India's Eating-Out Economy
Menu Engineering: How Restaurants Price Dishes
How restaurants design menus and prices using profit margins, popularity, anchoring and layout to nudge customers towards profitable dishes.
Restaurant menus are carefully designed to influence choices.
The menu matrix
Restaurants classify dishes by popularity and profit margin:
- Stars: popular and profitable. Promote them.
- Plowhorses: popular but low margin. Adjust price or cost.
- Puzzles: profitable but unpopular. Reposition them.
- Dogs: unpopular and low margin. Remove them.
Psychological tricks
- Anchoring: an expensive dish makes others look reasonable.
- Removing currency symbols: “450” instead of “₹450” may reduce price sensitivity.
- Descriptive names: “slow-cooked” or “grandma’s recipe” raise perceived value.
- Placement: diners’ eyes often go to certain areas first.
- Boxes and highlights draw attention.
Beverages and add-ons
Drinks, desserts and sides often carry high margins, so staff suggest them.
Combo meals
Bundling items into combos raises average spending per customer.
The anchor dish
A menu lists a 2,000-rupee seafood platter at the top. A 900-rupee curry nearby suddenly seems reasonable, and more diners order it.
Thinking menu prices are set only by cost
Menus are designed to steer choices towards profitable dishes.
Key takeaways
- Restaurants classify dishes by popularity and margin.
- Anchoring and descriptions influence choices.
- Drinks and desserts often have high margins.
- Combos raise average spending.
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