Your step-by-step guide to a more profitable menu.
The likelihood is that your hospitality business is facing re-opening with a reduced workforce, the need to
implement seemingly impossible – or certainly complex and financially challenging – social distancing measures,
and a nation of consumers whose attitudes towards dining out will have changed. All of this means, of course, that you can’t simply turn the lights back on. Instead, businesses will need to consider flexing their menus and sources
of revenue to maximise profitability and attract customers back through the door.
The good news is that this is entirely achievable. With a little resourcefulness and the backing of your sales or POS data, it is possible to engineer menus to meet the challenges of this ‘new world’. Unilever Food Solutions have teamed up with
the experts at Yumpingo to provide practical advice and best practice guidance on menu engineering.
Step 1: Pull the sales data from your POS system
A Star/Dog analysis is a very useful tool to help determine what dishes drive the most profitability for your business.
Input your cost price, selling price, sales volumes and required gross profit margin, and the template will help you identify your “Star” dishes (high profitability, high popularity) versus your “Dog” (low popularity, low profitability). If you have poorly performing dishes, consider where you can improve margins and / or reduce complexity.
Step 2: Measuring dish complexity
Dish complexity refers to the amount of effort and skill required to execute a dish successfully. This can include factors like prep time, number of steps in the recipe, number of stations required to prepare the dish, etc.
Rate your standardised recipes on a scale from 1 to 5 and plot this rating against the volume ordered and the margin of each dish. Weighing dish complexity against the other factors that you’ve measured in the Star/Dog analysis helps paint a clearer picture of potential pitfalls in your menu, particularly if you are looking to move into delivery or takeaway.
Decreasing dish complexity can help make your operations more efficient, offer your guests a more consistent product, and often decrease your food cost – especially if labour is a challenge for your business
Step 3: Menu Price Elasticity & Value Perception
The price elasticity of a dish means what impact changing the pricing of a dish has on the frequency of that dish being ordered. This is largely affected by restaurant type. For instance, quick service (QSR) end dining concepts. At QSRs, price tends to be one of the deciding factors for customers who choose to eat there, so any adjustment to pricing could have significant implications to volume.For low price elasticity dishes or concepts, try tweaking the menu description or dish presentation
or accompaniments to improve value perception without lowering price. Decreasing the price of these dishes risks having a larger effect on your bottom line than the improvement to value perception.
