Significance Of Menu Analytics In Restaurant Industry

What is Menu analytics?

One of the first and foremost contributors to the overall experience for a customer who walks into a restaurant is the menu design. The menu design is not just limited to the fonts, images, and colors used – It encompasses all other aspects including the range of items offered, the pricing, discount offers and much more.

‘Menu Engineering’ – a more apt term compared to ‘menu design’ – can deliver mind-boggling returns in short periods of time as has been experienced across the quick service restaurant (QSR)industry in recent times.

And it is best executed with the help of state of the art QSR analytics tools that are capable of drawing insights from the large amounts of data that any QSR outlet produces on a daily basis – including order data, inventory data, and customer data.

For many modern QSRs, menus are implemented with digital displays and are highly dynamic in nature making them even more fertile grounds for menu analytics.

Why Menu analytics?

QSR analytics can provide actionable business insights that can have a direct impact not only on the revenues and margins but also on other aspects such staff deployment and customer satisfaction. Some of the critical business questions, it can help you answer are as follows,

  • Is the menu too broad or too narrow in terms of the range of offerings?

It is often tempting to include offerings that are doing well for competitors or that offer choice for a variety of customer segments. However, this can significantly dent profitability if these offerings are not in line with your target customer’s tastes or staff’s skills.

On the other hand, focusing only on a narrow range of specialties can result in lost sales over time. It is important to monitor product wise order quantities and revenues to understand the demand for specific products and optimize the menu wherever necessary.

  • Are there specific menu items that are impacting margins or overburdening the staff?

Smart restaurateurs also monitor the cost per product and the resultant margins. Cost calculations in the QSR industry can be a bit tricky because products enter the kitchen in one form, and leave the kitchen in another form. Also, the staff costs need to be integrated into the overall margin calculations.

QSR analytics can help you identify low margin items with a high order to delivery time. You can then filter the low demand ones from the list and optimize the menu accordingly.

  • Is there a need to alter prices or run discounts for specific menu items?

QSR analytics can help you conduct comprehensive price sensitivity analysis and predict the impact of price changes and discounts on the revenues and margins.

It also enables you to predict and track the actual impact of markdown offers and ensure that the promotions have the intended impact.

By studying customer behavior along with the menu performance, designing personalized offers as per the preferences and spending behavior of individual customer segments is also possible.

  • Which add-ons drive maximum revenue?

Intelligently designed menu pairings and add-ons can be incorporated by studying the menu items that are frequently ordered together. Such cross-sell and upsell initiatives not only drive revenues but also lead to higher customer satisfaction rates.

  • Can simple changes in menu layouts and display drive revenues?

The impact of layout, placements, fonts and colors on the ordering behavior is often underestimated. With menu analytics, it is possible to A/B test different menu layouts and placements with separate customer clusters having similar characteristics.

This is even simpler with digital menus and can show an immediate impact on the ordering patterns in real-time.

How to start with Menu analytics?

Isolated analysis of order data can throw up many important insights about the menu design but may not be always enough. A holistic approach is essential which encompasses analysis of inventory movements, customer behavior, and product data.

Menu analytics is just one of a wide variety of capabilities offered by QSR analytics tools. Implementing the right QSR analytics tools in an effective manner requires cross-functional expertise in statistical techniques as well as QSR industry practices. This is where our specialized data scientist resources can help most.

If you are planning to start your analytics journey, it is essential you do so with the right technology partner. Do get in touch with COMTEC to know more.

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