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Menu Engineering: Costing your restaurant menus to assess profitability

19 September 2019

By: Henrik Chan

Part one of our three-part series on menu engineering, begin by taking a look at menu costing.

What sets apart a successful restaurant from a great one is often credited to how it engineers its menu. How great an impact menu engineering will have depends on your knowledge of the menu of your restaurant, and your willingness to devote time and effort into understanding and executing the process.

Firstly, what is menu engineering? Simply, it’s the practice of analysing and designing your menu to maximise restaurant profits. Restaurants do this in a number of ways, by balancing high and low food cost items, and featuring or promoting select items.

But before you get into that, start by costing your menu. To understand and implement menu engineering effectively, assess the profitability of menu items by calculating the food cost of each item. While this may seem like an overly tedious step, performing an audit will ensure that you take note of your purchases and how much money is going in and out.

  1. List all the ingredients needed in each dish. This includes even the nitty-gritty like seasoning, oil and garnish.
  2. Identify the cost of each ingredient and divide that cost based on how much of each ingredient is used to make the dish. Eg: If you purchase garlic for 30 cents and it contains 10 cloves, each clove costs 3 cents. If a dish requires eight cloves, then the cost of garlic for that dish is 24 cents.
  3. Take into consideration the yield you get from each of your ingredients e.g. For every 1 kg of potatoes that are peeled and washed, only 900g remains to be added into the actual dish. In this case, account for only 90% yield. There are books that are considered essential in many professional kitchens about yield testing for costing.
  4. Compute the extras such as delivery, interest rate, and other expenses related to inventory.
  5. Ensure that labour costs are not included in this calculation as this falls under a separate category.

Once you’ve completed costing your menu, head to the next step of Menu Engineering: Dividing your menu into categories and sections.

Looking to explore technology that makes menu costing easier? FoodRazor is an invoice management & food cost intelligence platform that helps you eliminate tedious data entry track business spending accurately and save time & money.

Want to find out more? Learn about our Chope products, and subscribe to Chope For Restaurants for tips on how to ace the restaurant business.


Henrik Chan

Henrik Chan has cut his teeth working as a B2B content marketer at Chope, connecting restaurants in Asia to resources and solutions. Finding joy in sports and film, he is Chope’s go-to critic on topics that range from Arsenal’s lineups to Christopher Nolan’s posse of performers.


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