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Wednesday, September 19, 2007

Hidden Profit Potential

One sure way to a lower food cost percentage is a strategic menu price hike. If you need to disguise this activity, find all the top sellers (by count) hidden in your product mix. Look for soft drinks, coffee and tea, side salads, add-ons, substitutes and extras. Check the all modifiers with high counts and little or zero sales.

Too often, operators give away the extra slice of cheese, two strips of bacon, sauteed mushrooms, lettuce leaves and tomato slices. You'll often see a burger menu category with these add-ons listed after the choices. A common charge is 25 or 50 cents. The two strips of bacon can easily cost 25 cents. These low profit items will hurt your food cost percentage.

Take a second look at your burger category. I see many menus with a basic burger for $8.95 and 5 to 6 options priced $1 higher. Sometimes, the menu will list a bleu cheese burger for an extra dollar. There are plenty of excellent quality bleu cheese options in the market. If your spending $5 a pound for the cheese and your portion size is 3 ounces, your add-on cost percentage is 94%. Charge an extra $1 and reduce the portion to 2.5 ounces and the same bleu cheese will run 39%.

Soft drinks, coffee and tea are high volume choices. An extra quarter or half dollar a drink will produce major revenue increases. Often, the menu does not have to be changed at all to increase the prices on these beverage items. Soft drinks can be priced to hit a 15% cost of sales (or lower).

Finally, I see many excellent side salads offered for a modest charge with a sandwich or burger. Often, the price is $1.95 or $2.95 (sometimes 99 cents!). If you charge $1.95 for a 6 ounce salad with dressing, your cost of sales could be over 50%. Cost out your salad mix and add the cost of your most popular dressing and garnish.

Would you offer a customer this choice as a substitute for fries? Some menus offer this substitute.

On the other hand, I once saw a menu with chips, potato salad or cole slaw included with the sandwiches and burgers. The waitress asked: "Fries?" and I said yes. My check had a $1.95 charge labelled Substitute Fries for Slaw. The fries were excellent and over 50% of the customers had taken the bait.

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