Only about 10 percent of restaurants take advantage of high-quality menu pricing, but experts say that making a few changes to your menu can increase your profits by about 10 percent.
When it comes to psychology and spending money, there are some interesting things that happen when a customer orders from your menu. Whether they know it or not, the way you price, the order in which you place these items on your menu, and the relative distance between the least and most expensive item on your menu, matter a lot for how a customer will order.
If you’ve ever taken the time to analyze the pricing of your menu items (not just by looking at food cost to pricing strategy, which should sit somewhere around or below the 33 percent mark), you may have noticed that your second-most expensive menu item is ordered exponentially more often than your most expensive menu item. People tend to purchase the item that falls in the middle, neither the least nor most expensive menu item.
This is useful because the most expensive item can make others seem relatively inexpensive. A $46 halibut sounds expensive, until it’s compared to your $67 steak. So, place your most expensive item prominently at the top of your menu so that everything after it will seem less expensive.
What is a Decoy Item?
Having a decoy item on your menu means putting an item at a high price to make the other items seem more reasonable. And, if someone does order it (for example, those execs dining out on the company card), then there’s the added bonus that you just sold a menu item at almost double the cost of your other menu items.
Here are some other general tips for how to design your menu to make the most profits. Most of these are from Gregg Rapp, a menu engineer who has been working in the industry for the past 30 years.
Organizing & Subheadings
Organizing your menu is of utmost importance. Don’t overcrowd your menu; I worked at a sushi restaurant that had over 80 items on its menu, with some having little-to-no variation from the others. This increases decision-making time for the customer, increases learning curves for your kitchen staff, and reduces your table turn around time.
Also, the subheadings you use on your menu to organize the different types of dishes you offer are extremely important, since customers spend less than 2 minutes glancing at a menu. Just like with words and lists, we are most likely to remember the first and last words. And, your customers are more likely to order the first and last item in each sub-section.
Keep your sections small. Research shows customers want 7 different appetizer and dessert options and 10 entrée options. However, other experts recommend limiting menu items to 5 per section, with 7 being the maximum number for optimization.
Use the Sweet Spot
The top right-hand corner of the menu is known as the “sweet spot.” It’s the area your customers are more likely to spend their time looking at. Make use of this and place your highest-priced menu items here. This varies a little for 1-, 2-, and 3-panel menus, but just as a general rule of thumb, more important menu items should go on the front for 1-pagers, and top right-hand for 2- and 3-pagers.
The bottom left hand corner is the one most often left out. Add your low-priced starters and add-ons here.
Use Graphics and Call-Outs
Adding a picture or a graphic to call out your “most popular” dishes is an easy way to draw attention to your best dishes with the largest profit margin. (Also, make sure your staff members are equipped with this knowledge as well.) But, limit call-outs and photographs to one per category.
Specialty Words and Flavorful Descriptions
They don’t all need to be a 50 words, but descriptive is good to entice customers to order particular dishes, Most importantly, specialty words can call attention to certain features and make a dish feel more authentic. So, depending on the vibe of your restaurant and what you are trying to convey to your customers, using value-added words like “homemade,” “lightly spiced,” and, “hand-harvested” could entice customers to order those items more often.
Also, an uncommon, but authentic word can start a conversation between your customers and servers. What are boquerones or muscovado? It also makes a dish seem more authentic when you use a word relevant to the country of origin for the food. For example, use vermicelli or farfalle, rather than spaghetti or bow tie pasta.
Don’t be afraid to use someone’s name either. Grandma’s pork chops and Sal’s sausage pizza seem friendly to customers and brings with it connotations of good, home-cooking.
Drop the $$$
Get rid of the $ sign, or write out the price in words, not numbers. This removes the association with money, or numbers, entirely from people’s minds as they order. So, nine fifty versus 9.5 or $9.50 all feel different to the buyer.
Also, as neat as it looks, don’t line up your prices in a column. This leads to your customers ordering based on price rather than descriptions. Move the price to just after your tantalizing descriptions.
Finally, customers say using values like 9.99 can seem cheap rather than like a good value. If you don’t want to use whole numbers, use .95 instead.
On a final note, remember that we’re not just talking about the cost customers are paying for these menu items. Think about profitability as well. Lobster may be the most expensive item on your menu, but it may also be the one with the least profitability, being expensive to buy, ship, and sell, thus prone to higher levels of food waste. Cost your menu, even if it is time consuming, to guarantee the best use of these menu pricing tactics to increase profitability.