Growing Restaurant Revenues: Revenue Management Series. Part 3

This week we conclude our three-part series:  Growing Restaurant Revenues: Revenue Management - as we explore five ways to optimize your restaurant’s menus for profit, the final revenue management strategy to increase profitability:

Organize Menu Based on Profit and Popularity

Firstly, arrange menu items into the various categories (starters, mains, and dessert). From there, assign them to one of the following four categories—each representing different levels of popularity and profit: Stars -High popularity and high profitability (margins), Work horses - high popularity and low profitability, Puzzles - low popularity and Dogs - high profitability and low popularity and profitability.

You can use your point of sales system (POS) sales data to help you classify all your dishes according to these quadrants. This classification will help you decide the fate of certain dishes, how to place items on your menu, and how to promote them.

Consider these ideas when making important decisions about what to do with the different dishes in the various categories:

Stars: Strategically place these items on your menu to entice customers to buy them. Work horses: These dishes may not be as profitable as the high popularity and high profitability items, but they're likely driving foot traffic to your restaurant, so keep them. But, don't be afraid to make changes to these dishes, so they become more profitable, e.g., source ingredients from different suppliers, reduce portion sizes and so on. Puzzles: Turn these dishes into customer favorites. A simple reduction in price or a change in flavor profile can help achieve this. Dogs: Unless these dishes appeal to a crucial customer segment of yours, remove them from the menu.

Add Profitable Dishes to the Golden Triangle

One of the best ways to sell more with your menu is to place profitable menu items in the Golden Triangle.

The Golden Triangle is a prime real estate area on your menu where the diner's eyes naturally gravitate toward first when reading a menu. The movement of the eye leads to the formation of what looks like a triangle.

When we look at a menu, our eyes typically move to the middle first, before traveling to the top right corner, and then, finally, to the top left.

Keep the Menu Lean

Research suggests that giving customers too many options to choose is overwhelming and makes it harder to choose. These same principles apply to your menu.

So, reduce the number of options per menu category (starter, main, and dessert). Experts suggest this number be seven or fewer.

Optimize Menu for Cross-Selling

Cross-selling involves encouraging diners to purchase complementary items to boost revenue. Although you should train and encourage servers to cross-sell, your menu can also be a sales tool. For example, you can pair certain wines and meals together by including a wine recommendation just below a dish description.

"Call-Out" Profitable Dishes

Simply placing menu items in the various categories, including the golden triangle, and optimizing it for cross-selling isn't enough. You should also encourage diners to buy profitable dishes by calling them out.

You can "call-out" these items by placing them in italics and bold font or underlying them. Just make sure you don't overdo these callouts as it will contribute to a cluttered and confusing menu that detracts from the entire dining experience.

A Final Word on Restaurant Revenue Management in Your Restaurant

Whether you're a struggling or thriving restaurant, your goal remains the same: To maximize restaurant revenue and boost profits. Better restaurant revenue management is one solution that can help you do exactly that.

Sure, it's not without its challenges as restaurants have a relatively fixed service capacity, but that doesn't mean it's impossible. Implementing the five strategies we’ve outlined in this series will help:

Manage restaurant capacity by adjusting table layout and using table management software to optimize your floor plan.

Control table turnover by ensuring both your kitchen and serving staff are trained properly, and you have a strategy to deal with the campers.

Optimize your menu for increased sales by grouping complementary items, strategically placing dishes, and highlighting profitable dishes to guide diner choice.

Caymera International is offering a course in Restaurant Revenue Management. In this course, we will guide you through the restaurant revenue management process, providing real-world examples, strategies, and techniques that will help you apply these tools to your own restaurant. For more information, please contact info@caymeragroup.com.

Brooke Meyer is the managing partner of Caymera International, a Caymanian-owned hospitality and tourism consulting and advisory firm. Visit Caymera at www.caymeragroup.com or email info@caymeragroup.com for more information.