Last Updated on March 16, 2020
Once a fairly humble piece of paper, the menu has evolved to become one of the most complex components of one of the most complex businesses in the world. Restaurant menus are a convergence of nearly every other facet of the business: marketing, supply chain, interaction, design, fulfillment production, copywriting, merchandising, etc. When combined effectively, they form the single most important piece of marketing collateral a restaurant can have. But as menus have changed over the years, so has their design — and menu merchandising is now a bigger challenge (and greater opportunity) than ever before. When it comes to technology’s impact on modern-day menu design and menu merchandising, we’re seeing something that’s absolutely brand new; something that will disrupt the industry in ways we couldn’t have imagined ten years ago. Fortunes will be made and lost over the next few years based on how well companies understand — and ultimately utilize — these technologies. It sounds like a tall order, to be sure
The Evolution of Menu Merchandising
Tens of millions of dollars have been poured in to understand menu psychology, merchandising, and engineering over the years. Yet some of those principals are as old as evolution itself: having things stand out in evolutionary (it’s the reason our instincts kick in when we see a lion hiding in a bush, for instance. We’re trained to notice if something is different than its surroundings.) These techniques have lately begun to evolve even further and faster. While some techniques remain tried and true, there are new pieces to the puzzle: interface design in kiosks and apps, for instance, the design of a mobile menu, etc. The $4 trillion global restaurant industry is one of many struggling with the fact that the consumer is moving faster than most restaurant chains can even comprehend. Many are left in a state of flux, while other chains are seeing tremendous growth thanks to emerging technologies — and reaping the rewards in terms of both higher stock prices and customer happiness.
How New Ways of Dining Are Impacting Menu Merchandising
New restaurant technologies (digital menus, mobile app ordering, kiosks, interface design) are beneficial for many reasons. For one thing, merchandising is already built into many mobile order technologies. It’s not always possible to track whether servers are up-selling to each customer, for instance. Not only is this good for guests (in terms of the convenience of seeing popular items called out on a menu), but it’s good for operations, leading to faster purchasing and ordering decisions and higher order accuracy. Technology certainly has its benefits — but it comes with a unique set of challenges, too. For operators, technology greatly enhances the capabilities of menu merchandising, into the realm of things like neuro-marketing, for instance. Neuro-marketing (which uses medical technologies such as functional Magnetic Resonance Imaging (fMRI) to study the brain’s responses to marketing stimuli) isn’t even on the horizon for many chains. Other restaurant companies, meanwhile (Starbucks, Domino’s, Pizza Hut, etc.) are actively investing in technology like machine learning, AI, advanced algorithms for menus and self-ordering.
Why Proper Menu Merchandising is Critical
Sixty-five percent of every dollar a restaurant brings in, goes back out in food and labor costs. Such slim margins make it even more important to ensure there’s not too much waste (and therefore describe menu items in a way that’s compelling and unique). Restaurants that aren’t managing that well will likely see guest experience suffer as a result. If a pizza restaurant is consistently out of pepperoni, for instance, it’s probably a sure bet that their traffic will begin to decline. Psychology and biology both play a role. If a menu is merchandised such that the most profitable items are placed in the areas where people look the most, that can give a restaurant a tremendous advantage. Those techniques have been applied to menus for decades, of course, though the evolution is astounding: sure, more chains are turning to nested pricing (which allows guests to focus on the headline and item description rather than its price), but they’re also utilizig 3D techniques and animation on digital menus. The latest techniques can sequence how guests consume information, walking them through a menu in a logical way that makes the ordering process feel much easier and more intuitive. There can be too much of a good thing, though. Over-do it, and a restaurant can create a conflict for the guest: a paradox of choice. If too many items look too good, a guest often feels as if they’ve missed out on something good. Lately, some chains have caught on to the paradox of choice. Some casual dining chains, which historically lacked the displicine to remove older items after unveiling newer ones, have lately been revealing re-vamped, slimmed-down menus.
The Menu Merchandising Mix
The best menu merchandising is a blend — an analysis of what’s profitable, as well as a knowledge of engineering side, and merchandising techniques. Because so much is involved, it’s not as easy as simply uploading a menu to a website. Today, it’s about optimizing a menu for mobile, for web speeds, etc. Those who get it right carve out a tremendous advantage for themselves in the process. On average, our clients have witnessed $12,000 in net profit increase per million dollars in revenue just by re-arranging the items on their menus. By analyzing what items are selling, what’s not selling — and applying proper engineering techniques (the structure of the document) and merchandising techniques (the design of the document) — can dramatically impact what guests buy and how they interact with a menu.
About Aaron Allen & Associates
Aaron Allen & Associates is a leading global restaurant industry consultancy specializing in growth strategy, marketing, branding, and commercial due diligence for emerging restaurant chains and prestigious private equity firms. We work alongside senior executives of some of the world’s most successful foodservice and hospitality companies to visualize, plan and implement innovative ideas for leapfrogging the competition. Collectively, our clients post more than $200 billion, span all 6 inhabited continents and 100+ countries, with locations totaling tens of thousands.