High-margin menu items should be one of the biggest contributors to a restaurant's profitability. But what happens when customers rarely order these dishes? Meanwhile, the most popular items do not necessarily generate profits that match their sales volume.
This situation presents a challenge for restaurant owners. Relying solely on intuition to decide which menu items to promote can lead to marketing expenses without optimal results. Offering discounts repeatedly may also reduce profit margins without actually increasing customer interest.
To address this challenge, restaurants need to understand why certain menu items underperform and evaluate customer behavior through sales data. This allows them to develop promotional strategies that align with each item's characteristics and customer preferences. So, how can you increase sales of high-margin menu items with low sales without sacrificing profitability? Let's explore the strategies.
What Is Menu Profit Margin in a Restaurant?
Menu profit margin refers to the percentage of profit a restaurant earns from selling a particular dish after deducting the costs associated with producing it. In restaurant management, this metric helps business owners understand how much profit each menu item generates relative to its selling price.
One important component to consider is the food cost percentage, which measures ingredient costs as a percentage of a menu item's selling price. A lower food cost percentage generally leaves more room for gross profit, although other operating expenses must still be accounted for separately.
However, profit margin should not be the only factor restaurants consider when deciding which menu items to prioritize. They also need to evaluate menu popularity based on the number of units sold. A high-margin item that customers rarely order may contribute less to overall profit than a lower-margin item with consistently high sales volume.
Therefore, menu analysis should consider two key factors: popularity and profit contribution. Evaluating both helps restaurants determine which items to maintain, improve, or support with additional marketing strategies.
Why Do High-Margin Menu Items Have Low Sales?
High-margin menu items do not always become customers' first choices. Several factors can explain why these dishes receive fewer orders, ranging from price perception to the overall customer experience when choosing food.
- Prices Do Not Match Perceived Value
Customers may consider a menu item too expensive if its portion size, quality, or benefits do not seem worth the price. Even when production costs are relatively low, pricing that does not meet customer expectations can discourage purchases.
- Unappealing Menu Descriptions and Visuals
Unfamiliar dish names, descriptions that fail to communicate product highlights, or unappetizing photos can make customers overlook certain items.
- Poor Menu Placement
Items positioned near the bottom of a menu or outside prominent ordering areas may receive less attention from customers.
- Misalignment with Customer Preferences
Ingredients, flavors, portion sizes, or dish categories may not match the preferences and eating habits of the restaurant's target customers.
- Competition from Popular Menu Items
Customers tend to choose dishes they already know or frequently see recommended. As a result, other items with higher profit margins may struggle to attract attention and encourage trial purchases.
Understanding these factors is essential before deciding on a promotional strategy. Offering discounts on items that customers overlook because of poor descriptions or placement may not solve the underlying problem.
How to Identify Why Certain Menu Items Receive Fewer Orders
Source: magnific.com
Before launching a promotion, restaurants need to understand the reasons behind low sales. This analysis helps owners determine whether the problem lies in the product itself, pricing, presentation, or marketing strategy.
Here are several steps restaurants can take:
1. Compare the Popularity and Profit Margins of Each Menu Item
Group menu items based on their sales volume and profit margins. This helps identify items with high margins but low popularity. Comparing these metrics also makes it easier to determine which products deserve greater attention.
2. Review Sales Data Across Different Periods
Do not rely solely on monthly sales totals. Evaluate menu performance by day, operating hours, and specific periods. For example, heavier meals may sell better during lunchtime, while certain beverages may be more popular in the afternoon.
3. Evaluate Selling Prices and Production Costs
Review selling prices, ingredient costs, portion sizes, and recipe consistency. Make sure the reported profit margins accurately reflect the actual costs involved. Changes in ingredient prices or portion sizes can significantly affect these calculations.
4. Observe Customer Behavior and Preferences
Pay attention to menu items that customers frequently view or add to their carts but do not purchase, if this data is available. You can also collect customer feedback through reviews, short surveys, or direct interactions with service staff.
5. Evaluate Previous Promotional Performance
Check whether the menu item has been promoted before and how customers responded. If sales did not improve despite offering discounts, other factors may need attention, such as product quality, menu placement, or alignment with customer preferences.
The findings should be documented to provide a clear basis for future decisions. This way, restaurants can move beyond assumptions and short-term trends when developing their sales strategies.
Read also: Food Pricing Strategy for Restaurant Businesses
How to Increase Customer Interest in These Menu Items
Once the underlying problems have been identified, restaurants can choose strategies that match each item's characteristics and customer behavior. The goal is not simply to increase order volume but to generate more sales without excessively reducing profit margins.
1. Improve Menu Descriptions and Visual Presentation
Use clear menu names, descriptions that highlight ingredients or product benefits, and appealing photos that accurately represent each dish. Avoid overly long descriptions. Focus on information that helps customers understand why an item is worth trying.
2. Optimize Menu Placement
Position the items you want to promote in highly visible areas, whether on printed menus, digital menus, or ordering screens. You can also use special labels to highlight recommended dishes or signature items. However, make sure these placements remain relevant to customers' needs.
3. Implement Bundling and Upselling Strategies
Pair high-margin menu items with popular dishes that complement each other in terms of flavor or portion size. For example, restaurants can offer a high-margin beverage as an add-on to a customer's favorite meal.
Upselling can also involve recommending additional items based on a customer's current order. Relevant recommendations are more likely to encourage purchases than random offers that do not match customer preferences.
4. Tailor Promotions to Different Customer Segments
Not all customers share the same preferences. Restaurants can use transaction history to identify customer groups that may be interested in specific menu items.
For example, customers who frequently order spicy dishes may receive recommendations for new items with similar flavor profiles. This approach makes promotions more relevant without requiring restaurants to offer discounts to every customer.
5. Test Promotional Strategies and Measure the Results
Try different approaches over a limited period, such as staff recommendations, featured menu placements, bundled offers, or promotions during specific operating hours. Compare the results to identify which strategy performs best.
Avoid changing too many variables at once. If prices, photos, menu placement, and discounts are adjusted simultaneously, restaurants may struggle to determine which factor actually drives sales growth.
How to Measure the Results of Menu Promotions
Once a promotion is underway, restaurants need to evaluate its performance. An increase in order volume is an important indicator, but it is not enough to determine whether the strategy generates better profits.
Here are several metrics worth monitoring:
- Menu Sales Volume: Compare the number of portions sold before and after the promotion to identify changes in customer demand.
- Profit Margin per Menu Item: Make sure increased sales are not accompanied by excessive margin reductions caused by discounts or promotional expenses.
- Total Profit Contribution: Calculate the gross profit generated from all portions sold to understand the menu item's contribution to restaurant profitability.
- Attach Rate: Measure how often the promoted item is purchased alongside other products, particularly when using bundling or upselling strategies.
- Promotional Costs: Compare the expenses incurred with the additional profit generated to determine whether the campaign is financially effective.
For example, a restaurant runs a bundling promotion for two weeks. Before the promotion, the menu item sells 40 portions with a gross profit of IDR 25,000 per portion. After the promotion, sales increase to 70 portions, but gross profit per portion decreases to IDR 20,000.
As a result, the total gross profit contribution increases from IDR 1,000,000 to IDR 1,400,000. However, the restaurant still needs to account for promotional expenses and additional operating costs before concluding that the strategy is profitable.
Evaluations should compare equivalent periods and consider other factors, such as changes in customer traffic, seasonal demand, and operating days. This approach helps restaurants determine whether sales growth is genuinely associated with the promotional strategy being implemented.
Read also: Upselling: Definition, Examples, and How to Improve It in the Culinary Business
FAQ About Strategies to Increase Sales of High-Margin Menu Items
1. What Are High-Margin Menu Items?
High-margin menu items are dishes that generate a relatively high profit percentage relative to their selling prices after accounting for relevant production costs. These items have the potential to make a greater contribution to restaurant profitability.
2. Should Restaurants Always Promote High-Margin Menu Items?
Not necessarily. Restaurants should consider each item's popularity, customer demand, and profit contribution. Promotional efforts should prioritize items with sales potential that have not yet received sufficient customer attention.
3. Are Discounts Effective for Increasing Sales of Underperforming Menu Items?
Discounts can encourage purchases, but they are not always the best solution. Restaurants need to consider the resulting profit margins and identify the reasons behind low demand before launching a discount campaign.
4. How Often Should Restaurants Evaluate Menu Performance?
Restaurants can conduct weekly evaluations to monitor sales changes and monthly reviews to identify broader trends. The frequency can be adjusted based on transaction volume and operational requirements.
5. How Can AI Technology Help Increase Restaurant Menu Sales?
AI technology can help analyze transaction patterns, forecast sales, identify customer purchasing habits, and provide promotional recommendations. These insights can support restaurant decision-making, but they do not guarantee that a particular menu item will automatically become popular.
Conclusion
Increasing sales of high-margin menu items that customers rarely order requires more than offering discounts or changing menu presentation. Restaurants need to understand the reasons behind low demand, analyze customer behavior, choose relevant promotional strategies, and measure profit contributions after each campaign.
To support more data-driven decisions, restaurants can consider OLIN by ESB, an AI-powered solution for F&B business analysis. OLIN offers sales forecasting, upselling recommendations based on menu performance and customer purchasing habits, alerts for unusual transaction activity, business performance monitoring, and promotional recommendations. These insights can help restaurants evaluate menu performance and make decisions based on data rather than intuition.
Contact the ESB team to explore OLIN by ESB and how data-driven insights can support restaurant profitability.
