GRIP! Get a

On Low Margin Menu Options

By Mike Fernandez

Adecade ago, profit margins for most food operations averaged a healthy 15-20%. Today, that number is as low as 4-7%. Are you tired of seeing your profits slip through your fingers?

As much as we love our greasy burgers and fries, some menu items aren’t cutting it when it comes to profitability.

Operators fear not! With a bit of menu engineering, less labor-intensive options, and streamlined prep, you can turn those low-margin food items into high-scoring hits or just toss the ones that don’t work! We’ll explore some top tips and tricks for flipping margins, boosting revenue, and keeping your customers coming back for more. There’s no one-size-fits-all plan for increasing your margins. Some foods can be important for attracting customers and creating a well-rounded menu. The goal is to find the right balance between profitability and customer satisfaction.

Loss Leaders

What’s a loss leader? It’s a product sold at low cost, or even at a loss, to attract customers and increase revenue. It might be a menu item priced below cost to get customers in the door and encourage them to purchase higher-margin items.

A center could offer discounted appetizers or drinks to entice customers to order more profitable items like pizzas or burgers. While it may seem counterintuitive to sell items at a loss, that increase in customer traffic and overall sales can lead to a substantial boost in revenue.

The most iconic example is Costco’s hot dogs and rotisserie chickens. They’re $1.75 and $5.00, respectively, regardless of inflation, war, or pandemic. Maybe they turned a profit in the ‘90s, but it keeps the people comin’!

If your mom’s homestyle baked ziti recipe is a little extra labor but beloved by guests, forget the margins and avoid a riot at the lanes.

LABOR-INTENSIVE FOODS

Running any food operation is a challenging feat, especially when it comes to preparing labor-intensive menu items. While tasty treats like hand-tossed pizzas, made-from-scratch burgers, and hand-breaded chicken tenders may be customer favorites, they can also be some of the most time-consuming and labor-intensive items to prepare. With a bit of planning and strategy, you can streamline your kitchen operations and keep those customers coming back for more.

For starters, consider prepping ingredients ahead of time and investing in time-saving equipment like food processors and high-powered blenders. Nobody will be ordering food that requires less labor if you don’t offer it! Here are a few lower-labor items to consider: Pre-packaged snacks like chips, pretzels, and candy can be added to your menu with little effort; frozen appetizers, such as mozzarella sticks and onion rings, can be quickly cooked and served with minimal prep work. Simple sandwiches like deli meats or PB&J can be assembled without much cooking time while offering a self-serve salad bar can provide a healthy and customizable option for customers.

Terrible Idea

Messy and saucy foods. Want to do BBQ? Offering black gloves with meaty plates makes both a guest photo shoot and clean hands. Ultimately there’s no escape from the mess.

THE CUP’S HALF-FULL

Which beverages provide the highest margins?

By including these lowlabor items in your menu, you can save time and energy in the kitchen without sacrificing the quality of your menu.

Short Shelf Life

Some popular menu items may have a short shelf life or result in more food waste than others. For example, fresh salads, sandwiches with perishable toppings, and delicate pastries may have a shorter shelf life and require more frequent preparation, leading to increased waste. Even fried items like chicken tenders or mozzarella sticks may have a shorter window of optimal freshness and texture, leading to more waste if sold slowly. Review your inventory to reduce waste and increase your bottom line.

Foods with strong odors aren’t boosting anyone’s revenue - and heating up tilapia all day isn’t bringing any new customers.

Foods with potential allergy risks will nearly

Fountain drinks are the highest profit. The markup on a soft drink from McDonald’s is about 90%. Not only do they have high-profit margins, but they also require very little additional labor. Unlike other beverages that may require individual preparation, fountain drinks can be easily dispensed with the push of a button by guests or staff.

The highest profit margin beverage after that will be coffee, at 80% or higher margins for each cup made! Not to mention that brewing some up is marketing, as very persuasive coffee aromas carry down the concourse, lane by lane, guest by guest.

Some bars may focus on high-margin cocktails to increase profitability, while others may offer various cocktail options to cater to different preferences and price points.

Mike Fernandez is a freelance contributor on all things regarding food, booze, and fun. Growing up in his family’s restaurant business fueled his passion for good eats and tasty treats. By day Mike works in business development for IBI scours south Florida for the latest trends in food, drinks, and recreation.

Sales funnels focus on making phones ring, and of course, ringing phones have been the lifeblood of business for years, but as times change, it’s time to rethink the central role of phone numbers in your sales funnel.

Why? Because people shop and buy differently now. More than ever, seconds count, and people use phones to make fewer calls. Because a ‘yes’ is yet to be money in your account, the tools and choices you offer prospects at the moment after a ‘yes’ determine if sales are won or lost. Winning the ‘yes’ is just the first step. This is why Amazon, Walmart, and other savvy companies invest heavily in instant gratification tools; they know the order is won or lost online, and winning this moment is the priority today.

Immediately after the consumer says yes, their thinking instantly changes from who, what, and where to ‘How can I get this?’ That is where the danger lies, and the opportunity.

The danger is the time gap from thinking yes once a consumer gets what they want. This gap is the central issue. The process from wanting to getting is the most crucial step in your sales process. In the old days — just a few years ago — people would call, agree to be put on hold, leave voice messages, and sometimes even drive over to leave a check. The pandemic changed all that. Patience is out the window, and your customers live and breathe online expecting instant gratification. If they can’t get it from you, that’s the danger.

What to do? Here’s the plan and the opportunity: replace phone numbers with customer self-service options in your sales funnel. Reduce the need for phone calls and instead channel online traffic to real-time self-service options. Let them book, shop, pay, and inquire on their own schedule whenever they want. This is the smart strategy in 2023. We used to call this striking while the iron was hot. Now we call it using new technology to improve your competitive advantage.

Bowling centers focusing on parties and entertainment are ideal for customer self-service options. Many already encourage guests to book their parties, bowling packages, open play time, and lessons online. However, most bowling centers offer no online conveniences, which opens the door for other entertainment options that feature better and faster conversion tools.

The customer self-service approach is suitable for your staffing issues, too. When guests do things for themselves, fewer routine tasks end up on someone’s desk for followup. Customers do it all by themselves! Bookings are made, payments processed, and receipts and staff notices sent, all automatically. It’s the new way business is done.•