The Most Valuable Asset Most Restaurateurs Ignore: Part 2
Last week, we discussed how to take your POS data from “meh”…to clean and organized. Now that your data has been scrubbed, we’ll talk about how you can take action to make the most of your data. This is the second part of a two-part series, so if you missed it be sure to read through part 1.
Once you’ve taken the time to categorize your items, you can now work on each category individually. As a reminder:
Star: Popular and profitable
Workhorse: Popular but unprofitable
Challenge: Unpopular but profitable
Dog: Unpopular and unprofitable
Drop em! Dogs need to be completely reworked or removed from the menu. They are doing nothing but costing you time and materials. Get rid of them!
Don’t touch em! They’re popular for a reason and they’re already profitable. No need to do anything here. If anything, make them more prominent on your menu.
Typically you want to promote your challenges and there are many ways to accomplish this:
- Change or add an item-based promotion campaign
Item based promotions can be used to steer customers towards add-ons or menu items that are profitable but unpopular (“Challenge” items). Giving away a free item is usually better than discounting it. If you discount the item, the customer may be unwilling to pay the difference to try something they’re unfamiliar with and it also conditions the customer to pay the lower amount. If you give the first one away, it increases the likelihood they will branch out and try it but also keeps the price fixed in their minds.
- Make the item sound more appealing in name or description
There are many ways to go about improving the name and description of an item, but the basic tenets are to call out the highlights and details of the dish. For example, specifying that you use “freshly grated parmesan” and “free range chicken” (assuming those things are true!) will make a “House Caesar” sound much more appealing.
- Include the item in a combo or meal
If you don’t want to give the item away for free but still want to encourage people to order it, consider adding a new combo with the item included. Even if the price is not different from ordering the items separately, a combo entices the customer to order a “full meal” since they won’t want to miss out on the extras! This typically makes the most sense for side or specialty items like milkshakes and side items (like chips, fries, drinks or desserts).
Workhorses are often the most difficult items to deal with. Since they’re popular, you don’t want to change the item so much that they lose their popularity. You also don’t want to completely remove them since they’re popular for a reason. That being said, there are still ways to work the levers to reach a profitable solution:
- Revamp the preparation to reduce cost without sacrificing popularity
Is it possible to reduce the cost without sacrificing the features that make the item popular? You can consider replacing an expensive garnish or reducing the portion size slightly. This is a balancing act as it’s easy to upset customers who are used to a dish.
- Increase the price
Menu prices change all the time. If you’re due for an update, go ahead and adjust the price into the profitable range and see how it impacts the popularity. Be careful here as well — too big of a change could mean a sharp drop in popularity!
Now that you’ve cleaned up your item data, categorized it and made a plan to deal with each item, you’re ready to put your plan into action. Set goals for each item so that you can monitor and correctly evaluate your changes. Once you’ve gotten a few weeks of results, re-evaluate the numbers and see how things have been re-classified. Take a look at what worked and what didn’t and keep making tweaks until as much of your menu as possible are “stars” or “challenges”.
Once your menu is optimized, you can focus your efforts elsewhere and be confident that your menu is working for you and your promotions are having the maximum effect.