Do You Know Your Menu’s “Golden Ratio”?
As any restaurant owner can tell you, it’s notoriously hard to increase margins, but one solution might be sitting right under your nose (literally), in your restaurant’s menu.
The average customer only spends 109 seconds scanning a menu, so making the most of your menu means driving them towards the highest margin items on it—and quickly. To do this, Upserve, the restaurant management platform, created a “Golden Menu Ratio” to successfully increase margins.
If you’re looking to find areas to significantly increase revenue, look at the pricing on your cocktail list first.
After reviewing hundreds of customer menus, Upserve found that food accounts for 66 percent of restaurant sales, with beverages accounting for the remaining 46 percent. Based on these data, it developed the following guidelines that any restaurant owner can follow when creating a successful (and cash-generating) menu:
How can you use this ratio to your advantage?
According to the National Restaurant Association, it’s not how high or low food costs are, but rather how many gross profit dollars your menu items generate. That’s why menu items should be promoted based on their gross profit contribution (dollars) rather than having a low food cost (percentage).
80% of a restaurant’s food sales come from only 16% of menu items. How do you know which ones? The perfect menu is just a click away with Upserve's Menu Builder.Design Your Menu
Here are some good places to start:
- Start strong, end strong. Nearly half of food sales are from the main course options. If you make sure your entrees are the items with the highest margins (or gross profit contribution), you can take it on the chin with those crowd-pleasing appetizers that bring back guests, but don’t give you great returns.
- Show your cocktail menu (and mixologists) some love: Drinks, both alcoholic and not, are great places to improve the bottom line. Wine and beer pours by the glass often have lower labor cost than mixed drinks unless you have a sommelier on staff. But cocktails account for nearly half of alcoholic beverage sales, so if you’re looking to find areas to significantly increase revenue, look at the pricing on your cocktail list first.
The average customer only spends 109 seconds scanning a menu, so making the most of your menu means driving them towards the highest margin items on it—and quickly.
While the “Golden Menu Ratio” can play a key role in developing a high-earning menu, it’s far from the only menu “trick” that restaurant owners can utilize. Find more tips here, or take a stab at creating your own menu following these guidelines with Upserve’s “Smart Menu”: Your Menu Here.