Iggy’s Restaurant Menu Makeover
When Ron LeGrand, owner of Iggy’s Seafood Shack in Fruit Cove, Florida, contacted us about a menu makeover, I asked for three things: a copy of their menu, a PMIX (product mix) or product velocity report, and the theoretic food cost. These are the same items I ask of every customer and I asked them for to help us with Iggy’s Restaurant Menu Makeover, because they will provide the info I need to create a menu matrix.
The menu gives us the selling price and shows what customers are actually seeing when they order the food and what impact the menu has on their decision. We use the PMIX to extract the total number of sales, over a three-month period, for every item on the menu. The theoretic food cost is “theoretic” because actual food costs can vary over time. And when we look at food costs, what we’re most interested in is the plate contribution, or the total amount of profit the restaurant can generate.
Iggy’s Restaurant Menu Makeover Menu Matrix
We use all this information to create a menu matrix … which will provide solid, objective justification for all our recommendations. A menu matrix is essentially a scatter graph measuring the difference between each item on a menu. On the matrix, we break everything down into one of four categories – stars, puzzles, plow horses, and dogs. Stars are popular menu items with above-average profits. Puzzles are products that offer higher than average profit but lower-than-average movement. Plow horses are high-sales items but with lower-than-average profitability. This is where most restaurants make their living. And dogs are both low-profit and low-sales items.
When we get all of this down, it shows me what happened in the past in the restaurant. What I am looking for is what we can change in the future to get more customers to buy those items that will allow you to take more money to the bank. How can we get someone to buy more steaks? Or even easier, how can we get someone to buy more items that just bring in an extra 50 cents or a dollar? If you can do that a few thousand times in the next month or two, you’re going to make a whole lot more money.
Because the fact is, the restaurant business is primarily a pennies business. It comes down to 25 cents here, 50 cents there. A dollar someplace else. It’s not a place where you’re going to get a really huge ticket that’s going to pay for all the problems you’ve got in your restaurant. Instead, you’ve got to tweak it a little bit. See if you can get someone to buy an extra appetizer or an extra dessert or a fruity drink.
There are many ways to achieve this goal. Two proven solutions are strategic pricing and a well-defined layout. Here are a couple examples of how we applied these tactics to Iggy’s.
Iggy’s original menu was set up like a price list. The item names on the left were followed by dots ending in the prices, all lined up on the right. The prices were further emphasized with bold type that was even larger than the item name.
This format was killing any opportunity to upsell. Because the first thing consumers do is scan all the prices. They’re going see the top number, say 27 bucks, and the bottom number at about $9. And they’ll settle about two-thirds of the way down and say, “Alright, I want to be around $19 bucks. Whadaya got?” And then they’ll see something for $17 and say, “Oooh, what’s this?” And they’ll start to buy on price. So it’s almost impossible to upsell more of the larger dinners with that design because consumers think they’re getting a better deal at that $17 range.
The “price list” format is more of a layout issue, but Iggy’s prices themselves needed adjusting. Some were too low and some too high. And some just plain didn’t make sense. For instance, why was it so much cheaper to order the grilled mahi and add the Shack Sauce than it was to order the Mahi with Shack Sauce dinner? Same thing with the fried flounder vs. the Flounder with Shack Sauce dinner. Iggy’s didn’t even know why they were doing it!
Boom Boom Shrimp
Moving on to Iggy’s appetizer section, most of the items were priced a little too high. Appetizers are incremental sales. They don’t need to sell that often, but when they do, they are added on to the ticket. They’re extra money you can take to the bank. So we took the prices of some of them down slightly.
On the other hand, the Boom Boom Shrimp was priced too low. It was a star in the matrix, selling three times more than the next highest item. It was such a steal that people were adding a side of fries to it and making it their dinner. It was a real trade-down position for the restaurant. You want people to buy an entrée for dinner. Entrées need to do the heavy financial lifting … paying the rent and utilities.
Furthermore, appetizers are not supposed to fill you up. They are to let customers sample different flavors. So we took up the price of the Boom Boom Shrimp, reduced the portion size and also created a Boom Boom Dinner entrée to help up-sell this popular item.
The Iggy Burger was so wildly popular, I could tell right away that it wasn’t just selling for lunch. We want to encourage customers to eat big meals at night. So we raised the price and buried it on the dinner menu.
In Iggy’s platters and pots section, the Lobster Pot was the same price as the Crab and Shrimp Pots. Everyone knows lobster should cost more. Iggy’s pricing was saying, “Hey, buy the pot that’s worth the most because these guys don’t have any understanding of value.” So we recommended a price increase. Iggy’s was very reluctant to do that. I countered with, “Why you wouldn’t want to take what they’re offering you? It’s like your consumers are saying, ‘Here’s an extra five bucks’ and you’re saying, ‘No, I don’t want it.’ And they’re doing it a thousand times a week. You’re walking away from five grand a week. Let’s try a thousand times 52. If you don’t want the 260 grand, I’ll take it!” They took the price up.
The restaurant business is about getting butts in chairs, but once you get them there, you’ve got to cover the rent. So the more you can sell them while they’re there, the better off you’re going to be. A well-defined menu layout will help you do that.
Your menu is your catalog. All your parts are in there, and it has a huge impact on what your customers purchase, how often they purchase and what you upsell. Iggy’s had a big complex menu with a confusing layout. The photos were not well-placed and the menu items needed better descriptions.
Divide and Conquer
One of the first things we needed to do was create well-defined categories. We like to keep each category to around seven items. That’s kind of a magic number. Customers respond better to seven than six or eight. Sometimes a restaurant operator will say to me, “Yeah, but I’ve got 15 appetizers and they’re all really good.” To which I’ll say, “Great! Let’s break them into two categories.”
That’s what we did in the case of Iggy’s. They had “Snacks, Sides & Appetizers” clumped into one really huge category. We made each one a separate category. The menu had shrimp all over the place. We put all the shrimp into one neat category. We also made a separate category for the steak.
Consumers Eat First with Their Eyes
It’s really important in the restaurant business to make sure you are using photos that help sell your food. An item with a bad photo sells less than an item with no photo at all. And for heaven’s sake, make sure the photo is positioned next to the description. Iggy’s had a picture of a burger next to the ribeye steak!
If you put the components of a menu in the right position and call attention to them with different colors and graphic treatments, you can actually slow down your customers’ eye movement. On the Iggy’s menu we made generous use of highlighting, where we put the items we wanted to sell the most in boxes with lighter shades that popped out against the dark background. We added big arrows to literally point out what Iggy’s is famous for … this is what they do best. When we take advantage of these design elements, we know consumers are drawn to those items. They hover there. And they tend to buy those items more often.
When guests come into your restaurant, they want to know what you think is good. Highlighting tells them. I don’t know of any other business where consumers give up that much power to the seller.
Helping Iggy’s Grow Their Business
Pricing and layout were just the beginning of our work with Iggy’s. As we made recommendations to Ron and his chef, John Long, I enjoyed seeing them get involved and excited. They’d pick up on some of the ideas and start modifying them to make them their own and fit the personality of Iggy’s Seafood Shack. As a result, we came up with expanded applications of some of their most popular flavors, compelling new names and descriptions, plus some tempting new offerings … all of which are a story for another day.
Mark and Kelly Laux have been working in the food industry since the mid-1980s, developing award-winning, profit-generating marketing and advertising programs promoting national brands to foodservice companies and restaurant operators all over the country.
Call 800-316-3198 to reach Mark and Kelly.
For a custom Restaurant Menu Makeover, contact HotOperator here.