Maximising your profit through smart menu design.
Today I’m going to talk you through the four key pillars of developing a profitable menu; and as a special bonus, I’m giving you my free top ten tips and tricks to maximise profitability and pricing. You’ll find the link for this at the end of this post and I strongly urge you to take a look at it and turn as much as you can into practice.
Did you know that a well-planned and strategised menu is one of the single most effective ways of driving revenue and profit?
Not only this, but if you’re wanting to increase your ticket value, speed up customer ordering, reduce food costs and drive repeat business, thoroughly reviewing your menu is a great place to start.
In this post, when referring to the menu, we’re talking about both the menu devise, whether that be a menu card, screen or board; and the food items and prices listed on it.
1. KNOW YOUR MARKET
Don’t try and be everything to everyone!! Get to know who your customers are, and more specifically who your ideal target market is. Figure out how they dine, when they dine and what they spend, and design your menu to suit.
An edgy, loud and uber-cool pop-up in a conservative part of town with an older audience might not fire, similarly an expensive white tablecloth, fine-dining establishment that also offers a kids’ menu might seem a little confused.
It’s important that you run your own race, but at the same time it never hurts to take a look at your competition from time to time. Doing so will provide you with some valuable insights into your target market and what they like and don’t like.
2. MENU DESIGN
Whether you use printed menus, menu boards, menu cards or a combination of these, your menu is a strategic communication tool so quality design and layout is critical.
Did you know customers spend about 60-90 seconds looking at a menu, and for some dining formats, such as food-halls, even less? To make things even more challenging, they will sometimes only devote 5-10 seconds to deciding whether they want to dine with you or not.
Your menu therefore needs to perfectly represent your brand but also present your food offering in a logical and easy format.
Avoid having too many menu items in each section; ideally seven or less. This will make it easy for customers to easily navigate your menu.
Studies show that when reading a menu, customers’ eyes are normally first drawn to a spot near the centre. They then look to the top right corner and move in an anti –clockwise direction around the menu. Understanding this will provide some valuable clues on how to best lay out your menu.
Don’t let the price be the dominant item on the menu. If it is, customers will shop based on price more so than the actual food items.
By putting the focus on the name of the dish and it’s descriptor, your customers are more likely to make their decision based on their attraction to the dish, and then use this to justify price.
To carry this logic one step further, it’s good practice to avoid stacking the prices on top of each other in a column. We call this column pricing, and when your menu is laid out like this, customers often subconsciously scan down the column of prices to help make their choice.
I recommend leaving the dollar symbols (or the Euros, Pounds or Yen) off the price and use a smaller font to display the decimal value.
In the example below you can see the price written three different ways. They all communicate the exact same information, but the right hand version helps take the focus off the price; placing the focus instead on the dish its self.
When thinking about your price, your goal should be to sell to the greatest number of meals to the greatest number of people at the highest possible price. When this is perfectly balanced your profit is being maximised.
Make sure you know your food costs so that you can set your selling price at least three, but ideally four times higher than this cost. This will achieve a food cost of 25-32% of your selling price. –We call this bottom up pricing.
You also need to consider this alongside top-down pricing, which is what you believe the market will be prepared to spend. Ideally these two prices look about the same, however if they don’t, you will need to find ways of reducing your food costs by tweaking the recipe, finding alternative ingredients or reducing portioning. -Do not drop your price below this three to four times multiplier.
Consider how the price of each item on the menu affects the perception of price of the other items. As an example, imagine the majority of mains on a menu are around $25, but one main is $35. How will your customers perceive this? For some, that $35 dish will make the cheaper dishes look like great value. Meanwhile others may think that $35 dish is something really special.
4. THE FOOD
Wherever possible consider menu items that share common ingredients, or base sauces to help streamline the kitchen operation and keep your labour costs as low as possible.
Consider logical add-ons, preferably with a good margin, that will help boost your ticket value.
Be mindful of seasonality as purchasing off-season produce can carry a hefty price tag which can seriously affect your margin. It pays to keep an eye on these items and then be ready to swap the dish out when the price reaches a threshold you can no longer support.
IN SUMMARY . . .
Other than simply being delicious, the dark art of menu design and strategy can have a massive impact on your business. And as such should be thought of as a strategic communication device; with the appropriate amount of care and attention being given to it.
Getting it right will reward you with:
- Higher revenue
- Better profit
- More customers
- Greater operational efficiency
- Speedier customer ordering
Download my Top Ten Tips for Profitable Menu Design