Restaurant Menu Matrix: Top 10 Mistakes Restaurant Operators Make On Their Menu (and how to avoid them)
A while back I had an opportunity to visit with a family restaurant owner in the Chicago area. For the most part I like Chicago and the people who reside there. Most will tell you what they think, so you never have to guess where you stand. Such was the case after I was finished with an Objective Menu Review and Menu Matrix for this Chicago-based family-style restaurant operator. He furrowed his brow, tilted his head and muttered,” I hope to Christ you’re wrong about this.”
I was surprised to say the least. But then he went on and I understood his problem a little better. “I’ve spent the past 20 years in the restaurant business. If you’re right, I’ve left more than $900,000.00 on the table in my career.”
It has been said that until the pain of the current situation is stronger than the fear of change, things stay pretty much the same. With our current economy there must be a lot of pain, because I’m suddenly inundated with calls from restaurant operators wanting advice on how to grow their restaurants.
To better understand the top 10 mistakes and how to correct them, it might help if we’re all on the same page with what a menu is. A menu should be your most effective marketing tool. It should suggestively sell products, describe your offering in a poetic way, entice an up sell, and – most importantly – be a visual representation of your brand. In addition, it is the place your guests will find what they want to order, so it is also your catalog.
Let’s take a look at the mistakes I have most often encountered from restaurant operators over the years.
Mistake #1 – Improper Planning
I get calls from restaurant operators all the time. When I tell them I can’t help them until they get me three basic pieces of information, about half of them never call again. And I think, “What did they expect? A menu psychic or a menu engineer?”
Every properly engineered menu starts with these three basic pieces of information.
Note: If you are just opening your restaurant, you won’t have any history. That’s OK, just use potential income as your guide. You’re actually in the best situation if you start out from day one with an engineered menu.
Product Mix Report, Sales Velocity Report or Sales Ticket Count.
We need this information for each item (entrées, sides, appetizers, etc.) sold from the menu. You don’t need the individual items – like how many tomatoes you sold – but rather finished plates out the door. So if you sell burgers and fries, we need to know how many burgers and fries you sold over a given period. I recommend 1-3 months if you have a point of service system, 1-3 weeks if you have to count tickets.
Once you have this information, you can develop a simple SKU rationalization or Menu Matrix. While not difficult, it can be time consuming, especially when doing this by hand. My recommendation is to visit www.hotoperator.com and use their automated system. Once you’ve signed up, it’s a simple step-by-step process that makes developing and calculating your Menu Matrix information easy (yet still a bit time consuming). Best of all, it’s free.
After you have the Menu Matrix, you will have to interpret what it means, which opens up another whole set of problems (you can see why this is a difficult assignment). Your best bet is to find a menu design-engineer and at least hire them to coach you through the process. To the experienced eye, the Menu Matrix can tell a lot about your brand and the products you sell and how they relate to one another.
Do: Keep a track on sales history
Do: Hire HotOperator to make a Menu Matrix for your restaurant business
Don’t: Skip this step
Don’t: Wait to engineer your menu
Percentages or Plate Contribution?
Many restaurant operators are concerned with food cost percentages, and that just keeps them looking in the wrong direction and focused on the wrong things. Paying close attention to your plate contribution will make you a wealthy restaurant operator, while focusing on percentages can make you poor. Here’s why: Plate contribution goes to the bank. Percentages go to the accountant.
Current Menu (Proposed Menu for Startup)
Over the course of my career in menu engineering, I’ve gotten a call every week from someone who has developed a new menu and wants my advice on what they should do next. And when I ask them for their current menu, there is an awkward moment of contempt from them as if to say, “Just tell me how great this is, so I can get it printed.”
But before going forward with a new menu, you must take a good hard look at where you’ve been. Sit and look at the menu as though you were a customer in your own restaurant. Think about it from their perspective. Do this before you take another step.
Also, your current menu is critical to the Matrix because it has the selling price of each item, and you can’t do a Menu Matrix without the selling price.
Do: Spend time contemplating your current menu
Don’t: Start the new menu before doing your homework
Do: Make sure the selling prices are accurate and note any specials or features that may have had a reduced price
Restaurant Food Cost
In most instances, new restaurants are way ahead of the game than their more established counterparts. That’s primarily because when you’re opening a restaurant, you figure out the food cost closely. Once you’re open, you have a million and one other things to do.
But before you get too far in the planning process, take a good look at your cost of goods. Not what you paid for food items in bulk, but figure out your current cost of finished goods out the door. It’s a healthy thing to do financially anyway, and you’ll need this information to do a Menu Matrix.
Do: Figure out your cost for finished goods out the door
Don’t: Make yourself crazy with too much detail
Mistake #2: Putting the Cart Before the Horse
Over the years I’ve tried to make menu engineering as easy as possible without leaving out critical parts of the process. My first attempts were cumbersome, since few people knew how to engineer a menu. When I started engineering menus back in the early ‘90s, it took nearly 50 hours on average. But over the years we’ve been able to reduce the process by more than half in terms of time, without losing any of the critical steps. In fact, the menus we’re engineering today are much better than those in the past, because we’re learning new processes with nearly every menu we produce.
Here is a list of steps to follow for developing a new menu:
1. Ongoing: Keep notes of menu ideas and suggestions that arise over time.
2. Review sales velocity reports at least monthly – develop a review every quarter and update the menu as needed.
3. Review food cost and plate contribution on each item at least monthly.
4. Build a straw man (layout) menu for engineering only.
5. Hire a great designer and give him or her a rough sketch of how you want your menu engineered (don’t leave critical decisions like product placement and highlighting to the designer).
6. Set the tone for the graphic representation of your menu with the cover layouts first; then incorporate the design you choose into the rest of the menu. Many operators make the mistake of having the menu designed all at once, and then when they make changes it can be very costly. Taking the time to engineer the menu first and build the graphics after is much more cost effective.
7. Then have your graphic designer finish the piece with complete graphics, but only after the cover design has been decided and you are sure you have the engineering complete.
Mistake #3 – Not Updating Their Menu Often Enough
How many of us resolve to lose weight, quit smoking, drink less, complain less, etc. and don’t keep up with it? It’s not really a surprise, but most restaurant operators just don’t update their menu enough. I’ve worked with more than 2,000 restaurant operators across the country, and it’s been our experience that, on average, restaurant operators change their menu less than once per year.
The downside of waiting too long is two-fold: First, by the time the operator makes an update to the menu, he or she is often upside down on many of their best-selling items. Second, many operators then end up shocking their customers with a price increase across the board because they’re faced with such tight margins.
My best recommendation is to update your menu at least four times per year. In this way you can keep pace with eating trends and seasonal shifts with your guests, and you can ensure you don’t get too far behind in price adjustments.
Mistake #4 – Improper Product Placement
Many operators don’t give much thought to where items are placed on the menu. In most cases, product positioning is more of an afterthought than a strategic decision. But it’s an easy fix with the right knowledge. Depending on the menu style you’ve chosen, your best profit items need to be placed in order of importance. I’ve included the eye movement charts we use to engineer a menu. Make sure the best plate contribution in your restaurant goes in one of the top three positions at the very least.
Through experience we’ve found the best place for the appetizers is on the back of the menu, which might seem counter-intuitive. However, when the menus are placed with the appetizers face up, and the servers point them out, the sales of appetizers increase.
Mistake #5 – Not Highlighting (or Not Highlighting Correctly)
Of all the mistakes I see on homespun menus, this is probably the most pervasive. While I’ve never done any research as to why operators choose not to highlight on their menu, it’s probably because they either don’t know how, or what, to highlight.
Over the years I’ve learned a couple of surefire tips on the best way to highlight on a menu. First, box in an area of the No. 1 position on your menu (see example). This needs to be large enough to hold your best entrée items, or sandwiches if you’re a sandwich-oriented restaurant.
Next, make sure there is a background color that is light enough to allow for you to use black type, yet dark enough to allow contrast for highlighted areas. It’s been my experience that the best highlights are white with a light background color. In fact, it has been my experience, through trial and error, that most other methods of highlighting have an opposite or negative effect on the sales velocity of the items highlighted.
Mistake #6 – Skipping Mental Anchoring
This step is skipped most often, probably because many restaurant operators don’t understand it. Mental anchoring can be the difference between getting an extra buck from your guests or not. The reason is: Most consumers do not purchase the most expensive item on any menu. In fact, the single most difficult item to sell at any restaurant is the most expensive item.
But there’s a catch: Consumers are very open to moving up the scale if given permission to do so. And the easiest way I have found to give them permission is to offer them something more expensive than the highest-priced item currently on the menu. In fact, just by offering a double order of your most expensive item will bring a higher check average.
Here’s an example of mental anchoring: Seafood Cruise. Take a cruise on a riverboat … eat dinner, gamble and be entertained, and you’ve spent at least $500.00. Or eat the steak and crab dinner here for only 21.95, and save a cool $478.05.
This may seem silly, but it works every time. Consumers compare the $500.00 to the 21.95 and change their mind about how expensive the item appears. And when they do, they are more likely to order the higher-priced item than if they hadn’t made that comparison.
Mistake #7 – Pricing Errors
As recently as just a few days ago, I was coaching a restaurant operator in Houston, Texas. While we were discussing his prices, I pointed out that he could make close to $12,000.00 in extra income in just three months by simply adjusting prices.
Whenever you take prices up, you run the risk that some customers will stop buying from you. That is a fact. Yet, there are simple price points that have an effect on consumer behavior. Under $5.00, there are four basic prices points to be concerned with: .29, .49, .79 and .99. After $5.00 there is only two: .49 and .99. So a product priced at $6.00 will sell at about the same rate as a product priced at 6.49.
Dollar Signs Make Me Angry
Dollar signs just remind consumers that they are in fact spending money. So rather than remind them of this, why not just leave the dollar signs off?
Mistake #8 – Price Lists
One of the most pervasive and preventable mistakes in the restaurant business is the price list menu. Why so many restaurant operators lead with money, I will never understand. A price list is just teaching your customers to shop from you on price.
The cure for this problem is simple: Tuck the prices into a paragraph. Don’t highlight the price; don’t make it another color, or type size, or style. Just end the description with a price without a dollar sign and move on.
And, heaven forbid, if you don’t have descriptions on your menu, now would be a great time to write some. If only to hold the price, it’s a good idea. But as a way to describe your offering in an enticing way is even better.
Mistake #9 – Misinterpreting Brand Value
Brand marketing is a very specialized field with people who spend their entire lives understanding brand development, and yet many of them make fundamental mistakes. So independent restaurant operators who make fundamental brand mistakes should come as no great surprise.
If you did the research and created a Menu Matrix, you will have some clues as to your own brand’s value and what it is capable of supporting. If you haven’t, you’re just guessing. And even then, you’ll have to get your own ego out of the way to make clear decisions involving your brand.
Here is a simple test you can do to make sure your menu offerings fit your brand personality. Single out the item in question and clear your mind of everything except that item. Then think: “Is this us?” If your gut tells you it is, you’re probably OK. If your gut tells you no, then you may want to take a pass on the item.
Use appetizers to test new items. Consumers are much more willing to try new food items as appetizers than they are with an entrée. The last thing anybody wants to do is leave hungry. So if you want to try something new on your menu, start it out as an appetizer and see how well it sells.
Mission Drift: When you’re deciding on a new ingredient for any of your menu items, make sure you tell your customers that you’re experimenting with the recipe to try to improve it. Do not tell them you’re trying to save money (which is most often the case), as that will make them much less likely to approve of the change. Ask for their feedback, and if it’s negative at all, don’t make the change. Many times a price increase is much easier for your customers to accept than a product change.
Mistake #10 – Nephew Art
If I had a dollar for every time I’ve said this, I wouldn’t be writing this article. Instead I’d be in Tahiti drinking on the beach! Good design is good business. And yet so many restaurant operators design their own menu or turn it over to a friend or family member to hack together.
A menu with clip art, an amateur painting or a snapshot from the digital camera someone got for Christmas on the outside and a price list on the inside just brings misfortune and missed opportunity every time.
But correcting this mistake is much harder because it requires hiring professional help, and that can cost serious money. Here are a couple of ways to ease the pain:
First, start with a menu-engineering guide. There is at least one out there that can help you. HotOperator offers it for $29.95.
Next, if you’re going to let your friend design the menu, or if you’re going to do it yourself and you’re not a professional designer, copy a well-engineered menu.
Finally, many of the techniques I offer here are simple enough to be handled competently by an amateur designer. However, if you can afford a professional designer, especially one with menu design-engineering experience, it’s well worth the money.
Mark and Kelly are a design-engineer team and managing partners of HotOperator. They have been working in the restaurant business since 1989. Either can be contacted through the HotOperator website, or by calling 800-316-3198.
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