Menu Analysis as an Effective Marketing Tool for Increasing the Restaurant Establishments’ Profitability

Abstract

The realities of today and the increasing turbulence of the external environment force economic entities to respond quickly to market pulsations. Accordingly, marketing is an effective tool for the growth of the restaurant business and determines the philosophy of its management, and timely marketing analysis of the menu ensures strengthening of positions in the market and victory in the competition. The purpose of the study is to further develop the methodological provisions for the restaurants’ menu analysis in order to increase the profitability level of such establishments. The article substantiates the relevance of using ABC analysis of the menu as one of the most effective marketing tools in the restaurant business, the results of which change prices, exclude items that are not sold from the menu, or vice versa, new products are introduced, the implementation of dishes that are most profitable for the restaurant is activated. Taking into account the specifics of restaurant facilities, it is proposed to carry out a classic ABC analysis not by one, but by three effective indicators: volume of sales, revenue, and gross profit, which allows for a multidimensional analysis of the menu by determining for each dish a combination of three letters denoting the selected parameters (AAA, ABA, ABC, BBC, SSS, etc.). Recommendations for 27 possible combinations of selected parameters have been formed and directions for increasing sales volumes, increasing prices and reducing the cost of dishes are outlined. So, ABC analysis allows identifying «leader dishes» and «outsider dishes» in the menu, as well as to make a decision about the assortment of dishes on the menu: identify dishes that need to be more actively promoted; identify dishes that need to be worked on in terms of cost reduction; adjust pricing in the menu in the direction of decreasing or increasing the selling price; justify the expediency of spending on certain types of raw materials, in particular, on those positions with low sales volumes; identify dishes that overlap in the composition of ingredients; identify menu groups that need to be expanded, as well as positions that can be safely replaced with new ones or simply removed from the menu.

Keywords

• menu analysis
• restaurant facilities
• abc analysis
• volume of sales
• revenue
• gross profit
• sales promotion
• cost