Data Analytics in Menu Engineering and Customer Behavior for Restaurant Growth

Have you ever wondered why some restaurants thrive while others struggle despite offering nearly identical menus? The difference often lies not just in food quality, but in how data analytics transforms menu engineering and customer engagement into measurable growth strategies.

Quick Answer
Data analytics in menu engineering empowers restaurants to maximize profitability by identifying customer preferences, refining pricing, and predicting demand.

According to Statista (2024), the global restaurant analytics market is projected to reach USD 14.6 billion by 2028, growing at a CAGR of 15.2%. This surge highlights how restaurants are increasingly relying on data-driven decision making to compete in a saturated market. Moreover, a National Restaurant Association survey (2023) found that restaurants leveraging menu analytics saw an average 12% boost in profitability within the first year.

Beyond financial outcomes, data analytics reshapes the very foundation of dining experiences. From heat-mapped digital menus that track customer clicks to AI-driven demand forecasts that reduce kitchen waste, analytics are no longer optional, they are the strategic backbone of restaurant survival. By 2025, over 65% of U.S. restaurants are expected to adopt data-centric menu engineering systems, demonstrating the shift toward intelligent dining management.

What Is Menu Engineering and How Does It Work with Analytics?

Menu engineering is the strategic process of analyzing the profitability and popularity of menu items to design menus that drive growth. Traditionally, this relied on manager intuition. Today, data analytics introduces precision and scalability.

Restaurants categorize dishes into four key segments:

1. Stars: High profit, high popularity.
2. Plowhorses: Low profit, high popularity.
3. Puzzles: High profit, low popularity.
4. Dogs: Low profit, low popularity.

When Should Restaurants Apply Data Analytics in Menu Engineering?

Timing is critical. Restaurants should apply analytics:

• Before launching a new menu: Identify trends and forecast acceptance.
• During seasonal changes: Adjust items based on weather, festivals, or tourist inflows.
• After promotions: Measure ROI of discounts and campaigns.
• Continuously: Update insights for long-term adaptability.

A survey by Toast POS in 2025 highlighted that restaurants reviewing menu performance quarterly saw 30% higher success in launching new items compared to those who revised annually.

How Do You Continuously Improve Your Menu Using Customer Behavior Analytics?

Customer behavior analytics reveals what guests love, what they skip, and how they order, guiding smarter menu decisions every cycle.

Identifying Popular Dishes

Use real transaction data, not hunches to see what guests truly love.

• Analyze sales over time: Review several weeks or months to find consistent best-sellers (e.g., chicken sandwich ~50 orders/week vs. salad ~10).
• Account for time and seasonality: A dish can be a lunch star but a dinner laggard, or a warm-weather favorite only.
• Feature the winners: Give high-demand items prime placement, compelling descriptions, and visual cues.
• Remember profit ≠ popularity: Popularity is your starting filter; you’ll validate margins next.

Recognizing High-Profit, High-Impact Dishes

Aim for items that are both loved and lucrative.

• Calculate contribution margin: Selling price − total recipe cost (e.g., $15 − $5 = $10 per dish).
• Balance demand and margin: A high-margin item that rarely sells won’t move the needle; chase the overlap.
• Design smart upsells: Identify add-ons that ride along with mains (sides, toppings, beverages) and package them.
• Price with intent: Modest increases on high-demand items can lift revenue without hurting perception.

Pinpointing Under-Performing Items

Cut clutter to boost clarity, speed, and profitability.

• Flag low sellers: Items with persistently few orders likely need a recipe, naming, or placement rethink or removal.
• Check weak margins: Ingredients, prep time, and waste can sink profitability even when orders look “okay.”
• Layer in feedback: Pair POS data with guest comments and server notes to learn why items underperform.
• Avoid menu overload: A tighter card improves decision speed and kitchen execution.

Decision rule: Fix it (recipe/price/name/placement) or 86 it. Every slot on the menu must earn its keep.

Reading Ordering Patterns and Preferences

Let real behavior shape your structure and suggestions.

• Map common combos: Which starters, sides, and drinks travel together? Turn them into suggested pairings or bundles.
• Tune by daypart and occasion: Lunch favors quick/light; weekends skew indulgent. Offer daypart-specific highlights.
• Segment by guest type: Families, solo diners, office groups, and celebrants have distinct patterns, mirror them in sections and specials.
• Track seasonality: Rotate or re-frame items as tastes shift across the year.

Revising Your Menu Based on Analytics

Iterate in small, trackable steps, then measure the impact.

1. Spotlight top performers: Eye-magnet zones (upper-right, first/last in section), chef’s picks, or callout boxes.
2. Group logically: Place commonly paired items near each other to “nudge” complete orders.
3. Rework or remove weak links: Improve recipe, rename, resize, or price—or retire the dish.
4. Refine copy and prices: Use vivid, specific descriptions and surgical price tweaks to protect margins.
5. Test, then track: Compare before/after KPIs to confirm lift and keep iterating.

How to Create Smart Restaurant Menu Pricing Strategies for Sustainable Growth?

As food costs climb and guest expectations evolve, menu pricing is no longer just about applying a flat markup. Here’re proven pricing strategies reshaping restaurant menus:

Cost-Plus Pricing

Cost-plus pricing is the most traditional approach. You calculate the total cost of making a dish, including ingredients, labor, and overhead, then add a markup, usually 25–35%.

For example, if preparing a dish costs $4, applying a 30% food cost target brings the menu price to $13. This guarantees built-in margins but ignores customer perception and competitor benchmarks, which can cause missed revenue opportunities.

Competitive Pricing

Instead of relying solely on internal costs, competitive pricing focuses on what nearby restaurants are charging. This approach works well for staple menu items like burgers or pizzas, where customers easily compare options.

It keeps you relevant in the market but may limit pricing potential if your concept offers higher quality, better service, or unique value that sets you apart.

Psychological Pricing

Psychological pricing uses subtle techniques to encourage purchases. Charm pricing ($9.99 instead of $10) makes dishes feel cheaper than they are. Anchoring also works, placing a high-ticket entrée next to a mid-priced option makes the latter look more attractive.

Fast-casual and quick-service restaurants often use these tactics to increase ticket size and boost order conversions.

Value-Based Pricing

Value-based pricing sets prices according to what guests believe the meal is worth, not just the cost to make it. A $17 salad may sound expensive if judged only by ingredients, but diners often pay more for sustainability, customization, or premium ambiance.

This model works especially well for restaurants that provide unique experiences, ethical sourcing, or strong brand storytelling.

Dynamic Pricing

Dynamic pricing allows restaurants to adjust prices based on demand, time of day, weather, or traffic. It works much like ride-sharing apps or airlines.

For instance, Wendy’s announced testing of digital menus that raise prices at peak hours and discounts during slower times. Though still in early adoption, this model offers restaurants flexibility to balance demand and revenue.

Menu Engineering

Menu engineering combines analytics and design to drive better sales. Dishes are classified as Stars (popular and profitable), Plowhorses (popular but low profit), Puzzles (profitable but unpopular), or Dogs (low profit and low popularity).

Restaurants then use layout techniques, like highlighting or repositioning to promote high-margin items while rethinking underperformers. This method blends psychology with profitability for stronger results.

Premium Pricing

Premium pricing intentionally sets higher menu prices to emphasize exclusivity and brand value. It’s common in fine dining, where customers expect to pay more for service, chef reputation, and premium sourcing.

Even fast-casuals use this model for limited-edition or high-quality items, such as specialty coffees or seasonal chef’s picks. The key is that the dining experience must justify the elevated price point.

Which Tools Can Help Restaurants Apply Analytics?

Restaurants need the right technology to turn data into growth. Here are key tool categories that make analytics practical:

• POS Systems (Toast, Lightspeed, Square): Track sales, margins, and peak hours.
• Menu Engineering Tools (MarginEdge, xtraCHEF): Categorize dishes, optimize pricing, and refine layout.
• CRM & Loyalty Platforms (Punchh, Thanx, Paytronix): Personalize offers, boost retention, and segment customers.
• AI Forecasting (SevenRooms, ClearCOGS): Predict demand, reduce waste, and optimize staffing.
• Feedback Tools (Yumpingo, Tattle): Combine guest sentiment with sales data to improve dishes.
• Inventory Analytics (MarketMan, BlueCart): Align supply with demand, cut waste, and track food cost.
• All-in-One Suites (Avero, Oracle MICROS, Upserve): Provide holistic insights across sales, customers, and operations.

Start with POS data, then expand into specialized tools as your restaurant grows.

Best Tips for Using Data Analytics in Menu Engineering

Start with Clear Goals

Define what you want from analytics, higher margins, reduced waste, or stronger customer loyalty, so you can measure success.

Segment Your Customers

Break down behavior by family diners, solo visitors, or corporate groups. Tailoring menu design and pricing per segment boosts satisfaction.

Track Both Popularity and Profitability

Don’t rely only on what sells most. Always cross-check with contribution margin to highlight true “stars” on your menu.

Use A/B Testing for Menu Changes

Experiment with layout, descriptions, and pricing on digital menus, then compare results. Small tweaks can have big revenue impacts.

Integrate Feedback with Numbers

Combine guest reviews and server input with transaction data. Analytics shows the “what,” feedback explains the “why.”

Upsell and Cross-Sell Intelligently

Use ordering patterns to design bundles and pairings that feel natural, increasing average order value without pushy sales tactics.

Final Words

The real power of analytics in restaurants lies not just in boosting profits, but in shaping a brand that adapts as quickly as its customers do. The future of dining will favor operators who see their menu as a living, data-driven ecosystem, where every adjustment reflects evolving tastes, community values, and sustainability goals. Restaurants that embrace this mindset won’t just survive market pressures; they’ll build loyal customer bases and stand out as industry leaders in an increasingly competitive landscape.