The word “trilogy” entered American vocabulary as a descriptor of Tolkien’s classic “Lord of the Rings.” For us, it means applying three analytical tools to “magically” optimize the performance of quick-service and fast-casual menuboards.
How important are menuboards? Research shows that 56 percent of customers can be influenced by them. The CEO of a quick-serve recently told me that “menuboard optimization is one of the best investments we can make, far exceeding any other strategy to increase profits.”
So, why don’t more restaurant brands do so? Many view upgrading the menuboard as a “one-off” fix rather than a disciplined process grounded in the brand’s business strategy. Instead, consider the analytical process of “The Menuboard Optimization Trilogy,” which is grounded in one, consumer research, two, insights into actual buying behavior, three, understanding how best to translate those insights into meaningful optimization of your menu that works for your customers.
Consumer research should be conducted both before and after you optimize the menuboard. First, develop a complete picture of what makes a customer tick—their needs, attitudes and behaviors—and turn that into menu decisions that will make your offering desirable. The types of research can range from studies observing actual customer behavior, to customer intercept interviews, to online polling.
After you decide how you want to optimize the menu, develop alternative menuboard strategies for communicating it. Focus groups can gather qualitative information on consumer response to the new strategies, while on-line queries can yield quantitative information. This validation research can be conducted using renderings of the menuboards, which allows you to hone in on the best strategies before going all-in on the changes and incurring associated production and distribution costs.
Insights into customer behavior can be gained through your point-of-sales (POS) data, helping you to optimize your menuboard layout through:
- proper product positioning, keeping item profitability and pricing elasticity in mind,
- menu mix optimization, using a basket analysis of how items sell in tandem.
First, take stock of your current menu offerings. Use POS data to understand demand for items and compare a product’s volume to its overall profitability (price less theoretical food cost). The menu items that sell best and/or provide the most profit should occupy the most prominent positions. Conversely, lower margin items should be downplayed or eliminated to free up precious space.
Promote and feature items that are profitable and wide-reaching. For example, a profitable item that has a polarizing taste profile may never become highly popular, even if it’s pictured on the menu.
For each menu item, analyze how demand has changed over time based on pricing. Did an item lose demand after a price increase, or did its sales grow once a promotion or discount was applied? What happened to the demand for other products?
Also, determine how customers are changing their purchase behavior over time. Are they trading towards less profitable items? Are they bundling less often or choosing less profitable items to build their basket? For example, if most of your lunch customers are bundling a sandwich and soft drink, avoid raising the price on both items at the same time to prevent sticker shock.
And, if you have more than one restaurant location, consider a localized pricing strategy. During your initial analysis of POS data, you may have noticed that customers in your various locations react to menu and price changes differently. The mix of categories and items sold may also vary. Gaining an understanding of these geographic differences will help you determine whether you should set different prices at each location, which is part of the process of making sure your menu design and pricing strategy are truly customer-led.
Communications analysis determines how well the elements in your current menuboard—colors, language, images, branding, typography, layout, navigation and legibility communicate and support your menu strategy. This presupposes that you have a menu strategy linked to your business strategy, as sophisticated quick-serves and fast casuals do.
You don’t have a menu strategy unless you score 100 percent on this test:
- Has each menu item been prioritized based on its importance to the brand?
- Do you have a specific action plan for how each menu item and/or category will contribute to the brand’s business performance?
- Do you have the details in place to execute the plan?
- Do you have specific goals and measures in place to evaluate results?
- Has the menu strategy been shared throughout the organization and understood by it?
Putting It All Together
Using these analytical findings, it’s time to develop your optimized menuboard.