Seasonality and sustainability
Locally grown, seasonal products are still important factors when designing or redeveloping a menu for most restaurant menu concepts. Customers are becoming more educated on best practices for cuisine and supporting local purveyors.
Although this is hardly a new trend, having been present in finer dining establishments over the past decade or so, we are now also seeing many smaller, craft-driven concepts across Canada that have adopted this position. This might include the use of local craft ingredients in specific or core menu items, such as a pub concept that has a local double-smoked bacon accompanying a house ground beef burger as a house specialty.
Using seasonal, locally sourced and sustainable items means your customers will know that integrity and freshness is paramount to your menu philosophy. For instance, a good example of sustainable fish suppliers is Vancouver-based Ocean Wise, which has over 585 partnerships across Canada. These commitments can be the focal point of many brand and marketing strategies for all styles of restaurants as they look to add more quality items and become more eco-conscious as restaurateurs. The positive effects of these practices can include :
- Using seasonal produce that will support better margins.
- Customers are more informed and aware about the origins and the traceability of ingredients and want to see these suppliers on menus or on websites.
- Listing farm-specific ingredients on the menu such as Rossdown Farms Chicken, Cache Creek Beef or Glorious Organics Co-operative Lettuces is important to showcasing the farm-to-table philosophy.
- There is a big swing to smaller producers and holdings, urban city farming and farmers’ markets.
- Some of the larger suppliers are making great efforts to carry and represent local and craft ingredients, making the items more convenient and available to purchase.
- Simpler, more honest food prepared with items that showcase their natural flavours.
Lifestyle choices and allergies
Developing a menu to suit every lifestyle choice and allergy concern is next to impossible, but understanding that the market has become progressively more dependent on healthier, more natural choices should come as no surprise. What is surprising is the number of lifestyle-driven orders and allergy concerns that restaurants across Canada experience every day.
When developing menus, being proactive with options that appeal to leading lifestyle choices and allergy challenges will address some of these concerns. However, it is also important to be prepared to accommodate special requests, and to ensure your staff have the information they need to help guests make informed, safe dining choices.
Feedback from guests and staff
Taking the time to build out a service culture that supports honest feedback from both guests and staff is a very smart initiative. Guest feedback is vital to a chef for obvious reasons, and the front-of-house service teams need to not only engage guests for their feedback, but also feel empowered to share it with the chef. Being receptive to feedback will show all staff that the guest’s opinion and happiness is the most important factor in the success of the restaurant.
Menu and brand design
Menu branding extends far beyond the font and layout of the menus. Plating techniques, plate ware, serving vessels and utensils now say more about the restaurant’s brand than ever before. Committing resources to building a style that suits the brand and the type of food will go miles as guests recognize the effort.
The Science Perspective
The focus on profitability is as important as any part of the art perspective, and is often not given enough consideration when developing menus. This is partly due to chefs and owners not having the recipes properly or accurately built out, and the lack of tools or software to make great decisions on pricing structures for menu items to be profitable once in the menu mix.
As a chef develops a special or feature menu item, it’s important to cost out and review the dish’s profitability and how it may compete against other menu items. Otherwise, the item may dilute profitability if it has below-average margin versus the other menu selections in the category it is competing in, and dominates in the sales mix.
The best practice is to start with building out a theoretical costing structure to establish the right pricing strategy. Over time, the menu can be developed with historical sales detail of how much each item has sold over a given period and, depending on sales volume, could be reviewed every couple of months.
Step 1 — Establishing theoretical costs
Once the menu is fully costed, “theoretical” costs can be established for all product categories. A theoretical cost is the ideal cost percentage that the category should be running at. It is based on the sales volumes of each item within a category and the costed recipe for each one of those items. Below are examples of what theoretical costings look like for a menu category:
The theoretical costs are then used to monitor inventory control on a regular basis and become the benchmarks laid out in budgets for the operational financial statements.
Step 2 — Menu engineering
The best way to maximize product cost efficiency is by properly engineering the menu. A restaurant’s menu and the pricing of it is one of the most important parts of a restaurant’s profitability (it is what generates 100 per cent of the revenue).
Proper menu engineering involves costing out all of the menu items that the location sells and then using margin-pricing techniques to establish selling prices:
Margin pricing technique
In the example, there are three approaches to selling a dinner item. At one extreme is the first column, where the product cost is $2 and the selling price is $10 (a 20-per-cent food cost) and at the other extreme is Dinner #3 where the product cost is $4 (double the size/quality/etc. of the first) and the selling price is $12 (a 33-per-cent cost). Focusing on percentage cost, one would say the best thing for the restaurant is the item on the left as it is only a 20-per-cent food cost. All three items, however, have the exact same profit margin. And if you asked guests after their dinner, many would say Dinner #3 was by far the best value. So the 33-per-cent cost dinner item is the best value for the guest (the most important part of driving repeat traffic) and it makes the restaurant the same amount of profit as the others. Using margin strategies might allow you to come up with an even better solution, which could be to sell the item for $12 and have the cost at $3.50, which would still give you a great v
alue and an even better profit margin of $8.50.
There is a lot more complexity to it than what is shown above, but to maximize a menu’s profitability, it is imperative that item costs are known and item margin is the primary focus.
The following process is recommended for all menu categories for proper menu profit maximization:
- Fully cost out all menu items.
- Graph menu items on a Quantity/Margin Graph (compares the Profit Margin for each item vs. the Quantity Sold for each item). Use a separate graph for groups of menu items (such as dinner appetizers, dinner entrees, etc.).
- Use the general rules below to maximize the profit margin of your menu.
Example of a quantity/margin graph:
Note that the Green Lines represnt the average margin for the category and the average quantity sold.
- Items of high quantity and above-average margin.
- Generally you leave these items alone as they are driving profit.
- Items that are below average margin and below average quantity.
- Good items to remove from a menu as removing them creates more profit instantly (as anyone who would have ordered those items now orders something more profitable).
- Above-average in popularity (quantity sold); however they are not as profitable as the average for the group.
- Great items for price increases.
- These items are generally less price sensitive (which is part of the reason they are selling well) and price increases do not hurt sales volumes.
- These items are challenging because they make the restaurant above-average margin, but we are not selling enough of them.
- We don’t want to take them off the menu, as that will cost us profits (as people would then have to order something less profitable).
- We need to find a way to get more sales out of these items (if everyone ordered these items, we would have a lot more profit).
- Often, with items in this category, a price decrease can result in more profit overall for the restaurant – by decreasing the price of an item, but still keeping it above the average margin, one can “steal” sales away from less profitable items and thereby increase overall profit.
Follow up best practices
- Cross-utilizing ingredients in a number of dishes without too much repetition can save prep time and ordering.
- Minimize the diversity of ingredients and stock holding.
- Develop the menu around the seasonal availability of produce, such as desserts created around the summer stone fruits.
- Preserve and pickle the seasonal bounty to use during the year.
- Embrace vendors and purveyors that support your food philosophy.
- Develop a clear brand identity and stay true to the concept in menu offerings.
There are other considerations that are important in menu development. For example, introduce new menu items on the nightly/weekly feature sheet to garner feedback before committing to a full menu addition.
Be sure to train all staff properly on the new menu items and make it an engaging process, encouraging feedback from the team. Details should include a menu syllabus that not only describes the dish’s ingredients and how it is prepared, but what’s special or important about the item, from the chef’s or creator’s perspective. Of course, staff need to taste the food to know how to describe it in detail, and learn what the service initiatives will be for each item.
Lastly, chefs and owners must challenge themselves to be inspired. Owners, take your chefs or kitchen managers out for dinners, or send them on trips outside the city they cook in. Don’t fall into the trap of being too insular to react to trends in your own marketplace. Create your own trends and you could find yourself ahead of the competition.
About the authors:
Alex Fraser is VP Western Operations and Lee Parsons is Chef Consultant for the Fifteen Group, one of North America’s largest foodservice industry consulting companies with a combined total of 200 years of experience in hospitality operations. They focus on the complete spectrum of the hospitality and foodservice business, from operations management to finance/start-up. For more information, visit www.thefifteengroup.com.