When restaurants update their menus annually, food waste is cut, and costs are lowered.
Two things on every restaurant owner’s mind are costs and profits. How well the first is tended to is reflected in the second. Even when customers are happy and the reservations book is full, balancing the two is a time-consuming responsibility.
Restaurants are finding that annually updating the menu helps to maintain a good balance between costs and profits. A menu analysis gives you a chance to revisit food costs and find cheaper alternatives, and to toss any duds on the menu. Below, we share more on the benefits of updating your restaurant menu, what to look out for, and how to harness the power of your POS system to help you.
Review Food Costs and Find Cheaper Suppliers or Ingredients
Because the price of produce fluctuates throughout the year, it’s important to regularly analyze your food costs. The specials are calculated every time a purchase order is made, so the real problems tend to be the mainstay dishes that are available year-round. And it’s no wonder; at the time the menu prices were first made, certain ingredients might have been cheaper. Several months later, that same dish might be 20% more expensive; eating into the profit margin.
To find out how much each dish costs, calculate the actual food costs as closely as possible to make sure the price you’re selling that item for makes sense.
Second, speak with your chef about food waste. Ingredients spoil and if there is food being ordered that doesn’t make it to customers’ plates, profitability suffers. If waste can be attributed to buying some ingredients in bulk, check out the prices other vendors are offering for the amount of food you really need.
As a general practice, you should be comparing the prices of other vendors and your current suppliers. You might find an alternate source for the same quality at a lower price that saves you hundreds or thousands every month. Knowing what’s being offered also gives you leverage to negotiate with your current vendor.
Lastly, check portion control. The cost spent per dish depends on a specific amount of food—is the kitchen giving the right portion? If someone has a heavy hand, that might be the reason for discrepancies you’re seeing in purchase orders.
Checking your menu for these choke points is the most important part of this analysis. Take the time to correctly calculate the costs and you will find places to make savings.
Toss the Duds
That might be your grandmother’s famous meatloaf recipe, but if no one is ordering it, cut it. The annual menu analysis gives you the opportunity to make these tough calls. Your goal is to have a restaurant menu with items that sell well.
To get started, generate an annual sales report on your restaurant POS.
You’ll see quickly which are your “Top Sellers.” They are generating huge revenue for the business and the number amount is high. (The exception being that you may have one or two very expensive items on the menu that are not ordered often, but when they are, bring up the sales number considerably.) Very often, the Top Sellers are considered the customers’ favorite dishes.
The majority of your dishes belong in the “Consistent Sellers” category. These dishes are most likely the “bread and butter” of the menu. They are reliably sold, and for that reason, are the dishes to pay particular attention to in terms of food costs.
In the final section, you find the “Low Sellers.” These are the items that are rarely ordered, and when they are, barely make an impact on your bottom line. Identify these and calculate their cost. You might find that you are spending more money on having them available for customers than you are making on them. If that’s the case, move them into the “Dud” category and cut them out of the menu.
By slashing the duds, you save on costs and increase profitability right away.
Don’t Forget the Bar Menu
The same rules apply to your cocktail and drinks menu. Use your bar pos system to generate sales and inventory reports to identify costly ingredients and poor sellers. Done well, a bar menu can make up nearly 30% of your sales.
Some chefs are serving “ugly” food to decrease food waste.