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Been a while since you’ve updated your menu? Here are some things to keep in mind.
Creating a restaurant menu involves far more than listing ingredients, prices, and a fancy description to entice your customers. Restaurant operators need to not only have a deep understanding of their customers, but also the many metrics and costs that influence their menu’s price points and margins. By taking the time to investigate these areas, you’ll create a menu that doesn’t just show off great food, but maximizes profits.
Whether you’re opening a new location or revamping your menu for the new year, here is a brief overview of things to consider when creating your restaurant menu.
A successful menu starts with competitive research. This means hopping onto your browser and researching what your competitors are (and aren’t) serving and their price points.
You likely already have an idea of what you want on your menu, but understanding what competitors are doing is a good way to get a baseline for your menu. If you see the same menu item being served across many of your competitors, odds are it’s a popular dish in the area.
This step also gives you an idea of what your competitors aren’t serving, which can be just as useful. It will give you some inspiration for menu items that will make your restaurant unique and give you a competitive edge.
From quick service to fine dining, each restaurant service area caters to a different target customer with different expectations from their dining experience. Start by asking yourself who you’re serving, not creating your menu and working backwards.
A quick service restaurant (QSR) customer is looking for high value at a lower price point. They want to get their food quickly and expect the same customer experience every time, no matter which location they visit.
A fine dining customer is at the opposite end of the spectrum. While they don’t expect quick service, they value high-quality food and ambiance above all else.
Fast casual falls somewhere in-between the two. The average customer expects higher quality food than QSR with fresher ingredients. This is one reason many fast casual establishments prepare their food in front of customers with clear windows into their kitchen.
Understanding your target demographic also involves understanding the type of people that come into your establishment, not just their dining preferences. Do they have children? If so, a kid’s menu is probably necessary. Do you cater to Gen Z and millennials? These customers are your “digital natives” that value tech to facilitate their everyday experiences, whether it’s payment options like tap to pay, apps, or rewards programs.
Menu pricing strategy is one of the more complex areas of creating a restaurant menu. It involves understanding metrics like total costs, cost of goods sold (CoGS), price per plate, and more. In its simplest terms, your menu items should be set at price points that maximize your profit. If a menu item price is set too high, less customers will order it. If it’s too low, you’re missing potential revenue with each dish served.
Use your competitive research from earlier as a guide to set your prices within the range of your competition, but not as a steadfast rule. Your restaurant’s prices are reflective of more than just the cost of your food. They’re reflective of your value. This includes areas like service, ambiance, and presentation.
The next step of setting price points is calculating some costs. Start by calculating your CoGS, food cost percentage, and break even point (BEP). Once you know these numbers, you’ll have a clearer picture of where you should set your prices.
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Menu engineering is a set of strategies that help you highlight certain menu items to increase their popularity. These strategies range include things like menu design, item placement, and the overall layout of your menu.
The first area of menu engineering involves using the equations mentioned in the previous section to identify which menu items are popular/unpopular and which items are high/low profit margin. Once you’ve broken down your menu into these four categories, and identified which items you want to highlight, you can move on to designing your menu.
The second part of the menu engineering process is a set of design techniques to draw attention to certain items on your menu. This can be done through color, negative space, imagery, and even psychological strategies to draw the customer’s eye to part of the page.
A successful restaurant menu should undergo updates and improvements over time. This doesn’t just mean adding new menu items or making seasonal adjustments, but testing changes to see if potential improvements can be made to capture more revenue.
Alter the location of specials to see if they can be highlighted. Introduce price changes to see if you can capture more revenue on a signature dish. Menu engineering can be implemented in small, manageable doses to make improvements overtime.
Whether you’re putting together your first menu, or making alterations to one you’ve had for years, these strategies can help you take your menu to the next level. Serving great food will always come first, but with a little work, your menu can go far beyond words on a page.
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