Grow Your Restaurant by Establishing a Winning Menu Strategy
Updated: Jan 27, 2021
A lot has been written lately about restaurant brands altering their menus as a result of COVID to add value, streamline operations, increase customer throughput, etc. However, little has been written about the menu strategies that drove these changes, or how the strategies were arrived at. Writings have focused on the “what” and not the “how.” This piece will focus on how to go about developing a menu strategy and it will outline the process and key steps leading to a winning strategy.
What’s a “Menu Strategy?”
A “Menu Strategy” is about establishing how each of the menu items you offer will help you grow your business.
When it Comes to Your Menu, Think Strategically
The leading restaurant brands develop a well-documented Menu Strategy linked to high-level business objectives. This is a document that sets forth how the menu categories and products are prioritized and how they help the brand realize its business objectives. The Menu Strategy is used to guide all menu communications (i.e., web, mobile, menuboards).
How to Go About Creating a Menu Strategy
The process for Menu Strategy development is similar to strategic business planning: setting goals; prioritizing goals; and translating the plan into specific actions.
When creating a Menu Strategy, a high-level team approach is important—you get valuable input across the organization, and most importantly, you get consensus and buy-in. A Menu Strategy team should include key brand personnel: COO, CFO, CMO, Operations, Insights and Culinary.
Do Your Homework Before Creating a Menu Strategy
There’s some up-front work to do before the team works out the details of a new Menu Strategy. The inputs are varied, but they are all business-centric. They fall into two groups, brand inputs and market inputs, as follows:
Review Your Current Menu Strategy. Identify the objectives and strategies you have now relative to your food and beverage offerings. These may be documented or you may need to document them. What you have now is your starting point.
TURF Analysis. This process employs consumer insights and a mathematical procedure for optimizing the menu. Through TURF, brands can determine the shortest list of menu items needed to satisfy the vast majority of customers.
Take a Deep Dive Into the Data
Menu Pricing Analysis. This allows for the creation of effective pricing strategies. POS data is analyzed, consumer purchasing behavior and the impact of price changes are studied at the item level, category level and across categories. Promotional activity is analyzed to calculate impact on sales, profit and traffic.
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 merchandising programs featuring those items can provide the highest likelihood of successfully growing sales.
Menu Operations Analysis. Using menu item operations data and complexity ratings allow brands to determine the items contributing to or distracting from throughput and profitability.
Determine Market Needs. What’s trending within the industry? Include your key competitors.
Factor In Economic Climate. The current economic climate. The outlook for the next 2-3 years. Look at broad economic indicators and consumer trends.
Consider Operations. Operations are a critical factor in determining your brand’s Menu Strategy. Do you have drive-thru? Curbside? Delivery? Be sure your menu items can be executed easily and consistently for off-premise, which has surged due to COVID-19.
Assess the Competition. Develop an understanding of the food/beverage landscape and the offerings of your key competitors. See where your brand stands relative to the competition from a menu offering standpoint. It will help determine if your brand has distinct advantages or disadvantages.
Review Technology. What is the latest equipment and technology? What technology is required to positively impact your Menu Strategy from the standpoint of quality, cost, speed and customer convenience?
The Five Key Steps to Develop a Menu Strategy
With the inputs in place, it’s time to develop the Menu Strategy itself. These are the key steps of the process.
1. Establish Business Objectives. What are the business objectives you ultimately want to accomplish from your menu? Examples might include: increase average check, improve perceptions of value. Each of the business objectives should be prioritized in order of importance (which will have the greatest positive impact on your business).
2. Identify and Prioritize Your Food Platforms. List your food platforms and/or categories and put them in the order of strategic importance. This step will require a good understanding of where your sales and profits are coming from now and where key opportunities lie.
3. Identify and Prioritize “Key Opportunities.” These are those tactical things you can do to reach your menu’s business objectives. For each of these “opportunities,” provide a specific, tactical example of how you will accomplish a stated business objective.
4. Understand Critical Success Factors. These are the menu strengths, characteristics and signature products that your brand must do well. This is what will differentiate your brand from the competition.
5. Understand Critical Weaknesses. These are those things that you do not do well from a menu offering standpoint. Identifying these in your Menu Strategy helps you circumvent or correct these weaknesses. You may, for example, decide to drop a menu item that is subpar to other offerings.
Menu Strategy Output: Optimized Menu Communications
Last but not least, once there is agreement regarding your menu strategy, it’s time to develop optimized menu communications (web, mobile, menuboard) that will allow you to realize the objectives established in your menu strategy.
Tom Cook is a Principal of King-Casey. For more than half a century, King-Casey has been helping restaurant brands grow their businesses and dramatically improve the customer experience. King-Casey’s solutions are firmly grounded in insights derived from hard data and analytics relative to consumer behavior. King-Casey provides a complete range of menu optimization services including assessment, research, menu reengineering, menu strategy, and menu communications.