Menu Engineering is the practice of analyzing and designing a restaurant's menu to maximize profitability and enhance customer satisfaction. It involves categorizing menu items based on their popularity and profitability, allowing restaurant owners to make informed decisions about pricing, placement, and promotion of dishes. By using techniques such as menu item categorization and psychological pricing, restaurants can strategically highlight high-margin items and encourage customers to choose them. This approach not only improves sales but also helps in creating a balanced menu that appeals to a wide range of tastes and preferences.