Actionable Insights From APT's Retail Practice

5 Things to Consider Before Removing Menu Items

September 30th, 2014 | Posted by MHarper in Restaurants

Many restaurant organizations make menu rationalization decisions based on basic financial metrics like item sales and number of checks. However, incorporating more robust check- and guest-level metrics into the analysis can help restaurants make more profitable decisions. Five important metrics for executives to consider when identifying which items to rationalize are:

  1. Item Profitability: Start by identifying items that have low sales and margin. With this list, executives can begin digging deeper into the analysis.
  2. Attached Sales / Margin: Consider the sales and margin associated with checks containing each item. If an item has low sales and margin on its own, but high sales and margin in the rest of its check, restaurants could be losing much more than they initially realized if they delete that item.
  3. Item Loyalty: Focus on items with lower item loyalty to increase chances that demand will transfer to other, similar items (e.g., guests who used to order a Grilled Salmon sandwich might switch to a Grilled Chicken sandwich).
  4. Guest Lifetime Value: Make sure to recognize your best guests. Take into account not only item loyalty on its own, but also which items are ordered by your most loyal guests to reduce the risk of losing those guests.
  5. Guest Satisfaction: Encourage guests to shift to higher satisfaction items by removing those items with lower satisfaction.

Click here to read about how one restaurant evaluated these metrics to create a new menu to build guest loyalty.

Be Sociable, Share!

You can follow any responses to this entry through the RSS 2.0 Both comments and pings are currently closed.