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Getting started with your menu makeover
By Wayne McKay
April 13, 2011
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A “menu makeover” is the strategy of maximizing the profitability and effectiveness of your number one sales tool – the menu – by selling the best money-making menu items while providing great customer satisfaction.
Consider your menu as the brochure to communicate what you have to sell and how you would like to influence your customer’s decisions.
Considering a menu makeover? Here some key considerations:
Frequency: When did you last revise your menu? It is ideal to have a thorough review of your menu and sales mix every six months.
Top 10 analysis*: The top priority when considering a menu makeover is a menu mix analysis - especially of your top 10 best overall-selling items, analyzed by menu category (starters, main items, desserts, beverages etc.).
By menu section, to define what are the most profitable menu items, answer the following:
- What is the profit margin?
- What is the food cost mix? (The cost of all menu items sold divided by the total revenue of the combined top 10 items)
- Have you managed the best way to shop smart, price smart and sell smart?
- (Note: don’t forget your features and specials in the analysis of the overall picture!)
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Best menu money-makers
Are you promoting the best money-makers on your menu? This can be done with signage at the restaurant entrance, by providing prime positioning on the menu, and by influencing the order with the sales pitch at the table. The top sellers might not be your best money-makers, so don’t leave money on the table. Remember the rule of supply and demand. Learn what your best money-makers are for contribution margin (Example: $10 selling price – minus $3 cost = a contribution margin of $7 after food cost only and before labour and other expenses.)
Other considerations in the menu pricing:
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- What is your necessary average cheque to break even? To calculate the necessary average cheque, divide the total expenses in a month by the number of customers you serve in a month.
Example: $60,000 in total expenses for the month divided by 10,000 customers served in a month = a necessary break even of a minimum of $6.00 average cheque per customer.
- What is your actual average cheque per customer? Using the total sales for the same month divided by the same number of 10,000 customers, calculate the actual average cheque per customer.
Example: $59,000 in sales divided by 10,000 customers = a $5.90 average cheque.
Summary: The actual expense per customer is $6.00 – minus the actual average cheque of $5.90 = .10 cents short per customer average cheque.
- Consider the difference between average cheque and the necessary break-even average cheque. Now that you know the average cheque per customer is short by 10 cents, you can fine tune the menu pricing in a “what if” scenario on a sales mix spread sheet or simply use Menu Tools to calculate your menu mix for all items sold to ensure your operation exceeds the break-even with a planned profit.
Dealing with fear of increasing menu prices
Today more than ever, customers are willing to pay a slightly higher price for your product given the top-of-mind increasing cost of food and fuel. At what average cheque increase – 30, 40, 50 cents or more - would the customer not see the value of their meal experience? Always maintain the guiding principle of “Quality, Consistency and Value” in your operation. Increase prices before cutting quality or portions. Never underestimate the power of nickels, dimes, quarters and even higher amounts, given the popularity and demand of a menu item. Take, for example, if the average customer consumed three items per meal at a five-cent increase per item. At 300 customers per day, this would translate into $45 per day or $1,350 per month or $16,200 per year in extra bottom line net profit!
Per menu item Total all items sold
| Name |
Number sold |
% Sales mix |
Food cost |
Sell price |
% Food cost |
Contrib. Margin |
Food Cost |
Sales Revenue |
Contrib margin |
Actions |
| Ceasar Salad |
300 |
8.0% |
$1.61 |
5.99
|
26.9% |
$4.38 |
$483.00 |
$1,797.00 |
$1,314.00 |
N/A |
| Chicken Nachos (large) |
150 |
7.0% |
$5.91 |
10.49 |
56.3% |
$4.58 |
$886.50 |
$1,573.00 |
$687.00 |
N/A |
| Club Sandwich Platter |
450 |
18.0% |
$3.00 |
8.99 |
33.4% |
$5.99 |
$1,350.00 |
$4,045.50 |
$2695.50 |
N/A |
| Lobster Roll |
240 |
9.6% |
$4.41 |
8.99 |
49.1% |
$4.58 |
$1,058.40 |
$2,157.60 |
$1,099.20 |
N/A |
| McCain Combo for Two |
290 |
12.3% |
$3.19 |
9.49 |
33.6% |
$6.30 |
$925.10 |
$2,752.10 |
$1,827.00 |
N/A |
| Smoked Meat Platter |
90 |
4.0% |
$2.51 |
9.99 |
25.1% |
$7.48 |
$225.90 |
$899.10 |
$673.20 |
N/A |
| Veggie Wrap |
45 |
1.4% |
$1.26 |
6.95 |
18.1% |
$5.69 |
$56.70 |
$312.75 |
$256.05 |
N/A |
| Coffee - cup |
3,000 |
18.6% |
$0.30 |
1.39 |
21.6% |
$1.09 |
$900.00 |
$4,170.00 |
$3,270.00 |
N/A |
| Fountain Pop |
1,600 |
10.6% |
$0.16 |
1.49 |
10.7% |
$1.33 |
$256.00 |
$2,384.00 |
$2,128.00 |
N/A |
| Dessert Shooter |
240 |
3.2% |
$0.74 |
2.99 |
24.7% |
$2.25 |
$177.60 |
$717.60 |
$540.00 |
N/A |
| Pepperoni Pizza - 12" |
150 |
7.3% |
$1.73 |
10.95 |
15.8% |
$9.22 |
$259.50 |
$1,642.00 |
$1,383.00 |
N/A |
Sales summary
| Total items |
11 |
| Total items sold |
6,555 |
| Total food cost |
$6,578.70 |
| Total sales revenue |
$22,451.65 |
| Total contribution |
$15,872.95 |
| Per cent food cost |
29.3% |
*Example of a top 10 menu mix analysis.
About the author:
Wayne McKay, Executive Chef / Food & Beverage Cost Controller, President of Menu Tools Inc., has a proven track record in assisting restaurant and foodservice operators to increase sales and lower costs for over 25 years. He is recognized as an industry specialist in finding the problems that drain the profits and provides franchise type tools and profit monitor systems to maximize menu profits, manage food, labour and many other expense challenges for restaurant operators.
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