Menu Magic Kitchen Sense
by James R. Covart
Successful operators generally say that their menu is the single most important marketing tool available, outside of a well-trained and enthusiastic staff. The menu can be what determines whether a business becomes a thriving establishment or a failure. Patrons’ interests and tastes, the availability of equipment and labor, pricing strategies, profit margins, and food costs are just a few of the considerations that go into menu planning.
Many operations choose to hire designers and graphic artists to create the layout for their menus and handle the artistic end of things; others have the creative flair to do this the
mselves. Menu development and design has become an art form. A quick search of the Internet yields hundreds of consultants who work full time creating menus for their clients.
Regardless of whether the layout and artwork are done in or out of house, management must first choose which items are to be offered and how they will be served and priced. A fancy menu without the proper item and pricing strategy is like a sports car without a motor — it can look sharp, but your business will never leave the garage.
Putting together and following a game plan makes the job much simpler and greatly increases your success rate. A three-step procedure works best: analyze and evaluate your existing menu, generate new ideas, and then test them out.
Evaluating Your Menu
First, pull together as much information about your present menu as you can. Information should include:
• Sales volume
• Food cost
• Labor cost
• Customer satisfaction
Almost all operators have access to point-of-sale printouts. These printouts can provide you with valuable information about the sales history of your present items — what items sell well and how much revenue they produce.
You will need to know the cost of producing each item on your menu. You can develop cost information from your recipe files and inventory. Many operations have computerized their inventory and linked them with their recipe files. Among the many advantages, this provides up-to-date cost information without the time commitment required by manual recipe recalculation. There are several good commercially available software products that offer this function. Although the initial setup is extremely time consuming, it is well worth the effort.
Now comes the interesting part. Put together a spreadsheet that displays all of your numeric information in a usable format. Using a computer can simplify the task, but a pad of
the task, but a pad of paper and a pencil still can work.
Set up seven columns (see chart, below). In column A list each of your menu items. The next two columns, B and C, display the weekly or monthly number of units sold and the selling price of the item. In column D calculate the total revenue produced by each menu item by multiplying the number of units sold by the selling price.
Put the food cost for each item in column E. Remember to include all ingredients when figuring the cost, such as sauces, garnishes, and condiments.
In column F multiply the food cost by the number of units sold to determine your total production cost for each item. Column G is calculated by subtracting column F from column D. This will give you the contribution amount for each menu item.
You can enhance your spreadsheet by adding columns that calculate percentages for food cost, contribution margin, and the percentage of the total contribution that each item represents.
Take a good look at your numbers. You will most likely find some surprises. Items that you knew were big sellers may in fact not contribute as much to your gross profit as items that have lower sales but higher profit margins. Some items with relatively high food cost may still contribute strongly to profits.
Don’t forget about labor cost. In today’s tight labor market the talent level along with production time is just as important as the raw cost of ingredients. Observe your kitchen staff and find out what menu items take the most time to prepare. Rate each menu item as: labor intense, moderate, or minimal labor.
The last but no less important piece of information you will need is a measure of customer satisfaction for each menu item. Speak with your service staff. They will be able to provide you with valuable feedback. You might be surprised that a few items that are big sellers generate grumbles and some of the slower sellers have a strong and loyal following.
Don’t forget to keep an eye on the bus buckets headed for the dish room. See what items your guests are devouring and those they leaving half-eaten.
Crunching the Numbers
Now that you have gathered all the information, it is time to analyze your menu. Start by making three lists: the A list, the B list, and the C list. The A list should be all the menu items that both sell well and contribute generously to your gross profit.
The B list should be those menu items that are either good sellers or highly profitable. You also might want to include on the B list any items that are both popular and profitable but require significant labor to produce or require a higher level of culinary skill than your staff can consistently provide.
Take a serious look at your B list and make an effort to bring these items to A-list status. Perhaps you can increase the price of a very popular but low-profit-margin item or enhance a menu selection that is highly profitable but not selling well.
Some ways to boost sales of an item include drawing a box around it on the menu, telling servers to mention it, and calling it a "house special."
That leaves the menu items that are least popular and least profitable. This C list represents the items you should target for replacement. Often these items represent less than 10 percent of sales but 70 percent of cost and production problems.
Finding Just the Right New Item
Before adding an offering to your menu, you need to identify a variety of possibilities. The aim is to choose items that will make the A list. Gather as many ideas as you can. Consider making this an ongoing process. When you find something that looks like it has potential, jot it down or put it in a menu-item file.
Look around. What items are selling strongly at your competition? What’s hot on the other coast? Take a look at trade journals. The Internet can be a great way to travel across the country or around the world to gather ideas without leaving your desk. Tradeshows can be very informative, and the Food TV network is another possible source.
Once again, talk to your staff. Ask them what menu items they think your customers would order and enjoy. Depending on the caliber of your kitchen staff, consider bringing in a consulting chef for a few weeks to help. Many managers have found that creative chefs have a high turnover rate and that it’s difficult to keep them interested in their job. Don’t be afraid to look outside your operation. Even if you have strong culinary talent in your kitchen, sometimes an outsider or "hired gun" can offer a fresh and creative approach. Another option is to outsource specific items, such as desserts and breads.
Begin to narrow your list by considering each item. Ask questions such as:
- Does the item fit the existing menu (or your new menu plan)?
Will this item draw sales away from existing A-list items?- Can this item attract customers who would normally order a popular but lower-profit item?
- Will the item be attractive to potential new patrons? Will it have a good perceived value?
- Will the ingredient costs fluctuate beyond a reasonable level?
- Can the kitchen staff produce the item consistently?
- Does the cook time fit with other items on the menu?
- How many new ingredients will I need to inventory to offer this item?
- And do I have the dry and cold storage space for them?
- Are there any highly perishable ingredients that will only be used for this item and therefore increase the potential for waste?
- Does the operation have the equipment to produce the item?
With your new list of potential A-list items in hand, start experimenting. Begin by offering items with the greatest potential as daily specials on a "fresh sheet." If an item sells
well, leave it on your potentials list and try offering it again. Vary the days of the week to see how broad the appeal is.
If an item doesn’t live up to expectations, drop it. If an item appears to be more suited to the B list, try to make some adjustments to enhance the item; otherwise, forget it. Gather feedback from your guests to find out why items aren’t selling as you expected — and if it’s worth trying to save them.
Some items will be A-list items one week but will land on the B list another week due to fluctuating or seasonal ingredient prices. Lobsters, for example, can double in price depending on the time of year. These items are best left on the specials list and used only when the numbers are favorable.
This process of experimenting with items as specials before promoting them to permanent menu status will reduce your risks to a minimum. Think of it as allowing your guests to test drive the item.
Be creative. One client wanted to increase his soup sales. When his service staff was asked why more people didn’t order soup, he found that two offerings, chowder and a daily special, were simply not enough of a selection.
By using high-quality pre-made soups and pre-portioning them into individual servings, the restaurant now offers five soups every day. When an order for soup comes into the kitchen, the individual portion comes out of the refrigerator, is heated, garnished, and presented in a rimmed soup bowl. Because the soups are kept refrigerated rather than on the steam table, there is little waste. Soup sales, with their high profit margins, have tripled.
Making the Change
Ten years ago, changing your menu cost a lot of money and was a major undertaking for most operations. With today’s desktop publishing technology and some forethought, you can update your menu quickly and easily with a trip to your neighborhood copy center. You may even be able to do the job in-house.
Consider choosing a menu format that allows flexibility. A nice cover with a printed insert or a design that allows you to make changes by substituting single pages permits you to change and tweak your menu gradually. Instead of making dramatic menu changes once or twice a year, you can make your menu an evolving work in progress. You can make price adjustments subtly and take advantage of fluctuating commodity prices by featuring high-profit items to turn your menu into a sales and profit-making tool.
By continually analyzing your sales information along with your production costs and profit margins, you can make adjustments to maximize profits. If the profit margin of a popular A-list item drops temporarily because of ingredient-cost changes, react quickly. Adjust the price, or feature similar but more profitable items as specials to draw sales.
Your menu can be a roadmap to financial success, but as with any roadmap, from time to time there will be situations that require detours. The more information that you have in front of you, the sooner you will react and adjust your route to these changes and take advantage of the opportunities presented.
