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Menu Engineering for Bars: Boosting Menu Profitability

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No matter when a guest comes into your bar, where they sit, who serves them, or what they order, they all share one identical experience: your drink menu. Your drink menu is your bar's soul and key to bar profitability.

liquor inventory app

Most restaurants have substantially higher profit margins on their most popular cocktails than they do on food. This hasn’t gone unnoticed in the biz.

In fact, there’s an entire field of study dedicated to getting the most profit out of drink menu design. It’s called menu engineering. It's the process of analyzing items on your menu and applying that analysis to designing and creating drink menus to increase restaurant sales using more profitable items.

In this guide, we’ll first tackle how to analyze your menu, then we’ll cover how to apply that analysis to menu design and creation. And even though we're specifically talking about drink menus, the principles can be used for all different types of menus. We’ll also cover some additional tactics you can use to make sure your wine list (or digital restaurant menu) is as profitable as can be.

Menu Engineering Analysis

Menu engineering analysis is an important part of bar management. It's also how you wring all the money out of the most common cocktails on your drink menu like a wet towel.

It depends on identifying two things over a set period of time: the most profitable drinks and the most popular drinks. To help you do that, we recommend using a menu engineering spreadsheet.

Profitability vs. Popularity

The goal of your bar or restaurant drink menu is to turn your most profitable drinks into your most popular drinks, and vice versa. Do that and you win.

A drink’s profitability depends on its pour cost (see liquor cost calculator). That's how much of that product you’re using divided by how much of that product you’re selling over a given period of time.

Your first goal is to calculate liquor cost for every drink on your drink menu. To save hours of your life, you can use BinWise Pro’s pour cost analysis to figure out these numbers in a jiff. Keep these numbers handy because you’ll need to compare them to the next set of numbers: popularity.

A drink’s popularity is an easy one. Pull the total number sold throughout that same time period using your restaurant or bar POS system or your beverage inventory management software.

Now we'll plot these two sets of numbers visually.

Using a Menu Engineering Worksheet

Using a worksheet template, plot each set of numbers. The pour costs on the vertical axis and number sold on the horizontal axis.

This will give you a look into the intersection of your drink menu items’ profitability and popularity. The lower (lower pour cost) and further right (more sales), the better.

Plotting on a worksheet will also give you the ability to:

  • Isolate top-performers. If a drink has great pour costs and is popular, leave it be. Adjust beer pricing on your top drafts and see the profits climb.
  • Isolate flops. A drink with a high pour cost and little-to-no customer interest should be rethought or removed from the beverage menu.
  • Identify popular drinks that can be optimized for profit. Is there a way you can lower pour costs for popular drinks? Tweaking ingredients, making cocktails with less expensive liquor, or ordering bulk from your distributor could all lower ingredient costs.
  • Identify profitable drinks that should be marketed. Drinks that make money but aren’t selling well can be moved to a different part of the menu, visually emphasized, renamed, or redescribed to improve your restaurant marketing ideas.

The goal is to lower the pour costs of your top-sellers and nudge your money-makers toward fame. With an understanding of what drinks need what kind of love, you’re ready to take a whack at designing your drink menu.

download BinWise resources that improve your bar or restaurant

Drink Menu Design and Layout

Armed with your number-crunching, it’s time to start designing and laying out your drink menu. That involves drink placement, drink highlighting and emphasis, regular updates, and how to describe your drinks.

Drink Menu Layout

Some drinks make money, but nobody’s buying. It could be that people aren't seeing them. The way eyes scan menus is a bit controversial. Conventional wisdom states that there’s a “sweet spot” in the upper right corner of a menu, where a gaze first drifts toward. But that’s not the only opinion.

Enter Professor Brian Wansink, author of Slim by Design, Mindless Eating Solutions to Every Day Life and menu psychology researcher. He told The Guardian, “We generally scan the menu in a z-shaped fashion starting at the top-left hand corner.”

Similarly, research from San Francisco State University found diners tend to read menus sequentially, like a book. From left to right not spending more time on one section over any other. Which flies in the face of the “sweet spot” theory.

There’s no definitive way that all people move their eyes around. But each theory has its value, and they’re all worth testing to see which one is most effective for your clientele. Think of them when you’re trying to get extra eyeballs on a profitable drink that needs some attention.

Once you factor in the ways eyes move, it’s time to think about what eyes like.

Make Profitable Items Pretty

In addition to placement, you can attract wandering eyes to a lonely drink with some visual drink-menu-design voodoo.

A box to highlight an individual item can work wonders, and can be combined with shading and borders for more emphasis. A box does double-duty. Imagine a cocktail menu with a select few cocktails boxed and highlighted. Now imagine their less-profitable brothers and sisters are banished to a text-only section in the boring old bottom-right.

Another option is a photo of the dish itself, or another kind of graphic or illustration. Anyway, picture the silhouette of a martini glass with olives next to the dirty martini on a cocktail menu. It emphasizes the glamour and mystique that’s associated with martinis.

In addition to visual highlights, you can use verbal ones by upselling!

Highlight Special Selections

This is a version of making profitable items pretty. It just has some added words that give people more of a reason to order the drink.

Think about setting off a drink, or a collection of drinks, with titles like:

  • Special selections
  • Top sellers
  • Seasonal favorites
  • Staff picks
  • Tasty delights

Ok, the last one might not work in every bar. The idea is to make the menu feel curated. People don’t typically enter a bar with one drink, and one drink only, on their mind. They enter a bar with money and a general desire to drink. It would be much easier for them if you just told them what to order. They’re open-minded. They’re listening. Let your menu be their guide. Seasonal and custom drinks, for example, are perfect examples of special selections that sell like crazy. You can apply this to other types of menus, too, like your table d'hote, prix fixe, or a la carte menus.

Think Seasonally

Stonehenge, Machu Picchu, and successful bars. What do they all have in common? They celebrate the seasons changing.

Seasonality is one of the best reasons to order a drink when there is otherwise none. Or, heck, even if there is one, like a seasonal LTO (see LTO meaning) bar promotion.

If a guest walks in your bar thinking “I’d really like a margarita tonight,” a good menu should subtly communicate: Not so fast pal, it’s fall. Have you thought about an apple sangria? What about cinnamon tequila sour? Look outside for god’s sake.

Here’s a list of seasonal flavors and ingredients. These will make people feel special as the earth tilts and whirls around the sun:

  • Spring Cocktails: Subtle flavors like apricots, avocados, strawberries, and even avocado and celery remind us that life is once again blooming. But we don’t yet need a beverage solution for the sun’s summer glare.
  • Summer Cocktails: As the heat rises, refreshment becomes paramount. Citrus fruits like pineapple, lemon, and mango, cooling cucumber, and creamy coconut are all summer staples.
  • Fall Cocktails: Mildly sweet and earthy flavors dominate as the leaves show us their true colors. Apple, pear, ginger, nuts, carrot, cranberry, fig, cinnamon, and, of course, pumpkin spice are all reliable.
  • Winter Cocktails: It gets even sweeter now. Warm, sweet, and cozy flavors like maple, peppermint, chocolate, and marshmallow melt frozen hearts.

At minimum, update your drink menu 4 times a year. Besides seasonal cocktails, there are a few other aspects of your drink menu that would benefit from consistent revision.

Update Regularly

If you have a digital menu or QR menu (with a QR code positioned neatly in a QR code template) it's almost laughably easy to update your menu. In addition to adding and removing seasonal cocktails, updating the following will help test what items are most profitable and should therefore occupy prime real estate on your menu. It'll also help you test which visual emphases work best to drive sales, and which formats and copy encourage the most ordering. It's also a crucial part of communicating to customers that you take restaurant hygiene seriously. Single use menus (see single use menu definition) can't touch a QR code menu's ability to update.

In fact, updating your type of menu and analyzing the results is what menu engineering is. If you aren't updating your menu based on sales patterns, you're missing the primary opportunity menu engineering offers. That's why a custom QR code is one of the most valuable pieces of restaurant technology out there.

bar and restaurant menu types ebook

Be Thorough and Descriptive

Your drink descriptions are another important touchpoint with guests, and effective drink descriptions are both informative and attractive. Let’s dissect two drink descriptions based on actual menus and think about the difference.

Description 1:

Lychee martini
Lychee juice, vodka, vermouth

Description 2:

Lychee martini
The citrus and rose flavors of lychee fruit drive this fragrant vodka cocktail tempered with vermouth

The first description isn’t necessarily worse. There are some bars with a less-is-more mentality, and that works for them and their guests. But if your menu descriptions are working for you, you’re probably not reading this.

Give guests more information about a cocktail, and throw in a pretty adjective or two to evoke other senses (like smell and flavor). A lot more eyes will find their way there and you can adjust your alcohol pricing to match their expectations. Psychological pricing is a beautiful thing.

This is especially important with wine, with which interesting information about wineries, grapes, histories, and flavor profiles is in no short supply.

Building a Profitable Wine List

Fine tuning your wine list (or digital wine list if you're using a wine bottle app)presents some unique challenges to the menu engineer. In addition to everything we’ve described above, let’s also consider food pairing, variety, information, and organization as they apply strictly to wine lists. Sine wine industry profits are high, it's imperative that you optimize your list.

Food and Wine Pairing

The most important part of your wine list is how well it pairs with the food you offer. A good general rule is to match the body of your wine with the intensity of your food’s flavor.

As wine contains more alcohol, it becomes more viscous. That means it's heavier and feels fuller in your mouth. This is why we call a heavily viscous wine full-bodied and a low viscosity wine light-bodied. They break it down further. An alcohol level of 12.5% and under for light-bodied wines, between 12.5 and 13.5% for medium-bodied wines, and over 13.5% for full-bodied wines.

If you serve mostly light, delicate food, then go with a wine list with a lot of light- and medium-bodied options. Alternately, if you’re running a steakhouse, a slate of full-bodied wines will pair perfectly with the bold flavor of red meat and luxurious sauces.

Further, you can fully embrace terroir and pair based on geography: an Oregon Pinot Noir as a suggested pairing to local, pasture-raised pork chops.

Once you have a feel for the size of the wines you need on your wine list, you can start thinking about their variety and use the higher priced wines to offset your food cost.

liquor inventory app

Wine List Variety

There are three general considerations to make when building a varied wine list. First, you should have a selection of light-, medium-, and big-bodied wines. Second, don’t skimp on the whites. And third, if it fits within your bar’s concept, represent both old- and new-world wines. This goes for wine bottle price and wine by the glass lists, too.

That stuff is pretty obvious. What may not be obvious is how a guest will feel about your wine list. It’s for them, after all.

“If you’re only going to have one Pinot Grigio, it should probably be one that the vast majority of customers who are going to order Pinot Grigio will like and think they got for a relatively good price,” says Geoff Kruth of GuildSomm.com. He hilariously continues. “If you only have one Pinot Grigio and it's fermented on the skins for three months without sulfur followed by four years of underwater aging and costs $100 ... then I probably hate you.”

The main takeaway is that you should have wine on the list that non-wine nerds can order and feel good about. This applies to popular wines that you know people are going to order. For more obscure varietals, there’s really no need to have multiple choices unless your wine list deep enough to justify it. The more wine you manage to sell, the less you'll have to worry about overhead expenses.

After you’ve chosen your wines, you’ve gotta provide all the relevant information about them.

Frequently Asked Questions About Menu Engineering

Menu engineering is a high-class term for something that, when you think about it, makes a lot of sense. That said, there are certainly questions you'll want to answer before you find your drink menu design and before you start creating a wine list. A few of those common questions are:

How Do You Choose A Drink Menu Design?

Even with all those tips, it may be a struggle to settle on your drink menu design, and that's okay! Take your time, and let your goals for your bar feed into the menu design. The menu that will work best for your place in terms of bringing in customers and introducing them to new items will be curated, at least in part, to the overall aesthetic of your bar or restaurant.

What Information Should Go on a Wine List?

The more, the better, within reason. Sure, the person who just completed one of the sommelier levels looking at your wine list knows that a Fumé Blanc is the same thing as a Sauvignon Blanc. But, these types of things will make the menu much easier to engage with for others.

At a minimum, at least, a useful wine list will include:

  • Producer
  • Name of the wine
  • Region
  • Vintage (year)
  • Price

Your wine reps and distributors are familiar with the wines they sell. They may have some good tips for how to present certain bottles.Now that you’ve got all the wines’ details, you can organize your wine list.

How Should a Wine List Be Organized?

There are three ways you can organize your wine list: geography, grape, and style.

Structuring your wine list by region or grape are fool-proof ways for people to get the lay of the land. It’s great because it lends a natural order to your wine list. It’s also interesting to see what wines come from where. And, let's be honest, it's really hard to mess up. Each wine has a region and a grape. It’s easy.

It’s not so easy organizing a wine list by style, though. While there are commonly accepted styles for wines (everyone agrees that Cabernets Sauvignons are full-bodied), not every wine is as obviously-bodied as Cabernet Sauvignon. Further, not every style is about the size of a wine’s body: you could have a section for aromatic whites, for example.

Point being, organizing wines by style is far more subjective than by regions and grape, and much harder to get 100% right. If you want a controversial wine list, go for it.

What are The Benefits of Digital Menus for Menu Engineering?

The whole idea behind menu engineering is to continually react to data, thereby iterating a more and more profitable menu as time goes on. One of the easiest ways to do this is using a digital menu, specifically a QR code menu.

QR code uses are run the gamut, but giving bars and restaurants instantly-editable, agile menus is one of their best. Not only do digital QR code menus give you the ability to change your menu and pricing on the fly without having to print anything, they're hygienic, touchless menus. They're more lightweight, cheaper, and convenient than menu apps, and they open up the whole world of QR code marketing.

Just be aware of the QR code security risks of using a free QR code PDF generator.

That's How to Do Menu Engineering

Once you use your analysis to inform your drink menu design, you'll be a battle-tested menu engineer. You'll learn how to create a drink menu, and you'll be making customers happy, increasing your profits, and filling out your restaurant balance sheet.

It’ll take time and effort to crunch all the numbers, but it’s worth the soul searching.

One way to lighten the load is using BinWise Pro as your liquor inventory software. It stores and tracks all your relevant inventory numbers for easy access.

Like for those times when you want to, say, look over all your cost of goods sold and prime cost and design the best drink menu ever. BinWise’s got you. Book a demo and we'll walk you through just how we'll help.

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