Let’s face it; everyone in the restaurant industry is looking for a leg up on the competition and trying to maximize profits. Having worked with Business Intelligence (BI) and Analytics tools over the past decade, I’ve found restaurant chains are pushing the envelope by assembling an optimized menu mix using a back office technique called Menu Engineering.
IT TAKES BACK OF HOUSE GUTS TO POWER FRONT OF HOUSE GLORY. LET US HELP.
This blog supplements our Resource Center content. We hope you visit often to learn more about how back office software can help your restaurant optimize food and labor costs and minimize waste.
As we discussed in my previous blog posts, the Assortment Plan provides a localized plan for each restaurant for all products. It not only specifies the categories and detailed menu items to be sold, it also provides sales estimates for those products and, as well, gross margin estimates at the category/location level. The definition of a category, the key product dimension for the plan, is best described by AC Nielsen is that the products should meet a similar consumer need, or that the products should be inter-related or substitutable. The key here is that a Category should be viewed from your customer’s perspective rather than from a Food & Beverage point of view.
Restaurants typically operate with two realities. The first is that local customers will ultimately drive the success of the business. Multi chain concepts in highly urbanized environments are often drawing the largest percentage of customers from a very small radius of just a few blocks. Suburban locations may see the primary trade area grow to 2-5 mile circle around the location. Thus, most of the location’s customers are neighbors and most likely have different tastes than customers in different neighborhoods based upon ethnic mix, local product availability, etc.
Restaurants, cruise lines, hotels and casinos, as well as contract foodservice companies have access to the most powerful business intelligence tools the world has ever seen. In fact, the hospitality industry is probably the closest to fully realizing all of what digital marketing has to offer.
“We lose money on each transaction, but we make it up in volume.” It’s an old joke, but when it comes to restaurant food cost, it reminds us that knowing the profit margin of each menu item is critically important to overall profitability. However, keeping that information current can be a challenge, especially in a multi-unit, multi-region restaurant chain with shifting costs, menu items and selling prices, as well as limited time offers. Following are some tips that can help.