Menu Analysis

The menu is the most important tool influencing the success or failure of a food and beverage operation. It's also the major piece of advertising that communicates to the customer exactly what is being sold. Therefore, the types of items, the way they are described, the price, and placement of the food and beverage items need be a forethought rather than an afterthought.

Two common measurements of menu items are their 1) Profitability and 2) Popular. A profitable menu item is one that generates above average contribution margin and a popular menu item is one that generates above average popularity. After conducting a menu analysis, each menu item can be classified as either a star, plowhorse, puzzle or dog. Depending on a menu item's classification, there are a number if approaches a menu planner can take.

MENU ANALYSIS - The STAR :)

STAR – High Popular and High Profitable
This is often a restaurant’s signature or prestige item. An item that is unique to the particular operation.

1. Leave the item alone. Don’t mess with a good thing, “If it isn’t broke, don’t fix it.”

2. Hide the item on the menu assuming it’s taking up a prime location on the menu. If an item is popular and customers know about it, they will find it no matter where it is. The reason for hiding is to provide an opportunity for some other potential good item to sell by giving it a good space. The idea is kind of similar to network TV where there is a hit show at a prime time slot. The networks sometimes move the show to a different hour and give some other potential shows the previous time slot in order to let them shine.

3. Attempt to sell the item more. Outback Steakhouse and Chili’s promoted the heck out of the classic onion ring appetizer by re-creating them into the “Awesome Blossim” and the “Bloomin Onion”. They advertised them not only with prime space on the menu, but also suggestive selling through service staff and also TV commercials. Why not! These items were stars. They were profitable (about.50 to produce and they sell them for about $7.95) and they were popular.

MENU ANALYSIS - The PLOWHORSE

PLOWHORSE – High Popular and Low Profitability
Having some of these on the menu is not necessarily a bad thing. They may appeal to a price conscious customer and/or may be used as a loss leader. A loss leader is an item that is highly popular and yet purposely low to no contribution margin in order to motivate buyers. The greatest concern is having too many plowhorses on the menu.

1. Hide the item on the menu assuming it’s taking up a prime location on the menu. This way, if people want the item, they find other more interesting (and better contribution margin) items before they get to it.

2. Increase the contribution margin by:
A) Raising the price
B) Lower the food cost
C) A little bit of both
But be careful with extremes. Any noticeable differences to the customer may be perceived as negative and therefore cut into popularity.

3. Try combining it with a lower cost item to achieve a greater contribution margin. Ex: Don’t just sell a steak, but make it possible for the customer to also get a combo platter of steak and chicken. There typically is greater margin and chicken and with the hedonistic combination, the margins may be closer to balancing one another out.

MENU ANALYSIS - The PUZZLE

PUZZLE – Low Popularity and High Profitability
The puzzle menu items are puzzling to management. They are items that are priced right, but we can’t sell them. The goals is to find a way to make them attractive to the customer.

1. Reposition the item to a prominent location. Prime space is limited, therefore the space needs to be utilized for items that are going to produce a good margin. Four prime locations include: A) Top of a column, B) Bottom of a column, C) Middle of the page, D) Create your own space (through the use of boxes, symbols or text emphasis.

2. Consider renaming the item or ingredients. Perhaps “prunes” don’t sound too romantic to the customer.

3. Consider reworking some of the ingredients. Some items could be tweaked to better emphasis on the vision of the dish.

4. Promote the item through merchandising. Servers can suggestive sell or place the item on a specials board or specials card.

5. Lower the price a tad to test for price sensitivity. The item could sell if the price sounded a bit more attractive. In some cases, the differences between $9.00 and $8.95 is only .05 but to some customers the difference is $1.00.

MENU ANALYSIS - The DOG:(

DOG – Low Profitability and Low Popularity
1. The natural inclination is to wipe out the dog menu items. (Personally, I think this category should be called “cats”) They are not selling and if they do sell, they don’t make an adequate margin. Possibly, they may cost the restaurant to even stock the ingredients in-house.

2. Raise the price and keep them on the menu. Why? Imagine a party of four goes to dinner at a steakhouse where one of the guests doesn’t care for red meat. All steakhouses have chicken, pasta or seafood in addition to steak because they realize that not all customers can or want to eat red meat. If the price is raised on a dog item, they still may not sell, but when the non beef eating customer comes into the restaurant they are going to pay for the item because their other options (starving yourself) don’t seem as desirable.

3. Remove the item from the menu, but keep the ingredients in-house (assuming they are relatively shelf stable) in order to make special orders when the situation arises. And this item should still be priced higher.