Is Your Menu Leaving Money On The Table?

Believe it or not, over 90% of all menus are leaving money on the table for a number of reasons. In fact, based on my experience with restaurants over the past 20 years, the measurable impact of this loss ranges from $.25-1.50 for every meal served in the restaurant.   Based on the number of meals sold in most restaurant companies, this adds up to a lot of lost dollars!

The following list highlights the top ten factors, which contribute to this huge loss of income. Use this checklist to determine how your menu stacks up.

  1. Does the menu primarily have a creative orientation? When revising the menu, is the primary consideration the look of the menu  (design, size, format, color, etc.).  If the answer is yes, your menu is guaranteed to be losing money.  Rather, it is most important to first develop a well-planned merchandising and marketing strategy for the menu. After this strategy is determined, “creative” should be used to support the strategy.
  2. Is the menu democratic  – do all product names and their descriptive copy have equal appeal?    To be most effective, there needs to be a product “continuum of appeal” which reflects what we want or need to sell. All products may taste good, but some need to be communicated as being more desirable.  In other words, those products we want or need to sell should sound better than those we do not.
  3. Also related to point #2,is there a clear priority for what you want to sell? Because we humans can process a limited amount of information, and   because most people prefer not to spend a lot of time trying to figure out the menu, it is critical to determine what you want or need to sell. In fact, all products should be prioritized from most preferred through least preferred.
  4. Do you view the menu as real estate? In fact, the menu is the most important real estate the company owns, since it will generate the overwhelming majority of the company’s sales and profits. A very important part of the menu strategy is to assign appropriate units of real estate   to the individual tenants  (i.e. product is) on the menu.   Obviously, important tenants receive premium real estate, while less important tenants receive poorer locations.
  5. It is amazing that most menus do not answer the basic questions that guests want answered:

“What’s really good?”

“What are the restaurant’s signature items?”

“What should I order right now?”

How well does your menu answer these questions?

  1. Can the guests read the menu quickly and process its content efficiently?  Or, is the menu difficult to navigate because it contains too much information, is overwhelming, confusing, or even too stimulating?  Again, because of the inherent processing and time limitations discussed above, the menu needs to help the guest process its content, not make it more difficult.
  2. How focused is the menu? Are the most important categories and products clearly emphasized?  A good way of understanding this point is to view the menu as needing to have a tour guide built into it. When the menu has a clear-cut starting point, then the tour guide leads the reader through the menu on a very definite and strategic review of the menu. Without the tour guide, the reader will certainly get lost and have a difficult time appreciating your restaurant/menu’s most unique features/products.
  3. Do you copy the competition? Whether it is the type or style of menu, design characteristics, or even products and merchandising, there are hazards involved with this approach. Remember the statement that 90% of all menus have problems?  Then why copy other menus when they have such a high probability of being “wrong”?  You can gain more by developing a strategy that reflects your restaurant’s uniqueness rather than copying somebody else’s.
  4. Check out the following rules of thumb and see if they apply in your restaurant:
    • If you sell entree specials, do they represent at least 20% of the entree menu mix?
    • Do 20% of your guests order an appetizer or dessert with their meal?

If the answer is no to either question, your menu is underachieving.

Please note: These guidelines apply to casual and dinner house restaurants.  With higher priced concepts, the percentages should be even higher (i.e. up to 40-60% in fine dining restaurants).

  1. Finally, how are products listed within their specific categories – in one single column or in two or even three columns?  “Primacy” and “recency” are psychological principles stating hat people are best at processing information that they see first or last. These principles can be best applied when using single columns. Using multiple columns decreases the likelihood of definitively predicting and influencing what information the guest is processing.

So, how did you do?  Did you find room for improvement in your menu?  How much opportunity does your menu have to generate more profit dollars? If you would like to discuss your menu in greater detail, give Bill a call at 513-703-3476.

Bill Paul is Founder and President of The Menu Advantage® in Milford, Ohio and has worked with successful restaurant companies since 1986. Bill can be reached at 513-703-3476 or visit his Web site, www.menuadvantage.com.

Dishing It Up

Cincinnati Magazine

“Dishing It Up” – Melissa Davis Haller

There’s a science to selling shrimp Caesar salads, and Bill Paul, the man behind the Menu Advantage, based in Milford, is not a fan of democracy.  At least, not on a menu.  So when the shrimp Caesar salad at one of his clients’ eateries wasn’t pulling its weight—through popularity or profitability—he voted to nix it.  “It’s a weed in the garden”, Paul says of such items.  “It’s going to get in the way of “better” flowers growing bigger, stronger, more beautiful.”

At first, David Melincoff, who owns Sweetwaters in Burlington, Vermont, wasn’t so sure.  The kitchen needed shrimp on hand anyway.  “What’s the difference if we sell 10 or two?  It’s not costing us more”, Melincoff remembers thinking a couple of years ago, after he’d hired Paul to analyze the menus at two of his restaurants.  “What’s the big deal?”

Although Paul doesn’t remember the salad recommendations in particular, he’s no stranger to this burning question, be it about shrimp Caesar or steak, artichoke dip or pizza.  He’s just trying to “influence guest satisfaction so they will be happier and the restaurant will be more profitable,” he says.  For the last 20 years he’s used what he calls a “combination of science and art” to  help restaurants identify their outstanding signatures, and most profitable items, then develop a strategy—through selections, pricing, and menu design—to subtly influence customers to order them.  “But my take goes beyond the mechanics of moving things around on the menu,” Paul says.  “It really gets into the way people perceive information and how that impacts their decision making.”

Paul’s a thin, professional-looking man with carefully styled white hair and razor straight posture.  He speaks in a measured tempo that gives his words a weighty seriousness, even when he’s talking about fried shrimp and 12 ounce steaks.  He started Menu Advantage in 1985, when he left his job as food service director of Federated Department Stores, and based his business on the concept behind the 1982 book “Menu Engineering: A Practical Guide to Menu Analysis”, by Michigan State University professor Michael I. Kasavana.  This turned out to be the beginning of a burgeoning trend, a different way of using data to analyze customer demand, menu mix, and the contribution margin of items to help restaurateurs decide what to include on their menu, how to price it, and the mechanics of formatting a menu to give these items maximum attention.  Paul convinced some food operators to try it, with some success.  While he admits he had little idea what he was doing back then, he saw the potential of coupling this technical approach with his interest in psychology (he has a psychology degree from Michigan State).

His method starts with a scientific, data-driven approach. First, Paul develops a marketing plan for each item, based on its popularity and profitability, then he comes up with a pricing strategy.  Using this information, he then recommends specific changes to the menu—removing some dishes, rearranging the way they’re listed, or altering their descriptions.  The “art” comes throughout the process, as Paul calls up on his instinct and experience to consider the restaurant’s market position, niche, and how a myriad of factors affect diner perceptions.  There are, of course, no strict rules when it comes to human nature; diners are looking for value regardless of what type of restaurant they’re visiting.  While the list of variables that could influence ordering is endless, among them are pricing perceptions; gender (in general, women tend toward cream sauces, men toward steaks); demographics (blue collar diners are often less concerned about health, urban-dwellers might be more adventuresome); portion sizes; word choice; and regional food preferences.  Often most (or all) of these factors come into play.

Paul once assessed as menu that included a seldom-ordered pasta sampler platter for two, priced at $19.95.  He thought that with some tweaking, it could be a customer favorite and a moneymaker.  So, he convinced the restaurateur to adjust the portion size and price it at more than half the original price.  It became one of the best-selling plates for years to come, he says.  “It just shows you that people will respond to value, to what’s good, and to what’s presented in the right way,” he says.

That such a  thing a menu engineering exists may come as a surprise to those among us who’ve gone about our longstanding dining rituals believing that the food we order simply speaks for itself.  That’s the old way, Paul says.  In an industry where sales are expected to reach a record $511 billion this year, menus are the gatekeepers to a lot of dough, and most restaurateurs believe they’re doing what’s necessary to protect their share.  “They know how to, quote, “do a menu”, unquote, he says.  But before they “do” a menu, they must first know what they do best, what customers want, what items are most profitable—then present a menu that supports these truths. And that’s where some get tripped up.

“The menu is a piece of real estate and each product is a tenant,” Paul explains, employing one of his favorite metaphors.  “It occupies space and has to pay for some share of the rent.  Part of our job is to allocate the right space to the right tenants.  So we’re basically real estate developers.”  This logic informs one of the fundamental principals of Paul’s work: People can process about five to seven pieces of information in the time they review a menu, so a menu should direct them, through placement, graphics and descriptions, to what the restaurant really wants to sell.

In the fall of 2004, David Melincoff hired Paul for a three-part assignment: to assess the menu of Sweetwaters, a bistro housed in a historic building in downtown Burlington; do the same for a steakhouse Melincoff also owns; and help develop the concept and menu for a Tuscan-themed eatery  The project began with Paul getting to know the restaurant and understanding its niche, sampling the menu, and analyzing reams of data.  This is part of what he calls his “Classic Five Point Plan.”

When we sat down to talk one morning this winter, Paul brought along a sample PowerPoint presentation he’d printed and put into a binder.  The presentation was typical of one he would present to a client, he said, but in this case the numbers and names were fictitious.  (Restaurants are competitive and proprietary when it comes to such things, Paul explained, so he avoids offering specifics about actual menu changes he’s recommended to current clients.)  Paul’s among a handful of consultants in the country who offer such services, although various menu engineering methods exists.  His  list of clients is impressive, from Levy Restaurants in Chicago, a $470 million restaurant and foodservice company, to Shoney’s and dozens of regional chains and independent restaurants.  He relies on word-of-mouth and referrals to get business, with LaRosa’s being one of his few local clients.

True to his penchant for numbers, Paul’s presentation of his Classic Five Point Plan was punctuated by graphs and lists with headlines like “The Wrong Reasons”—the primary one being that high sales, low foodcost, and ease don’t always make a good case for promoting certain items.  “The Right Reasons” list included guest satisfaction, maximizing profits, and “creating a win-win.”  Paul flipped the page to some thing that looked like a Sudoku puzzle, where each menu offering was assigned a number and placed in a quadrant based on number sold and profitability.  This was one of several charts on what appeared to be a mind-numbing voyage through sales, profit, margin and cost data—the technical aspects of menu engineering.  “We are, in effect, acting like detectives.  We are trying to solve the case of the missing profit,” he said  quite seriously.

Such attention to the numbers is something Paul’s customers have come to expect.  Clients call him “surgical” and “objective” and say he’s reliable, someone who believes in what he recommends and backs it up with numbers.  “If he says he’s going to call you at 10:30 a.m., I look at my computer clock and the phone rings, and its 10:30 a.m.,” Melincoff says.

Restaurateurs often instinctively know what people order and what’s profitable.  But it’s easy to see how the numbers could challenge conventional wisdom.  He’ll say, “Listen Steve, it’s a dog and it’s taking up real estate,” says Stephen Silverstein, founder of Not Your Average Joe’s, a thriving Northeastern chain of 11 restaurants known for such made-from-scratch dishes as chicken pot pie and grilled sirloin tips.  Silverstein is one of Paul’s clients, and Joe’s is one of Paul’s favorite restaurants in the country.  In the beginning, a wide variety of specialty pizzas, including goat cheese and sun-dried tomato, dominated the front of the menu at Joe’s.  Enter Paul, whose analysis revealed the pizza just wasn’t contributing enough to the restaurant’s bottom line to warrant the placement.  Silverstein said Paul recommended he cut the pizza selection by half and move it to the back of the menu.

Along with the statistical analysis, Paul considers the “sophisticated” aspects of what people are thinking and feeling when they look at the menu.  He showed me a sample menu.  The text was carefully lined up in columns, spaced evenly, with each item including a two to three sentence description.

“This is democratic,” he said, reminding me that in the world of menus, democracy is a dirty word.  “It lacks focus.  This makes a guest work harder.  He still has to figure out, “What’s good here?””  A misconception in menu writing is that every selection must be made to sound excellent, Paul told me.  After all, everything can’t be that good.  He once saw a menu “that described the least profitable item on the menu as tender, delicious, homemade,” he said, grinning.  “Makes you wanna buy it, huh?”  A menu needs what Paul calls a “continuum of appeal,” where descriptions don’t’ make every item sound equally tasty. 

Having shown me the original, Paul pulled out a different version of the sample menu, one that he’d improved.  There were fewer food choices and the font size on the priced had been reduced.  “Restaurants aren’t in the business of selling a price,” he said, “they’re selling the product.”  Some portion sizes, as well as prices, had changed, and specialty items now appeared in a simple box in the center.  “We want to figuratively grab the reader’s hand at a clear-cut starting point and lead them on a tour,” he said.

Such tweaks keep diners focused, since satisfaction and dollars are at stake when they get sidetracked.  Douglas McGregor, managing partner of the Outback Steak House in Colerain Township, got his first inkling of this phenomenon a few years ago when one of Outback’s signature items, a top-selling steak, was moved from the center of the menu and replaced with a cheaper item.  The results were immediate.  “When the steak moved, sales on it slowed down,” McGregory says, “and that kind of freaked everybody out.”  Eventually, the steak was moved back to its original spot, and the chain recently added an eight-ounce steak.

When I asked Paul why the folks at Outback might make the decision to add another, smaller steak to the menu, he explained it this way: Since a 12-ounce steak might seem too large to price/portion-conscious diners, the resulting indecision or confusion could lead to a “trade-down” in which they make safer, less expensive/profitable choices. Hence the need for the eight-ounce option.

Once Paul had gone through his traditional analysis for the first of Melincoff’s restaurants, as he does for 100 or so menus a year, he returned with a series of recommendations, including dropping shrimp Caesar salad from the Sweetwaters menu.  Melincoff chuckles when he recounts Paul’s deadpan delivery of the facts.  “He looks at you and says, “You sold 10 shrimp Caesars.”  Like he’s saying, “What else is there for me to say?” says Melincoff.  “You can tell you’re being too emotional.”  Melincoff ultimately acquiesced.  Out went the shrimp Caesar salad, thus reducing competition of the more popular salads, such as chicken Caesar and Asian chicken.

This is not to say that Paul or his customers blindly follow the numbers.  For instance, Silverstein and Paul discuss such things as whether Not Your Average Joe’s should offer a side salad which Silverstein thinks of as “a bit chainy,” and whether prices should end in 99 or 95 cents.  “All these things add up to your brand statement,” Silverstein says.  “Bill does a good job of recognizing the brand.”  With the pizza recommendation, Silverstein says he complied, in part: He moved it to the back of the menu, but didn’t reduce the number of choices.  “In this business there cannot be any sacred cows,” Silverstein says.  “But I balance it.  It’s not about making money today.”

With their focus on creativity, chefs often bristle at the idea of ranking items on the menu, believing everything is equally good.  “It’s a balancing act to take the culinary and business and meld them together into a successful mix,” Paul says, philosophically.

While Paul doesn’t guarantee results, his web site includes a Potential Profit Calculator that says it’s realistic for a restaurant that follows his Five Point Plan to expect to increase profits from 25 cents to $1.50 for every meal sold.  He doesn’t talk about his fees, but he does say he probably could have retired years ago if he charged even a small percentage of “the millions” he’s added to restaurants’ bottom lines.  He’s a good investment, according to Silverstein, who hasn’t run the numbers but figures it like this: Even if Paul’s recommendations contribute just one percent to the $35 million annual revenue of Not Your Average Joe’s, his fee is far less than even 10 percent of that profit increase.

And although Melincoff doesn’t always agree with Paul, he values his perspective.  I’d never really thought about a menu that way,” Melincoff says.  “It was hard to swallow the philosophy about the shrimp Caesar.  It was hard to say I’m going to really honor that real estate thing.  But clearly he’s been right.”