alongside competitive market pricing, with a particular focus on the breakfast and dinner segments, to strategically enhance both margins and sales.
Implementing Menu Engineering: The Process
For strategic and highly effective menu engineering, Alias leveraged the following steps as part of our proven process.
1. Data Collection & Analysis
The first step involved analyzing sales data, cost of goods sold (COGS) and popularity over a few months. This data was used to categorize each menu item as either a Star, Plowhorse, Puzzle, or Dog.
2. Categorization of Menu Items
Using sales volume and profitability, the restaurant placed each item into one of the four categories:
◦ Stars: Popular dishes with high-profit margins
◦ Plowhorses: Dishes with high popularity but lower margins
◦ Puzzles: Items with high margins but low popularity
◦ Dogs: Low popularity and low margins, which were often removed or reworked.
3. Menu Design Optimization
High-margin items (Stars and Puzzles) were placed in the most visible areas of the menu to attract attention.
Descriptions were refined to make these items more appealing so that:
1. Plowhorses were either repositioned with more compelling descriptions or had their prices adjusted.
2. Dogs were eliminated or reworked.
4. Menu Price Adjustments
Slight price increases were applied to Stars, and prices for Plowhorses were adjusted to boost profitability while retaining customer appeal.
Puzzles that couldn’t be made more popular were marketed differently through promotions or bundle offers.
5. Psychological Pricing & Design
The design of the menu was altered to apply psychological pricing strategies, such as removing the dollar sign and pricing items at $19 instead of $20.
Strategic layout changes were made to ensure high-margin items caught the customer’s eye.
Incorporating Competitive Pricing into Menu Engineering
Furthering menu strategy, Alias integrated competitive pricing techniques, including (but not exclusive to) the following, balancing profitability with guest appeal.
1. Competitive Pricing Analysis
To further optimize profitability, a competitive pricing analysis was conducted. This helped ensure that The Brasserie’s prices were aligned with its direct competitors. This step included gathering data through mystery shopping, online research, and phone calls to comparable restaurants in the downtown Chicago area.
2. Adjusting Prices Based on Competitor Insights
Using the competitive pricing data, The Brasserie ensured its pricing was in line with the local market while emphasizing the perceived value of its offerings. If the restaurant’s prices were significantly higher or lower than competitors, adjustments were made to align better with customer expectations.
3. Menu Segmentation & Bundling
The Brasserie used menu segmentation to offer a range of price points, from budget-friendly options to premium dishes. Additionally, bundled meals or prix-fixe menus were introduced to encourage upselling and create a sense of value.
4. Regular Competitive Price Monitoring
To stay relevant, The Brasserie committed to reviewing its prices quarterly, monitoring industry trends, and adjusting its pricing strategy based on competitor movements and customer feedback.
Results: Revenue Impact & Analysis
After implementing menu engineering, The Brasserie saw significant improvements:
1. Increased Food Check Average
The average revenue per table increased by 15%, largely driven by customers selecting higher-margin items that were strategically highlighted on the menu.
2. Higher Profit Margins
Profit margins improved by 12%. Adjusting prices for Plowhorses and eliminating Dogs reduced waste and improved overall profitability.
3. Improved Item Popularity
Several previously underperforming Puzzles gained popularity. For example, a White Fish dish with Asian influences, which was initially underwhelming, became a customer favorite after being repositioned with new ingredients and promoted via limited-time offers.
4. Reduced Waste & Inventory Costs
The elimination of low-performing dishes led to a 9% reduction in inventory costs. Cross-utilization of ingredients across menus helped streamline operations and reduce food waste.
5. Positive Customer Feedback
Customer responses indicated satisfaction with the new menu, especially the improved descriptions and the more approachable feel of the dishes. The changes led to more social media shares, as diners praised the updated offerings.
Conclusion: Ongoing Impact of Menu Engineering & Future Reviews
The Brasserie’s revenue and operational efficiency improved considerably, proving the value of menu engineering. Through strategic adjustments in pricing and menu design, the restaurant was able to:
Increase profitability without alienating customers
Streamline its menu, making it easier for diners to choose while minimizing waste
Optimize pricing to remain competitive in the local market
Encouraged by the success, The Brasserie committed to regular reviews of its menu, ensuring that it stayed agile and responsive to changing market conditions. The restaurant implemented a routine of menu engineering reviews every 6 months to continually optimize its offerings, adapt to customer preferences, and maximize profitability.
Final Thoughts
Menu engineering, when combined with competitive pricing strategies, can be a powerful tool for increasing both revenue and customer satisfaction.
The Brasserie’s success demonstrates the importance of continual adaptation in a dynamic industry. Regular menu reviews, alongside strategic pricing, are essential for staying competitive, improving margins, and maintaining customer loyalty in the fast-paced restaurant business.