One thing that sets a restaurant apart from all others is its unique combination of menu items. Finding the perfect blend of products can be the difference between a restaurant’s success and its demise. Of course, you need to find a harmonious balance between serving the food your customers will love and serving the bottom line that will keep your business thriving.
One way to do that is by using a restaurant product mix (PMIX) analysis. This tool is intended to give managers a comprehensive view into the effectiveness of their spending on food. The results can help:
- Uncover what dishes are true customer favorites.
- Pinpoint sources of product waste.
- Understand the profit margins for specific menu items.
- Determine how specific products impact the restaurant’s image.
PMIX analysis is a valuable tool used by many successful restaurants. Here’s what you need to know about the value it can offer your business.
The Four P’s of a Restaurant Product Mix Analysis
A product mix analysis is a data-driven reporting process that looks at your products across multiple dimensions to help you understand how they’re performing. Often, a restaurant’s product mix is divided into the four P’s:
- Product is more than simply the food the restaurant offers. It includes all the goods and services that accompany the restaurant’s meals, such as their appearance, how they are served, dining room staff, parking, lighting, music, decor, restrooms, and even hours of operation. The goal is to make the restaurant’s offerings unique, attractive, and welcoming so diners are ensured a positive experience.
- Place refers to where the food is served. This could refer to meals served in a dining room or a multitude of other options, such as pick-up/delivery, cart or kiosk, food trucks, or even catering services. With regard to place, the important consideration is to make it easy for customers to order, to ensure accurate ordering, and to strive for expediency.
- Price begins with determining how much to charge for products, but it also entails whether to vary them based on specific circumstances, such as happy hours, early-bird specials, or daily specials. Additionally, discounts can be used to spur business during normally slow times.
- Promotion includes both advertising and sales. The two types of promotions are “push” incentives, such as free samples or price reductions that entice customers to visit more often or increase order sizes, and “pull” ads that inform customers about various offerings and encourage them to request specific products. It is important to match the type of ad to the goal of the promotion. For example, coupons distributed to office buildings should focus on lunch specials rather than dinner specials.
When to Conduct a Restaurant Product Mix Analysis
The more frequently a restaurant performs a product mix analysis, the more value managers can extract from the resulting reports. However, it can be counterproductive to conduct extensive product analysis every day, so you will need to determine which interval is right for your restaurant. Here are some considerations when doing daily, weekly, and monthly product mix analyses:
- Daily: Food waste is a primary source of lost revenue for restaurants. One way to reduce food waste is by measuring the difference between each day’s actual prep usage and theoretical prep usage. For example, if records show that the restaurant sold 12 salads the day before, the prep should require only the amount of lettuce and other ingredients necessary to serve 12 salads. Any variance from that amount may indicate sources of waste that can be individually assessed.
- Weekly: Activities that are not performed daily, such as ordering or shelf life analyses, are targeted in weekly product mix reports. For example, if the weekly sales reports show the restaurant sold 150 orders of ahi tuna and each order includes eight ounces of tuna, the weekly order should be about 75 pounds. The key here is to use the weekly PMIX analysis results to prep only as much food as will be consumed within the shelf life of that item.
- Monthly: The focus of monthly product mix analysis is to examine the sales performance of each item on the restaurant’s menu. Two ways to categorize menu item performance are by popularity and profitability. Menu items will then fall into one of four categories:
- Stars are both highly popular and highly profitable. These items should be promoted.
- Plow horses are highly popular but less profitable. These items may need to be reformulated to improve profit margins.
- Puzzles are less popular but highly profitable. These products need better promotion, better placement on the menu, or highlighting in some other way.
- Dogs are less popular and less profitable. They need to be replaced with new items the next time the restaurant changes its menu.
How Can Your POS System Help You?
If you are wondering how to implement data-driven reporting to help your restaurant gain valuable insight into its operations, a modern point of sale (POS) system could be the answer. Product mix analysis plays an important role in helping restaurants understand how efficiently they are working with their products. This data could help point out significant sources of waste, underperforming menu items, or give insights on when to add new menu items instead of promoting existing ones. Regardless of what type of restaurant you run, leveraging the help of reporting software can help you better serve the needs of your customers, minimize waste, and even out-perform competitors.
Enlisting the help of an expert is crucial for determining if your restaurant is ready to move into the emerging technologies driving today’s POS platform innovations. When you are ready, talech will examine your operations from top to bottom, developing a solution that blends emerging technologies with your business needs and goals. Reach out to us today to sign up for a demo and to learn more about how talech can be your valued POS partner.