It’s called the silent seller for good reason. Your bar, restaurant, or brewery’s menu can help you rack up the profits and satisfy guests at the same time, just like your best server or bartender.
It just takes smart pricing coupled strategic menu design, and that’s exactly what our team at Buzztime covered on the September 26th webinar with Poster POS. Read on for a full transcript of the webinar, along with links to all the science-backed menu design tips.
As an added bonus, we’re including 11 free menu design templates which are fully customizable…and did we mention, 100% free?
The 3 Golden Rules of Menu Pricing
Before diving into menu design, it’s essential to price your menu items for profit. Use these 3 golden rules to do just that…
Rule #1: Price Using the Food Cost Percentage
The ideal food cost percentage is 25-30%. That means that for every menu item you sell, 25-30% of the selling price goes to covering your food costs. The remaining 70-75% is your gross profit.
You can use this approach to price your menu, and ensure you’re building in healthy profits.
Your food costs per menu item / .30 = Profitable price
Example:
$3 in hamburger ingredient costs / .3 = $10
However, as we’ll soon review, there are additional menu design and pricing strategies to ensure that you maximize profits on that $10 hamburger. For example, if you cater to a blue collar or value-seeking crowd, research shows you’d want to include .99 cents in your menu design to increase sales. It shows that you’re trying to offer a great bargain. So, selling your burger for $9.99 might actually result in more revenue.
Rules #2: Promote Beyond the Menu
Think your work is done once you’ve mastered menu design and pricing? Think again.
It’s critical that you highlight specific, high-margin menu items at the point of sale…when people are making their purchase decisions at the table or bar!
Here are some examples of where to promote:
- Table tents: feature an enticing photo of your cocktail or menu item.
- Featured specials: chalkboard menu design can be attractive and you can include lengthy descriptions.
- Digital signage: affordable, easy-to-use digital signage software turns your TVs into customizable billboards. You can include eye-catching photos of your high-margin menu items – even scheduling them to run by daypart! According to a Nielsen study, using digital signage at the point of sale increases sales of promoted items by 33%.
- Sampling: why not bring around small samples of one of your most popular dishes to the waiting area? It’s the ultimate “try before you buy.” In fact, research has revealed that sampling may increase sales of the sampled item by up to 1,000%…yes 1,000%!
Rule #3: Monitor Performance: Stars vs. Dogs
One last pricing rule before we tackle menu design. If you use one of the modern POS systems available today, like Poster POS, you’ll be able to quickly understand which menu items are hot sellers known as “stars” – and which are not selling at all, those are dogs.
At the end of every month, it’s a good habit to assess your overall menu design – along with your top 3 stars and the 3 dogs. Trends should emerge. You may notice a steak entrée has been a “dog” for 3 out of 4 weeks. Why is that? Common issues include:
- Poor description – are your servers not doing this menu item justice? Does your current menu design not leave enough space for lengthier descriptions?
- Too-high priced – could you substitute a lesser cut of steak to get the price down, adjust the side dishes?
- Not enough pizzazz – what about a mushroom balsamic reduction sauce to top that steak? Would it help sell it? (A quick note here: resist temptation to integrate photos into your menu design. Unless you are a quick service or fast casual operation, pictures tend to look tacky.)
- Word on the street – head to your Yelp reviews, if you see some complaints about a specific dish, fix it or ditch it!
Analyzing your “stars” can also help you identify menu design trends or flavor profiles that are working, so you can repeat them throughout your menu. What is appealing about these star menu items? Is there a certain price point that customers seem to like? Are you giving more value by including extra sides or a larger portion? Did you use a menu design tactic, like putting this particular dish in a box to highlight it?
But first, a menu design and pricing warning!
Be sure that your “stars” are still profitable by using that food cost formula! Sometimes, a restaurant owner will notice a particular dish is selling like gangbusters. Then, they realize why: they haven’t run the food cost formula lately…
Maybe it’s a fettuccine alfredo dish on your menu for $10. No wonder it’s a star! You haven’t added up the ingredient costs for 3 years. Let’s say you are updating your menu design, so you run the food cost formula again. You realize your ingredient costs are $5! With a sales price of $10, your gross profit margin is only $5 or 50%…yikes.
If you ran the food cost formula, and built in a healthy margin of 70%…the pasta would be priced closer to $16.
7 Menu Design Secrets Too Good Not to Share
1. Eliminate Zeros and Dollar Signs
When it comes to easy menu design tips, this one takes the cake. All you need to do is…ditch the dollar sign. Cornell University research revealed that customers spend more when dollar signs are removed from menus. Whatever you do, don’t add double zeroes (9.00). The researchers found that folks subconsciously “read” double zeroes as a hundred. $900 nachos? No thanks.
Examples
Gourmet Nachos 9.
Gourmet Nachos 9-
Gourmet Nachos 9
2. Give Dishes Descriptive Names
Researchers at the University of Illinois discovered that menu items with lengthier, vivid, descriptive names sold 27% better than “basic” menu item names. Make sure your menu design leaves ample room for these storied descriptions.
Example:
Gourmet Nachos topped with Artisan Cheddar, Chorizo, House-made Guacamole and Pico de Gallo
3. Customers Think 9 is Sooooo Fine
MIT and University of Chicago researchers discovered that customers will buy more of an item priced at $39 – compared to the same item priced at $34.
Here’s another one of the easiest menu design tips. Just add an extra dollar to any menu items priced at $8, $18, or $28. Most customers won’t notice or mind the slight increase. And you’ll be on cloud 9 with extra revenue, thanks to this menu design tactic.
4. Use Common Cents to Convey Value
We already reviewed this menu design tactic, but it’s worth repeating again. If you cater to a customer base that loves great deals and thrives on bargains, you’ll want to add cents – specifically .95 or .99 – to your prices. This strategy shows customers you care about giving them value, even if it means just shaving off a few cents.
5. Be Fancy with Your Fonts
Contrary to popular belief, good menu design doesn’t include using the simplest fonts. Instead, menu engineering experts recommend you use more decorative typography. In fact, University of Michigan researchers discovered that the more hard a font was to read, the more effort customers believe it took to create that dish. These customers are also willing to pay more for all that extra effort (even if the “effort” you took is simply using these menu design tips).
Another menu design and typography study by the International Journal of Hospitality Management revealed that simply using the italics version of a font suggests your restaurant or bar offers top-shelf service!
6. Don’t Go Overboard with Menu Options
This next menu design tip goes beyond the printed page and requires you to play hardball with your chef or bartender. No, they cannot put 20 entrees on the menu. Instead, if you want to please guests and increase sales, aim for 7-10 menu items per category!
7. Avoid Price Comparisons
Not only will your menu design look cluttered with dozens of entrees, your customers will go nuts trying to make a selection.
The researchers call this “choice overload” and oftentimes, guests will make their choice based on price if you overwhelm them with too many options. That leads us to our very last menu design tip. Never list menu items by price, this invites comparison shopping. Instead, staggering pricing so guests focus on other factors when making their selections.
Now that you’re armed with 3 pricing strategies and 7 menu design tactics, the next step is to put it all into play and watch as your sales improve. Cheers to your success!