Step 1: Cost Your MenuIf you calculate food cost for a menu item whenever you develop a recipe, you probably already have a good idea of what each item costs in money and labor, as well as your profit margin. It can, of course, be helpful to do so each season if costs for some ingredients go up or down. You may be surprised, for example, to find that your club sandwich has gone up in cost since the last time you calculated its food cost because the price of bacon has risen. This means that every club sandwich you sell is bringing in less profit than it used to. You’ll need to make a decision about what to do about this in the next step.
Step 2: Decide Whether to Raise PricesRaising menu prices is a tricky subject. On the one hand, if you raise them too much, longtime customers may get upset and take their business elsewhere. If you don’t raise them for too long, you cut into your profitability and may struggle to make ends meet. There are a few scenarios where raising menu prices is a good idea:
- When certain costs have risen permanently
- When the market can bear it
- When business is booming
Step 3: Get Rid of the DogsThe Dogs on your menu are items that aren’t very profitable or popular. In other words: there’s not a lot of purpose in you offering them. Clear them out of the way to make room for new or seasonal items and to focus on Stars, those highly profitable, popular dishes. If you look at your sales history broken down by dish, you should be able to easily see which items qualify as Dogs and remove them.
Step 4: Spruce Up Your MenuWhile you can certainly improve your restaurant’s profits by adjusting your menu prices, you can also put some attention on marketing and design to encourage people to order specific menu items. Place items with high profitability in a Specials box to highlight them, or have your servers list the day’s specials. Also pay attention to where you place certain items on a menu, because layout can impact how a customer decides to order. A few small changes can help you maximize profit in your restaurant without jeopardizing the customer experience.
Start Saving Today! Request A Free Demo