Menu Profit is one mission critical detail in your restaurant that you may be missing.
You may in fact have a menu that your customer’s love, but that doesn’t mean you’re making lots of money selling it! This really is common and I see it all the time in restaurant’s I work with.
You’re working just as hard preparing low profit items as high profit, so you might as well give yourself every advantage.
Listen to today’s episode and I’ll give you the “key” to maximizing profit from your menu, every item every time.
Know two things, that your suppliers work for your restaurant, and they will bend over backwards to help you succeed if you simply ask.
Now go out there and Rock Your Restaurant.
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EPISODE #94 TRANSCRIPTION
[Start of Transcript]
You’re tuned in to the Restaurant Rockstars Podcast. Powerful ideas to rock your restaurant, here's your host Roger Beaudoin.
Hey guys! It's Roger back at you; today I'm going to give you an idea that can put thousands of new dollars right to your bottom line profit. It takes a little homework up front but I guarantee, you'll be thanking me.
It's a simple idea really, and I've got to say I'm really amazed at how many restaurants I see spinning their wheels, working super hard in this riskiest of all businesses not only trying to make a go of it but really succeed.
Why else are you in business? You might as well be maximizing every opportunity, every advantage and absolutely crushing it. Listen to this episode carefully as it holds the key to more money in your register night after night, month after month and go ahead do the math.
Rockstars, one of the biggest problems I see most frequently is menu design. I'm not talking about colors, graphics or item placement here; I'm talking about the selection of menu items in each category. Every restaurant needs appeal variety the customer and profit it's a real balance you need to strike.
Now, I coach Restauranteurs all the time and the first thing I look at is their menu profitability. I ask a couple questions such as “What are your biggest sellers?” Most every restaurant can answer this question but more often than not, these Owners and Managers can't tell which items are their most profitable in each category.
So next, I run some very simple math and I compare sales and profit item by item, category by category. I'm talking about appetizers, entries desserts even the specialty cocktail list, are you getting the picture? When they dig a little deeper, and again you may be surprised at how often I see this; I find that their least profitable items are their most popular.
These restaurants are working just as hard preparing low profit items as high profit. And here's the kiss of death, the low profit items are taking away valuable sales from those items with a higher profit. I quickly see that thousands of dollars are lost over the course of a few months simply because their menu was not designed with profitability in mind, no wonder the bank account isn't growing.
You can have a busy restaurant and still not be making any money and this is one of the major reasons why. So let me give you a crash course in this exercise so you can find out for yourself; you may want to take some notes and I'll go slow:
- First, there's probably no more important exercise than costing out your entire menu item by item in each category. Write down to the garnish. If it's an ingredient that goes into that dish or on that plate, it has a cost to it and you need to count it and come up with an individual cost sheet for every item. Your order guide from your suppliers will be a huge help here. The order guide lists every food and drink item you order and the quantity it comes whether by the case, the can, the bag or other unit. The order guide also tells you the price you pay for that case or can. So now, all you need to do is list every ingredient or component in every dish you sell and what that ingredients cost is as a portion of the full case or bag etcetera.
Now, you'll have what is known as a ‘Plate Cost’ or what it costs you to put that dish in front of your customer. Subtract this plate cost from your menu price or what you're charging your customer and then you'll have your gross profit per dish. Again, do this for every item so you know exactly what profit each dish contributes to your overall menu profit.
If this exercise sounds a little bit daunting, no worries know that your major suppliers that you purchase from will accurately cost out your menu for you and determine your item by item profit and food cost percentage on each dish as long as you're buying from them.
So, know that this options available to you as well. But once again I have to emphasize how important completing this exercise is. It's your dollars on the line here, and maybe your restaurant's very survival; it's that critical.
- Next we're going to run a Product Mix Report from your point of sale system. If you've never done this it's simple and one of the most valuable reports you have at your fingertips a Product Mix or a P-mix for short tells you every product your restaurant has sold over a period of time with the price you charge and the total sales dollar amount you took in from selling those items.
The product mix will ask you to type in a date range and I recommend you plug in at least 6months of data unless you change menu seasonally so then 3months of data will be very telling.
- Finally go to your cost sheets; one item and one category at a time and transfer the number of units you've sold over that period of time. First, compare the appetizer category look and see if in fact your most profitable items are strong sellers or not.
Do this also for your entries desserts and the rest of your menu. What do you do if your most profitable items are not the big sellers you have a couple choices here, you can raise prices of the lower profit items that are selling well, or adjust ingredients supported and sizes or you can drop the lowest profit items entirely.
But what I recommend most is this; design and on new menu that has variety and appeal to the customer but contributes an equal if not very similar profit item by item, category by category. Again, your major food suppliers can do this for you if you like, all you have to do is ask. This way you will care what's selling on your menu as long as you're moving the merchandise and this way you will also absolutely be maximizing your profit and not leaving lots of money on the table. Now go out there and rock your Restaurant!
Thank you for listening to The Restaurant's Rockstars Podcast. For lots of great resources, head over to restaurantrockstars.com and while you're there, download a copy of the book, ‘Rock Your Restaurant’ it’s a game changer, See you next time!
[End of Transcript]