As Appeared in Convenience Store News
Updated: Aug 7
The Profit Optimization Trilogy Three analytical approaches that improve menuboard performance. Tom Cook, King-Casey
Why should you optimize menuboards?
Because the menuboard is the single most important communicator in a foodservice environment. It's your No. 1 selling tool. Successful menuboard optimization programs generate significant returns on investment (ROI). Optimizing menuboards can shave precious seconds off the order process, speeding throughput, increasing the number of transactions and boosting overall sales. This translates into increased profitability.
In fact, menuboard optimization has one of the highest ROIs of any option available to convenience store operators.
A Trio of Analytics: Consumer Insights, Financial Data & Communications To realize significant results, menuboard optimization involves combining three different skill sets — a trilogy of analytical tools that collectively result in meaningful improvements in menuboard communications.
This approach helps foodservice and c-store brands be smarter as they optimize their menuboard layout, design, content and pricing structure in a way that promotes profitability while encouraging repeat customers. The process helps brands understand the thinking behind customer menu decisions. It provides a complete picture of customer needs, attitudes and behaviors, and how these can be turned into desirable menu decisions. This article looks at each of the components of the Profit Optimization Trilogy:
1. CONSUMER ANALYTICS Consumer research plays an important role when it comes to menuboard optimization. Research should be conducted both prior to and following menuboard optimization.
Pre-Optimization Research — Use pre-optimization research as a diagnostic tool to help identify how customers are using your menuboards, what issues they have and what specifically needs improvement. Research can involve ethnographic studies to observe customer behavior and menuboard use. Use customer intercept interviews to ask questions about their menuboard use, and to explore their likes and dislikes. Yet another approach is online research, where feedback can quickly and cost-effectively be collected from hundreds of consumers to quantify and prioritize key attitude and usage findings and insights.
Post-Optimization Research — This approach is used later to test and validate the effectiveness of the new optimization strategies, before new menuboard designs are developed. Focus groups can be used to gather qualitative research on consumer reactions and use of the new menuboard strategies. Quantitative consumer research is an effective way to reach hundreds of consumers and compare the performance of optimized menuboard strategies to the current menuboard strategy. This quantitative research can also evaluate purchase intent as well as gather data on consumer attitudes and preferences.
It's important to note that all this strategy validation research can be conducted using color renderings of the menuboards. This allows for quickly identifying the best strategies before the creation of final menuboard designs, and before the costs associated with production and distribution to stores.
2. FINANCIAL ANALYTICS This part of the trilogy focuses on analyzing sales, profitability and cost-of-goods data to identify ways to optimize the menuboard layout, product placement, space allocation, menu mix, and food and beverage attach and bundling opportunities.
Basic Sales Analysis — All brands track sales, but it is astonishing how few use this data to help them create an optimized menuboard. Understanding where your sales are coming from can help you learn how and where to position items on your menuboard. Where you place products on your menuboard should be driven by an analysis of sales, profitability and menu item complexity. Some of your menu items are better sellers than others, and some contribute more to your bottom line. These should be more prominent on your menuboard. Analyzing sales also helps identify which poor-selling items should be downplayed or eliminated altogether to free up precious menuboard real estate for high priority items.
Taking a Deep Dive Into Data — Beyond basic sales and profit data, there's a treasure trove of data that can be mined. Programs can be created and tailored specifically to the needs of the brand from a geographic, transaction type and customer standpoint. Here are a few of these tools:
Menu Pricing Analysis: This allows for the creation of pricing strategies that are modified over time as internal and external environments change. Historical sales and consumer purchasing behavior are analyzed and the impact of price changes are studied at the item level, category level and across categories. Past promotional activity is analyzed to calculate impact on sales, profit and traffic. The end result is a brand-specific pricing strategy that allows for higher profit without negatively impacting customer traffic and buying behavior.
Menu Performance Analysis: This involves a comprehensive review of revenue performance of menu items, their related transactions, and relationship with other menu items. This leads to an understanding of the specific food and beverage menu items that have the highest attachment potential. Building sales and merchandising programs featuring those items can provide the highest likelihood of successfully growing sales and profitability.
3. COMMUNICATION ANALYTICS This final part of the trilogy involves a communications assessment of the current menuboard. The objective is to evaluate how effectively the menuboard's language, branding, layout, navigation and legibility come together to communicate and support your brand’s menu strategy.
It’s critical that strategy drives the design of the menuboard. For example, if the menu strategy states that "we will increase ticket by increasing beverage attach," does the current menuboard effectively communicate adding a beverage to a food selection?
Research has proven consumers prefer to order by images. The strategic use of food and beverage images increases the sales of featured items. How does your menuboard stack up in this regard? Customer eye-tracking and behavioral research has determined that menuboards have "hot spots" — specific areas on the menuboard where customers tend to look first and most frequently. These hot spots can be leveraged to have a positive impact on average check, ease of ordering and speeding throughput by putting the best-selling and highest-margin items in these zones. The communications assessment identifies what you are currently doing well and want to retain in your optimized menuboards. It also identifies the problem areas where design and communication techniques fall below best-practice. The assessment results in a list of menuboard optimization opportunities.
Putting It All Together Using the collective analytical findings of the Profit Optimization Trilogy, it’s time to develop your optimized menuboard communications. This follows a series of sequential activities, as illustrated below:
1. DEVELOP THE MENUBOARD’S STRATEGIC LAYOUT This is a "blueprint" for how the optimized menuboard will be organized. It expresses in words and schematic diagram form how the content will be organized to achieve the business goals and objectives set forth in the menu strategy. The schematic illustrates the optimized menuboard's layout, product placement, space allocation and key communications. There should be several variations of the optimized menuboard layout developed before one is finalized and approved. Image 2. VISUALIZE THE OPTIMIZED MENUBOARD Here, the strategic layout is developed into color renderings illustrating what the new menuboard might look like. There's just enough detail in these renderings (visuals, graphics, copy, branding, colors) to conduct consumer research to quickly assess the validity of the new menuboard strategy. Image 3. CONDUCT RESEARCH TO VALIDATE THE NEW STRATEGY This will determine if the new menuboard strategy resonates with customers. Using the color renderings, conduct quantitative customer research to evaluate the new strategy before placing menuboards in stores. Use renderings of the current menuboard as a control. See what works, and what needs modification. This will help confirm if the new strategy can achieve the desired business objectives.
A final word of advice: Menuboard communications that achieve the most profitability are the result of superior analytics and strategic thinking — not clever graphics and design.
Tom Cook is a principal of King-Casey. Established in 1953, King-Casey is a restaurant and foodservice business improvement firm that provides strategic menu optimization advice and a range of services to help clients manage overall food and beverage offerings, affecting their positioning, reputation and business growth. For information, visit king-casey.com or contact Cook at (203) 571-1776 or email@example.com.