Big profits from cost-conscious changes.
As food costs continue to escalate and margins get squeezed ever tighter, periodic menu fixes become even more important to the bottom line. There may be no getting around menu price increases in today’s economy, but “you have to raise the total value proposition—not just prices,” says Bill Main, chairman and CEO of Bill Main Associates in Chico, California. He and his team help operators engineer their menus to boost profits. Highlighting the most popular and profitable items and getting rid of underperformers is one tactic; paying close attention to consumer trends is another and building traffic through operational efficiencies is a third. These operators have recently revamped their menus through various strategic moves—all with the goal of increased profitability.
Daily Grind Unwind
The heart and soul of this concept is its coffee program, but CEO Leo Tudela was eager to increase the food side of the business. In 2007, he hired a consultant to revamp the core sandwich menu. “We switched from paninis to baguettes to speed up and build lunchtime traffic and decrease the cost of goods,” says Tudela. “The new menu rolled out incrementally, starting in February, 2008, and we’ve already increased food sales from 30 to 40 percent of overall sales.”
The new baguette menu offers six selections, including Turkey & Brie (with apple slices and mango chutney), Marinated Chicken on Ciabatta and Veggies & Pesto on Baguette. Customers can dig into the warm sandwiches within 30 seconds after ordering. The paninis, while popular, proved too time-consuming to deliver quickly during busy lunch hours. “The faster program not only reduced the bottleneck in our stores, we realized a 7 percent savings in cost of goods,” Tudela explains. Daily Grind was able to pass that savings on to guests; the baguettes retail for $5.95 to $6.25 as opposed to $6.95 for the paninis. In surveys, customers responded favorably to the flavor profiles, more substantial size and price of the new sandwiches. Tudela claims that costs to develop new stores also went down. The impinger ovens used for the baguettes are less expensive than panini grills and exhaust hoods, adding up to a savings of $5,000 per store. Plus, greater efficiencies in the baguette program mean that food can be served from 10 or 11 in the morning through the evening hours.
“Our biggest expenses were in consulting and marketing costs,” says Tudela, who hired a consultant with expertise on the sandwich side to develop the baguette program.
•Sandwiches were developed with ingredients that could be used in multiple menu items
•Rolled out new menu incrementally by location to keep expenses down; older stores were given time to switch
•Market sandwiches by “show and sell”—making up each variety and displaying it. Cuts down on marketing materials
•Listed new menu items on individual magnetic panels so menu boards didn’t need to be completely overhauled
La Jolla, California
There are 80 million millennials in America [the generation born after 1981] and we want to attract these customers by appealing to their eating style,” says Tom Penn, VP of Sammy’s. Although his concept sounds like a pizza place, its menu has become more diverse and chef-driven than the name implies. Last year, corporate chef Jeff Moogk, who came from Hyatt, introduced a selection of tapas. “The idea was to offer appetizer-size items that guests could share,” Penn explains. Included in the initial rollout were Mini Duck Tacos, Parmesan Crusted Artichokes and Mediterranean Kefta Skewers—priced between $7.95 and $9.95. Sammy’s Lebanese founder Sami Ladeki brought his unique culinary perspective to some of the recipes.
The reaction to the tapas menu has been very positive—diners have lots of good times around it and the staff
is enjoying serving it. And 20-somethings aren’t the only ones coming in for the new items. “The menu is geared to all people who want to be young and eat young too,” says Penn. The tapas revolve around ingredients and flavors that adventurous eaters of all ages crave. Plus, smaller portions often translate into healthier dining.
That warm response prompted Sammy’s to expand the category this past spring. Additional tapas include Oak Roasted Asparagus and Greek Moussaka as well as more finger foods and a totally new section of Mini Burgers. The latter features an ahi slider with ginger mayo and a salmon burger with mustard mayo as well as a Kobe beef and cheeseburger. To accommodate the additions while containing costs, Sammy’s eliminated items that didn’t cross-utilize ingredients.
Time has been the biggest expense in the menu update. “Our team spends a lot of time traveling, tasting, developing, tasting some more and training,” Penn reports. “When a new menu rolls out, chef Moogk works with each location for several weeks before moving on to another store.” Other costs included a new menu design with an upgraded logo and the installation of flattop grills. Although Sammy’s had to adjust menu prices a bit to cover costs and increase its value proposition, average checks still hover around a budget-friendly $14.50. What’s more, sales are holding their own even in these tougher times, says Penn.
•Saved on R&D fees; corporate chef did menu development
•Partnered with purveyors, such as Coca Cola and Hormel, in a marketing program to defray costs
•Spread the word through cross-promotional opportunities with partners like the San Diego Zoo and Legoland; saved on hard advertising costs
•Used technology to monitor costs and put a laser beam focus on shortfalls. This allowed them to provide details to each unit instead of generalities
Culver City, California
When it opened in 1958, Sizzler drew crowds for its all-you-can-eat buffet, featuring an endless salad bar and
low-priced steaks and seafood. Times have changed and so have restaurant customers. To reinvigorate its image, the chain is celebrating its 50th anniversary with a bang. Sizzler now sports a new logo, a more contemporary design and revised tagline: “where America goes to eat.” And Audrey Baldwin, senior director of menu development and innovation has introduced a slew of new items and reworked several menu categories.
“The salad bar is still key to our concept; 61 percent of our guests order it as an entrée or add-on,” says Katie Cameron, Sizzler’s director of marketing. To leverage its power, add value and keep up with the trends, Baldwin created more flexible entrée options. Patrons can now order shareable plates such as steak burger minis or a seafood sampler for $4 more. Heartier eaters can opt for the “Pick 2” menu—combos include a grilled scallop skewer paired with a 6-ounce steak and baked potato—for $9.99. Also new are seasonal soups, appetizers, specialty salads and desserts. “I’m currently testing a corn poblano soup and cranberry turkey salad for fall,” Baldwin reports.
Perhaps the most drastic change is the elimination of sandwiches and the launch of American Classics—a roster of simple, familiar dishes that offer value and comfort in tune with today’s economy. Four items are in the starting lineup: a roast turkey dinner, pot roast, meatloaf stack and country fried chicken. All sell for under $8. Coming up next are enhancements in the hot appetizer and dessert bar areas. “These changes not only play up value, they’ve improved our food costs,” Cameron contends.
Sizzler’s physical menu was modernized, too, changing from a huge, standard board to a more stylized magnetic panel illustrated with food photos. The format allows for easy updates and the inclusion of more LTOs. Also on the marketing front, the company is publicizing its new image and menu with direct mail, print and local promotions instead of more expensive TV ads.
•Used existing internal research to develop products that would appeal to current customers
•R&D team developed new menu items in-house
•Created menu items with line extensions, so products could be cross-utilized.
•Newer menu panel system allows adjustments to menu one panel at a time, as opposed to replacing the whole menu board just to delete or add one or two items
Consultants Bill Main & Associates in Chico, California, assess and retool restaurant menus to maximize profits. When they tackle a remodeling job, they work on both the infrastructure and look of the menu, combining science and art.
Science = Analysis: What sells?
•To analyze what sells, start with your POS menu sales mix report. What are the most popular items? Poll servers for their input, too. And use a well-designed comment card to learn more about your core customer.
•To analyze what’s profitable, start with basic recipe costing. Which items offer the highest margins? Aside from food costs, variables such as portion control, monitoring of waste and cross-utilization can impact profitability.
Art = Value: How do you price?
How do you present?
•Culinary creativity includes following the trends to meet customers’ needs. Local and sustainable ingredients, small plates, bite-size desserts, unique flavors and global preps are current ways to create value.
•Value perception pricing covers several factors. Plate presentation, ingredients, portion size, service style and your competition all impact optimum menu price. Avoid common mistakes such as cost-led pricing, going too long between price increases and applying across-the-board menu increases.
•Presentation encompasses everything from menu design, engineering and layout techniques to descriptions—whether done by the server or printed on the menu. Stress the unique aspects of each menu item; its flavors, ingredients and preparation methods.
•Target high-profit items by boxing in or showcasing them on the menu or identifying them with a signature icon.