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How Menu Innovation Impacts Food Cost Management

October 10, 2018 food operations management

Menu innovation can bump sales and help maintain brand freshness, but how does it impact your food cost management?

Menu innovation is a hot trend in the industry and most restaurants are getting in on the action. Some brands provide new takes on classic dishes while others expand their offerings to items outside their traditional menus. Dunkin' donut fries and Burger King's Mac n' Cheetos are just a small sample of innovations that have kept guests coming back to these restaurants. Then there are seasonal menus, which are particularly popular this time of year when your guests yearn for pumpkin flavoring.

Limited time menu changes and seasonal offerings can boost sales over a period of time and give you that extra oomph you need to hit your revenue goals. But how do you ensure your stores are prepared for any significant menu modifications? Not only will you need to properly forecast how many units of your new item you'll sell, you may also need to consider what kind of impact it will have on your operations. Are you introducing a new beverage that pairs well with a standard food item on your menu? Will a new twist on a familiar item require an increased reliance on some traditional ingredients? These are the questions your inventory management system needs answers to.

Form a Hypothesis, Get a Conclusion

Experimenting with your menu isn't much different than the experiments you conducted in science class. You have an expectation for what you think might happen - a hypothesis - and you ultimately end up with a conclusion. Did these two elements combine to cause the reaction you anticipated? Did the new menu item sell the number of units you predicted? And regardless of the test, one thing remains constant - you need the most accurate data to get the best possible result. What you bring to your menu requires the latest and most accurate data in order to be successful. How well is the new menu item selling? How does it impact ingredient usage?

Your menu experiment conclusions will ultimately inform a number of decisions you'll have to make at your restaurant. If the menu innovation doesn't sell as well as you hoped, it might be necessary to end the experiment and not continue with the item. If it becomes a huge hit, you'll probably want to keep selling it. Whatever decision you make will reverberate through your inventory management, ordering, sales forecasting, and menu engineering processes, so the stakes are pretty high.

Other considerations like locations and day parts only add greater complexity to decision making. What if the new menu item sells really well during lunchtime in one location but is more popular as a dinner option in another? Are the ingredients more expensive at one location? Is there more wasteful spending? This is all critical information that helps maximize the effectiveness of the menu innovation. A centralized data hub will ensure that all menu decisions are backed by the best possible information.

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