When thinking of your favorite restaurant, what comes to mind? Is it a high-end, white tablecloth place, or is it a hole-in-the-wall joint that’s been around forever? Maybe it’s a national chain like Shake Shack, or a franchise like McDonald’s? Whatever restaurant it is, chances are the menu is a huge part of what makes it a success.
Sure, we can all think of a successful restaurant that has boring food and poor service, but they have a great location with a view so people go there anyway. In most cases, however, it’s the menu that’s the real draw for customers, and getting your menu just right could be the key to the success of your business.
The Menu is the Secret Ingredient to a Successful Restaurant
It seems so obvious, but it’s truly surprising how many restaurant owners overlook the importance their menu plays in keeping customers coming back time and time again.
Successful restaurants have a menu that customers can trust. Customers know what the restaurant offers, and have an idea of how much it will cost to dine there. Think about what’s going through the customer’s mind as he or she considers where to eat:
- What kind of food am I ‘in the mood’ for?”
- How much can I, or do I want to, spend on this meal?”
- “How long is this meal going to take?” or “How much time do I have to eat?”
It’s true that location, ambiance, and the dining experience as a whole will be factors as well, but those matter much less than those three menu-driven questions listed above. A customer needs to have confidence that your restaurant offers the food they’re craving at a price point they can afford. Time matters, too. Are they in a rush, but know your food takes a while to come out? Or maybe they’re looking for a leisurely, wine-filled meal and have felt rushed by your service in the past. All of these things are important considerations a customer makes before even stepping through your doors.
In this article, we will explore several ideas for improving your menu and online presence to better drive repeat business to your restaurant. After all, it’s that repeat business that will take your restaurant to the next level and make it a successful revenue-driving company for years to come.
Identify Your Top-Selling Menu Items
This sounds like a no-brainer, and you probably already have a reasonably good idea of what menu items sell best, but do this exercise anyway. To get the most out of this, you should use actual data (and not just your gut feeling!)
Step 1 – List your top 10 selling menu items
Look at your sales for the past week or month. What were the most common menu items ordered during that period? List the number of sales (units) and the dollar value of those sales.
Example: 150 Pepperoni Pizzas x $15 per pie = $2,250, 105 Steak & Cheese Subs x $8 = $840, 75 Cheeseburgers x $9 = $675, (and so on…)
Step 2 – List your total sales during that time period
Here, you’re looking for the number of transactions and total sales dollars.
Example: 1,000 sales for a total of $15,000
Step 3 – Calculate the percentage of total sales for each of your top 10 menu items.
Example: Pepperoni Pizzas = 15% ($2,250/$15,000), Steak & Cheese Subs = 5.6%, Cheeseburgers = 4.5%
In this example, you just discovered that 25% of your (hypothetical) business comes from three menu items. That’s huge! Your customers love your pizza, steak & cheese, and cheeseburgers.
Chances are you’ll find that your top 10 selling menu items account for a large portion of your total sales. Knowing what items sell best is powerful. There must be a reason these items are so popular with your customers.
Planning Your Menu
Now that you have a firm grasp on what menu items your customers like best it’s time to do some planning. Think of your top selling items as your restaurant’s foundation. You need to perfect everything about these menu items. You want to master the recipes, the preparation process, and the pricing of these items.
Recipes and Preparation Process
You are in the meal manufacturing and delivery business. Sure, you may offer a nice experience for your customers and pour your heart and soul into every dish you make but as a business owner you are a manufacturer. You take raw materials and turn then into a finished product that you designed using a repetitive process and you sell that product for a price that is hopefully higher than the cost of the materials, labor, and overhead required to produce it.
Successful restaurateurs get this concept. Again, think about the successful restaurants that came to mind earlier. Can you imagine the owners and management teams at those places “winging it” when it comes to understanding the costs and processes required to produce their menu items? Take some time to answer the following questions about your top 10 menu items:
- How much do the ingredients cost for each menu item?
- How long does each menu item take to prepare?
- What is the hourly rate you pay to the staff who prepares the menu item?
The answers to these questions will tell you a lot about the gross profitability of your top selling menu items. What you hope to discover is which of your top sellers are your top money makers. You may also discover that you need to make some changes.
Gregg Rapp of Menu Technologies calls this process “Menu Engineering” and he claims that many restaurants see profits rise by 15% or more by taking a more manufacturing-like approach to their menu. Give it a try and let us know what you discover.
Whether you are already running a profitable restaurant or working toward profitability understanding the expenses associated with producing your menu is important. How else are you going to know how to price your food?
It’s often said that pricing is more of an art than a science. The most important rule is “charge more than it costs to make”. Beyond that you can look to a variety of strategies to maximize your profits. Below are a few ideas:
Premium Pricing – Some customers view a higher price point as an indicator of quality. Try raising prices to see how it impacts sales. If you can sell the same number of items at a 10% higher prices that’s pure profit.
Value Pricing – Other customers are looking for a deal. Taco Bell sells millions of tacos for $0.99 each for a reason. You may be able to increase profits by selling more volume at a lower price.
Combo Pricing – For most restaurants the “Soup & Sandwich” combo is much more profitable than the sandwich alone. Why? Soups have great unit economics. Check out this “Coffee Stout French Onion Soup” recipe on the WebstaurantStore blog. It has an 87% profit margin.
Competitive Pricing – You may want to explore the menu prices of restaurants in your area. If you price your menu so that it’s in the same range of other restaurants competing for your customers can avoid missing out on business due to price.
Demand Creator Pricing – Some menu items drive the purchase of other menu items. Buffalo wings lead to the sale of more beer. Beer is more very profitable. Why not sell wings at low price to drive an increase in beer sales?
You can experiment with a variety of menu pricing strategies. The most important thing is to have an actual strategy. Again, don’t wing it. Run the numbers and take a systematic approach.
There’s a lot that goes into planning a menu, and you have to take a realistic and profit-driven view of the situation. You may absolutely love one of your dishes and hold onto it, despite low sales. But if no one is buying it, you’re wasting money on ingredients that won’t get used. Make sure you’re using a POS that keeps detailed records of which individual dishes are ordered, and that there is an accessible way to view that information weekly.
The bottom line is, keep careful track of what your customers are ordering, and what they’re not. Make adjustments accordingly so that you’re not wasting money on preparing for orders that won’t be coming in. On the flip side, try to get a picture of which dishes are consistently popular and use that information as a model for adding new entrees in the future.
Restaurant Website Strategies
It’s 2017. If you don’t have a website for your restaurant, it’s probably time to get it up and running. If you’re considering either creating a new site, or tweaking the one you already have, consider these tips:
Make your website easily viewable on mobile devices – many, if not most, of your guests will be accessing it on their smartphones.
- Keep your menu updated – try to make sure the menu is on a web page instead of a PDF. This makes it easier for you to update and easier for your guests to view it.
- Location, location, location. Nothing’s more frustrating than wanting to go to a new restaurant only to later find it’s too far away. Consider adding a map feature to help customers find you easily, and at the very least make sure your address is located in key spots on every page.
- Making a reservation should be as easy as possible for potential customers. Give diners the option to make an online reservation from your website and explicitly list your phone number as a second option.
Never Forget the Basics
Customers universally value certain things in their restaurant experience; Cleanliness in the dining area and in the restrooms, attractive decor, a welcoming ambiance. The quality of the food and the service has to be top-notch for your culinary niche. Food is a very communal experience, and the more you can make your guests feel relaxed and comfortable, the longer they’ll stay and the more they’ll spend. And the more they’ll keep coming back.
Consistency is another important basic to remember. Some of the most popular restaurant chains of all time offer universal consistency. Every time you go in, you know what you’re going to get. Your corner bistro may not be McDonald’s, but the same principles hold true.
Don’t Let One Setback Become a Disaster
If you’re running a coffee shop and your espresso machine breaks, that’s a huge expense that has to be remedied immediately. The same goes for your refrigeration system, freezer, stove, dishwasher, or any of the other business-critical pieces of equipment you need to operate your restaurant. If you find yourself needing restaurant financing in a hurry to get the doors back open, you have several options, including a Merchant Cash Advance from Horizon (Apply here today!).