How to design your menu to increase your profit.
What is the average net profit for cafes and restaurants in Australia?
Not long ago, it was common for a cafe or restaurant to make 15-20% net profit. But, in the latest industry performance benchmark, the ATO reported the average net profit for Cafes and Restaurants in Australia is 10% or lower. Other research states that profit for hospitality venues is now between 3% - 8%.
Due to the rising costs of running a hospitality business, it’s hard to make a decent profit. But there are ways to increase your profit, regardless of the current downturn. There are simple strategies you can implement right away to increase your profit. For example, you can engineer (or design) your menu to get more sales and raise your profit. Let’s unpack a few ways on how to do that.
…
The following article is an excerpt from a new guide called How To Get More Sales and Make More Profit for Cafes and Restaurants. It’s coming out soon and you can join the waitlist below to be the first to get the guide.
Your menu is your secret salesperson
Your menu is a product brochure. An influential salesperson. This is true for all types of menus, whether it's printed and in your guest's hands, on their phone, hand-written on a blackboard, or on a digital billboard behind the counter. The strategy, layout, content, and design of your menu has an impact on what your guests order and can increase sales and profit.
Good menu design does the following
Clearly communicates what is on offer. Does not confuse or make guests feel stupid.
Shapes positive emotion and builds excitement for the experience to come.
Suggests specials, sides and additions to elevate the guest experience.
Gives the guest an impression of your venue's values and quality. If it's printed, keep it clean!
1. Increase transaction size with suggested additions
The simplest way to increase the value of a guest's order is the add-on, or the cross-sell. An effective way to offer add-ons is to have suggested additions for most menu items written on the menu. Don't leave it for the sides menu on the other page to do the job, make it very clear what additions go great with each item. Here’s an example:
Little Creek Free-range Poached Eggs on Organic Dark Rye 17.9
ADD …
HERB-ROASTED HEIRLOOM TOMATO 7.9 / SAUTEED CAVOLO NERO 7.9 / AVOCADO 6.9 / RANGERS VALLEY FREE-RANGE BACON 7.9 / GRILLED CYPRIOT HALLOUMI 7.9 / PAN-SEARED FIELD MUSHROOMS 6.9 / SMOKED SPANISH CHORIZO 7.9
2. Design the menu so guests can scan it first
Most guests start by scanning the menu to understand what is available. If it's one long list of items, people easily become lost and overwhelmed. Use clear sections and headings to make it easy to scan. If there are sides, additions and specials, make them stand out.
3. Utilise menu hot spots
Professional menu engineers suggest that guests spend the most time looking at the first and last items on a list. This is especially important for portrait-orientated menus. Dishes positioned first or last are often the biggest sellers. Another hot spot is the top right-hand corner. This is important for landscape-orientated menus. Historically operators have placed their most profitable dishes in the top right-hand corner. As always test, measure and adjust to get the best outcome.
4. Highlight specific menu items
Highlight menu items to capture the attention of your guests. Consider using shading or outlining items to make them stand out. A dedicated featured section can also be effective. Or you could highlight that a particular dish is your most popular or signature specialty. Collaborate with your designer to come up with the best options.
5. Describe your dishes with emotive language
Use descriptive and emotive language to inspire your guests. When possible include details about the producer, farmer, maker, or region, and an indication of the sensory experience. For example, ‘Tender, Rangers Valley Rib Eye’ will likely get more orders than ‘Rib Eye’. This communicates a higher value through a sensorial and emotive origin story. Studies show that sales increase by 30% or more when descriptive language is used.
6. Avoid dollar signs
A widely recognised practice in the hospitality industry is to avoid using currency symbols on the menu. The repetitive presence of dollar signs is overpowering and centres guests' attention on price. Research shows that when currency signs are used, customers choose the cheapest option, rather than what they really want to eat.
7. Review your sales regularly
An effective strategy in menu engineering for more profit is to know what items are popular and profitable compared to items that are not. Then adjust your menu accordingly, which will mean removing some items that are not selling or not profitable.
It will also mean, you need to dig deeper into low-profit items that are popular to make them more profitable. This usually involves a combination of reducing ingredient costs, lowering waste, adjusting the portion size if it is too big, and increasing the price. Be careful to not remove popular items that are low profit. If they are popular just make them more profitable. This process will encourage you to keep your food costs below 30%, but that’s a conversation for another time.
…
In the next article, we will look at setting growth targets, cross-selling, up-selling and increasing the overall transaction size.
What you can do to increase your profit
Purchase the Food Cost Calculator
Explore how these strategies can help grow your business with a free 20-minute call
Grow your business and leadership through coaching - send me a message
I can’t wait to help
Darryn
