Quick-service restaurants (QSRs) are in the thick of it right now. Demand is wavering and costs are still on the rise. McDonald’s even reported a 1% year-over-year sales decrease for Q2 of 2024 — the first dip in four years.
But the industry is resilient. QSR operators are adapting menus to react to market changes — which is exactly what we’re talking about in this article.
By the end, you‘ll know how QSR menu engineering can help you increase profit margins in your restaurant. But first, let’s clarify what menu engineering is and how it works.
What is QSR menu engineering? The psychology of menu design
Menu engineering involves strategically designing and pricing your quick-service restaurant menu to increase revenue and profits. You analyse sales and trends to spot your most popular and profitable items and amend your menu to promote these items.
The layout of a menu can seriously influence consumer choices. For example, if your breakfast wrap is a popular choice and has a high profit margin, you might put it in a ‘chef recommended’ box, or make sure it sits at the top of the list of breakfast options.
These small design changes and visual cues can influence consumer choices and increase your gross profit margins.
Understanding the menu engineering matrix
In menu engineering, items are typically categorised into the following groups:
- Stars — high profitability, high popularity. These are the best-performing items on the menu, meaning that they should be prominently featured to entice more sales.
- Plough horses — low profitability, high popularity. These items sell well but don’t generate much profit. They may need cost adjustments or re-pricing to increase your profit margins.
- Puzzles — high profitability, low popularity. Puzzle items have the potential to be successful because of the high margins, but aren’t ordered very often. You may need to reposition them on the menu or update the food description to try and increase sales.
- Dogs — low profitability, low popularity. These are the menu items you don’t need to prioritise in your design. In fact, you might want to revisit them as an option on your menu. Are they worth keeping? Or could you update them to increase sales and margins?
These categories help you optimise your QSR menu for the best results.
You can spot the items that need improvement and identify the top sellers with the best margins. As a result, you can engineer your menu to increase sales and margins.
Strategies for effective QSR menu engineering
Let’s take a look at some of the strategies you can incorporate to successfully engineer your QSR menu.
Leverage data
Picture this: Your customers love your egg and sausage muffin. It’s a top seller, so you put it front and centre on your menu. People can’t miss it, and sales go up. This is great, right?
Sure — but it could be better.
What you didn’t know before promoting your egg and sausage muffin is that it isn’t very profitable. Instead, it makes more sense to push the French toast, where sales and profits are both high.
How could this have been avoided?
By reviewing your data.
Make sure you regularly gather and analyse data on customer orders to pinpoint which items to promote, and which might need updating to increase sales.
Sales data can also help you identify popular items, seasonal trends, and emerging preferences. All of this information helps you make informed decisions about your menu to get the best results.
Hot tip 🔥 Use Nory to access all this valuable data in one location. Track your restaurant sales and customer preferences in real-time, and use our AI-powered features to predict future trends.
You can even track profits and sales for individual menu items, which is useful for menu engineering — you can use this information to categorise your menu items and optimise your menu as effectively as possible!
Nory success story 🥳 See how Urban Greens used Nory’s real-time data to track costs and prices in real-time, making quick decisions to boost profits.
“For the first time, we have real-time data on purchase trends and price fluctuations, and we can see how that affects our cost of sales.” – Anna Kowalik, Operations Manager at Urban Greens.
Consider optimal item placement
One of the key elements of menu engineering is where and how you place items. People tend to remember the first and last items they see, so placing high-margin items at the top or bottom of menu sections can be a good idea.
Or think about eye-tracking patterns. It’s widely believed that most customers naturally scan menus in an “F” or “Z” pattern. Some studies also show that the middle and upper-left parts of the menu are scanned the most.
All of this information is vital for menu design. You want to present your most profitable items to customers in the areas they’re most likely to look at. The higher visibility they have, the more likely they are to be ordered.
Hot tip 🔥 Keep your menu layout simple and with a select number of options. A busy and overwhelming menu can be off-putting for QSR customers. They want convenience, so if the menu is hard to navigate or too complicated to read through, it could put them off altogether.
Plus, fewer menu items means ordering a smaller variety of ingredients and ordering more ingredients in bulk. This cuts your food costs down and reduces waste in the process (especially if you partner with a restaurant operating system like Nory to track costs and waste).
Use strategic pricing techniques
There are some pricing techniques you can use on your menu to try and increase sales and profits.
The decoy effect, for example, involves specifically pricing some menu items higher so that the rest appear more reasonable. Anchoring is another option, which involves placing a high-priced item near the top of the menu. This item sets a price anchor, making other menu options appear more reasonably priced.
A lot of QSRs use bundling, too. This involves creating a menu option from different menu items, like a meal deal. Customers can order a sandwich, snack, and drink for a set price. It can encourage people to spend more money but offers them a good deal in return.
Hot tip 🔥 Consider using limited-time offers (LTOs) to create a sense of urgency around the menu items. It’s a great way to encourage more spending on bundle deals or items that are leaving the menu shortly.
Research also shows that LTOs are becoming more popular for QSRs, with their share of the menu growing by 12% in the last year, so it’s something worth considering.
Add visual design elements to highlight profitable items
Visual cues can help draw attention to your most profitable items. For example, using boxes, borders, or frames around high-margin items to make them stand out. In doing this, you draw people’s attention to these items.
But boxes and borders aren’t the only way to highlight these items. Here are a few other visual elements:
- Font style and size. Vary your font size, style, or weight for specific items to draw attention. For example, use larger or bold fonts for high-margin items to make them more prominent and easier to spot.
- Imagery. Including high-quality images next to featured items is a great way to showcase top-selling dishes on your menu. Seeing the food will draw their attention to it, and show them what to expect — both of which increase the likelihood of ordering that dish.
- Descriptive callouts. Studies have found that emotional descriptions of menu items can trigger positive emotions in the consumer’s mind at the moment of decision-making. This can encourage them to make a purchase, so it’s important to think about how you describe your profitable menu items. The better the description, the more likely people are to buy it.
- Icons and symbols. Place icons (like chef’s hats or stars) next to profitable dishes to indicate popularity or chef recommendations. This builds trust with diners, showing them that your popular dishes are tried and tested.
Hot tip 🔥 Don’t forget to think about colour when designing your menu, as different colours create different perceptions and emotions. For instance, red, orange, and yellow are typically associated with stimulating hunger, while green implies the food is fresh and healthy.
How Nory’s AI-powered solutions support your menu engineering efforts
Menu engineering is a constant battle. As costs fluctuate and customer needs change, so does the best structure for your menu. But it’s vital that you stay on top of it. Why? Because it has a direct impact on your profitability.
Using Nory, you can keep on top of menu prices, sales, and customer spending habits in one location. Here’s how:
- Access real-time sales and profitability insights. Our software integrates with POS systems (like Toast and Vita Mojo) to track sales and performance in real-time. Break down profit margins line-by-line to see exactly how much you make on each dish, and keep a close eye on the dishes that customers love the most.
- Inventory management for accurate food costing. Keep track of food costs and supplier prices in real-time to get an accurate picture of spending across the business. Track changes instantly to ensure that your menu items are as profitable as possible.
Our AI-powered system also analyses your historical sales alongside external factors (like seasonal fluctuations and local events) to predict future demand. This means you can ensure you have the right ingredients to serve customers without overspending.
Want to find out more? Have a look at the Clean Kitchen success story.
With Nory’s real-time data, Clean Kitchen sees a line-by-line breakdown of costs, usage, and profits from food items. They can now make informed decisions about how to improve their stock management, ensuring they only order the ingredients they need to reduce costs.
The results? 4% decrease in the cost of goods sold (COGs)—thus increasing GP by 4%
FAQs about QSR menu engineering
What are the 4 categories of menu engineering?
The four categories of menu engineering are:
- Stars. High profitability and high popularity items that should feature prominently on the menu.
- Plough horses. High popularity but low profitability items, often needing cost adjustments.
- Puzzles. High profitability but low popularity items, usually in need of better marketing or repositioning.
- Dogs. Low profitability and low popularity items that are often candidates for removal from the menu.
What are the limitations of menu engineering?
One of the main limitations of menu engineering is focusing too much on profitability at the expense of the customer experience. You still want your menu items (sand your menu itself) to provide diners with a good experience so that they’ll return and hopefully spread the word to others.
Menu engineering also relies heavily on accurate data. If you don’t have accurate figures, it can lead to flawed decisions. This is where using a platform like Nory can help — book a demo to find out more!
What information is needed to perform menu engineering?
To perform menu engineering, you need:
- Data on each menu item’s costs (such as ingredients and preparation costs)
- Sales volume of each menu item
- Profit margins
Customer feedback, seasonal trends, and competitor pricing also provide valuable insights.
