Pricing typically is the biggest profit driver for a restaurant, said Philip Daus, a partner at Simon-Kucher, who works with restaurant clients on topics that include pricing, value perception and growth strategy. “It’s a lever that you can pull very quickly. You don’t need to invest in R&D, store design and expensive operational construction.”
With not only spikes in labor costs but also inflation—which makes paying for culinary ingredients and other supplies a true threat to your bottom line—refining the menu is extremely important. When done well, you may find ways to increase diners’ average check amount while also trimming the fat in what’s eating into your profits.
“The two big buzz words are affordability and value in the market right now,” said Hubert Paul, another partner with Simon-Kucher. “That’s a continuation of past trends but a lot of big brands are using price point as the key communicator of value to say, ‘Yes, we get it.’ Affordability is getting harder and discretionary income more difficult. There is a lot more focus to get to that point.”
The ages-old saying that “less is more” when pricing your menu has never been more applicable to restaurants. But this isn’t just about lowering prices. “It’s called menu engineering,” said Noman Peera, CEO of Horeca Store, a restaurant-supply company with 11 stores worldwide, including in Houston. “If you go to Chick-Fil-A or Raising Cane’s, they are very profitable because they have a very limited menu. There are less things to focus on. They spend less time training their staff and changing their oils. If your menu’s limited, you can have more focus. It’s very easy to scale and streamline your operations.”
Peera goes deeper into the concept of a limited menu by sharing tips on how to design its layout and aesthetic, including when there are fewer items. This includes separating the menu item from its price—but not hiding the price. It’s about focusing on the menu item first, focusing on its ingredients, flavors and texture in the description, then revealing its price.
“You decide before you see the pricing. When we see the pricing, we try to compare the value. When you don’t have the pricing or you have the pricing on the side, then you just read the whole thing and you try to make up something in your mind like, ‘I need this thing,’” said Peera.
Continuing along these lines, there are tweaks you can make to how items are arranged on a menu, including the order in which they appear, to help steer the customer towards certain items you would prefer they order. For instance, said Peera, even though salad is often the first course, presenting it first on the menu, before entrees and desserts, is not a good idea if you want to increase your revenue. Ingredients to make a salad need to be fresh, meaning it’s among the expensive menu items to make, and therefore don’t earn as big of a profit.
“You should start with something that will make the restaurant a profit,” Peera advises.
Seasoned restaurant managers rely on what’s called a golden triangle. “Whatever you put into the golden triangle is what your customer will decide on,” said Peera. “If you go to a steakhouse, you will have the premium items in the golden triangle because they want you to order those first. Let’s say you go to The Cheesecake Factory. They will try to flag items—you see those items immediately. They are taking the decision away from you.”
This gets back to why you don’t want to offer an extensive menu. Limited menus are about more than monitoring your bottom line—with fewer items, you can more easily showcase and highlight specific offerings. “When a customer sees the menu, they have like 100 seconds to decide,” said Peera. “They’re hungry. If you give them a big list of menu items, you aren’t telling them what they should order,” he said. “The restaurant has to push the decision for the customer.”
From the mindset of a customer, said Peera, “We don’t want to try new things. We want things that are tested. The restaurant owner or the chef needs to decide what the customer should order.”
If you’re feeling strapped for time and resources to reengineer your menu, the best bet is to focus on lunch and dinner—not breakfast. There’s a reason why.
“You need to change people’s morning behaviors,” said Daus. “There are some studies that say you need three to four repetitions in the morning before people make permanent changes. You’d have to entice them three or four times. After three or four times, then it’s sufficient for you to change your habits.”
Expanding the lunch menu is much easier, because it can be an abbreviated version of dinner. “For example, you can create a smaller pasta just like the larger pasta for dinner that’s more affordable,” said Paul, adding that to entice people to arrive earlier in the day to experience your restaurant, “you can have certain time-based offers.” This will help get people in the door.