One controllable variable is the menu and it is the primary vehicle by which a foodservice operation presents its marketing strategy and helps customers satisfy their needs. These needs may be physical (e.g., hunger), but could also be social (an environmentally responsible customer might prefer non-meat dishes) or personal (ordering the newest trendy food might reinforce one’s self image as a “foodie”). More and more, these intangible factors are playing an important role.
Menus list products and prices, and because of this a menu is a critical means of marketing communication that sets customers’ expectations. A menu can also affect distribution by informing customers about other store locations, pick-up or delivery services, Website addresses and hours of operation.
The whole point of offering a menu is to inform customers about available food choices and help them assess which ones will best meet their needs. In addition to just listing the choices, many menus provide information about ingredients, nutritional content and preparation techniques, which facilitates weighing the value of one item against others.
This brings us to the topic of the menu life cycle, or the stages through which menu items progress after first being introduced. There are four stages:
- Introduction
- Growth
- Maturity
- Decline
At the point in time when a menu item is first introduced to a target market, the introduction stage of the menu life cycle begins. Early in this stage, of course, there are virtually no sales revenues, because no customers are aware of the new item and therefore cannot purchase it. The sales revenues do become positive during the introduction stage, although they grow very slowly. The marketing expenses necessary to inform customers and obtain distribution at this stage mean that profits are negative or, at very best, zero (revenues and costs are equal).
During the growth stage, the impact of the marketing mix begins to be felt and sales increase rapidly, generating profits. But notice that revenues level out and even decline as the no-longer-so-new menu item approaches the maturity stage. Also, notice that profits peak and actually can begin to decline during the late growth stage. If the marketing mix is effective, how could this happen?
There could be lots of reasons, but it is usually from increased competition. If your company launches a blockbuster new product, it’s not likely that competitors will sit idly by. Instead, they will introduce their own versions of the new product. This means two things for you.
First, the competitive offerings will attract some of your customers, with the result that your revenues will decline, or at least grow at a slower rate. Second, you may decide to increase your marketing investment to defend yourself from the competitive attack, which means that your costs will increase.
During the maturity stage of the menu life cycle, sales revenues will, at best, be stable but profits usually decline. There are two primary reasons for this. First, market saturation may have occurred, which means that there are no more customers in the target market who can be reached by the marketing mix; i.e., no more potential for revenue growth by attracting additional customers.
Second, market fragmentation may have also taken place during the maturity stage. This means that a large number of competitors are trying to attract the target market. There are only so many unique ways to create value, so the differences between competitors’ offerings may become trivial, and customers often begin to perceive the various offerings as interchangeable. Note: the increased marketing effort required to maintain even a stable level of sales can be very costly during maturity.
Marketing can be employed to reduce these undesirable effects during maturity by: finding new use occasions for the product, identifying new market segments for whom the product offers value and stimulating sales by price cutting or promotions.
The decline stage of the menu life cycle is characterized by decreasing sales revenues and profits. Menu items at this stage are offering only marginal value to targeted customers, either because their needs have changed or new items have been introduced that satisfy the original need more effectively. Sometimes companies will cut back on the marketing support for decline-stage products so that profits may actually be positive. But this is only a temporary measure, of course, because declining marketing support means that sales revenues will continue to decline. Eventually, the menu item will just fade away.
To make the most of the menu life cycle, shoot for a menu portfolio consisting of items at all of the cycle stages. This means that as older menu items progress into maturity and eventually decline, there will be newer menu items at the introductory and growth stages to replace them. The mature and declining menu items may continue to serve existing customer needs for a time, but the new items will keep your company viable as they offer value to satisfy emerging needs. These new menu items come from the menu R&D teams integrated and innovative efforts, and marketing is key to facilitating these efforts.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.