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With rising labor and ingredient costs, what’s a restaurant owner to do? One solution: rethinking menus. Some owners are stocking up on seasonal ingredients and sourcing from local suppliers to curb spend on shipping. Others are raising prices. But no matter how significant the change, updating your menu can spark a reaction from your customers, good or bad.
To make sure your menu stays right on the mark, tap into your restaurant data. The easiest way is to use your restaurant technology, which tracks almost every area of your business, including your transactions, customers, loyalty programs, and marketing campaigns, across locations. Accessing this information can help you identify your most popular items, average spend per customer, peak dining times, and more, all of which come in handy for making the right improvements.
Over one-third of restaurant owners surveyed in the 2024 Square Future of Restaurants report plan to stay competitive by using data insights to better understand what their customers want.
So does your menu need tweaking? Then the data-driven approaches below can help you perfect it.
Weigh your menu sales data against your costs.
Don’t ignore your sales data. It’s the first place you should look to unlock key information to improve your menu’s appeal and profitability. Start by identifying your top-selling menu items over a significant period, say a month or a quarter. Square for Restaurants POS users can access this information readily on the Square Dashboard.
Top-performing menu items will let you know what’s important to keep or highlight on your menu. But don’t lose sight of the dishes that rarely get ordered, too. Low-performing menu items often take up your team’s time and resources. This was the case for Superbaba, a modern Middle Eastern quick-service restaurant. Based on insight from their sales data, owner Abdallah El Chami made important menu changes to improve their operations.
“There are a minority of people that love [pickled turnip] and a majority that really hate it, and so they would remove it [from the wrap]. It got to the point where I said, ‘These are very expensive to make; they require a ton of labor, and [through analytics] Square is telling us that tons of people are asking to take it out.’”
While sales volume is a critical metric, it doesn’t paint the full picture. It’s important to gauge profitability versus popularity. A dish might be popular but have low profit margins, while a less frequently ordered item might be a high-margin offering. Analyze the cost of each menu item alongside its sales data to understand its profitability. This will help you strike the right balance between customer favorites and dishes that boost your bottom line.
“Bottom line and margins are everything right now, so it’s natural to see a focus on menu items that carry lower food costs and higher margins,” explained Rajat Deva, product marketing manager for Square for Restaurants.
Leverage customer feedback and data.
Sales data provides a quantitative look at what items perform well. But customer feedback offers qualitative insights that are just as crucial for improving your menu. Understanding how your customers feel about your offerings — like Superbaba did — can help you fine-tune every aspect of your menu, from flavor profiles to presentation.
In addition to public channels where customers provide feedback, like your website or social media, check your dedicated channels like Square Feedback, which allows you to collect private customer feedback from customers who opt for digital receipts. If multiple customers make the same complaint, like a meal being too spicy or lacking flavor, it may be a clear sign that you need to make adjustments.
Data from your loyalty programs and marketing tools can also help here. For example, customers get email or text notifications when they earn rewards via Square Loyalty and when you run marketing campaigns via Square Marketing. Checking which menu item notifications get the most engagement can help you understand what excites your community.
And don’t forget your customer demographics. Age, gender, and occupation, along with psychographic data regarding lifestyles, values, and interests, can also guide menu changes. For example, if your restaurant is popular with families, you may consider adding kid-friendly options. Square Customer Directory allows you to drill down on your customer data and understand their purchasing habits and preferences.
Track seasonal and industry trends.
Next, look back at your sales data from previous years to identify seasonal patterns. This can help you anticipate periods of high demand for certain dishes. Creating a seasonal menu allows you to serve your guests vibrant, tasteful meals, which can boost your sales while keeping operating costs in check.
Staying informed about current food trends can also allow you to innovate and experiment with new dishes that keep your menu exciting. For example, the National Restaurant Association publishes a forecast of the hottest culinary trends each year — a great place to start your analysis. No matter what the current trends are, having an allergy-sensitive menu is considered best practice and can greatly improve your restaurant’s appeal.
Implement menu changes based on data.
Once you’ve gathered insights from your sales data, demographic data, customer feedback, and trend analysis, the next step is to make those important changes. Here are some best practices to keep in mind.
Phase in new menu items with care.
While innovation keeps your menu dynamic and relevant, it’s essential to introduce new items thoughtfully to ensure they resonate with your customers. Consider introducing new dishes as specials or limited-time offers initially. This allows you to gather feedback and make adjustments before fully integrating them into your menu. Use your website, social media channels, and email marketing to create buzz around new menu items.
Phase out underperforming dishes.
Removing items from your menu can be as crucial as adding new ones. Wally Sadat, owner of The Kebab Shop, believes that menu trims are crucial for business survival. “Your menu should be something that you believe in. You shouldn’t have any filler on your menu,” he advises. Before making final decisions, discuss potential cuts with your kitchen and service staff. They might have valuable insights into why something isn’t selling or how it could be improved. If an item has a loyal following, communicate its removal in advance and consider offering it as an occasional special to maintain goodwill.
Optimize menu design.
Use high-quality images and thoughtful design to make your menu visually appealing. This can entice customers to try new dishes. If you need inspiration, use these free restaurant menu templates to get started. Incorporate digital tools to make your menu more adaptable and interactive. Digital menus, like QR code menus, can be easily updated, allowing you to respond quickly to inventory changes, customer feedback, or new trends.
Grow your restaurant business with a data-informed menu.
A well-optimized menu can unlock several benefits for your business, including higher profit margins, smoother kitchen operations, and more satisfied customers. By diving into your restaurant’s data, you can make smart choices about what to keep, tweak, or remove from your menu. And the process doesn’t have to be difficult.
Tools like Square Dashboard make it easy to track, analyze, and manage data from all areas of your business in one place, so you can make critical decisions quickly and confidently. After you’ve made the choices that make sense for your business, updating your menu in Square for Restaurants POS is intuitive. Remember, a great menu is always evolving, so continue to dig into your business data and let those insights guide you toward a menu that delights customers and ultimately boosts your business.
