How can c-store operators structure menu promotions that will springboard sales and increase net profit? In our second Ops Talk advice column, Deborah Holand explains how to jump-start sales and profits without giving away the bank.
How do I pair the best items in combo meals and price them right?
Do all your meal deal promotions look the same year after year, sacrificing gross margins to see short-term sales growth for only a season? Are you wondering how to revitalize the tired menu you have, without a complete overhaul or major investment?
Here are four easy steps to help you transform your menu into the profit-generating machine it can be:
1. Ensure the promotional price has value and increases profit. If combo deals are your primary sales growth strategy, the offer must lead or propel a total increase in net long-term profit. Identify the per-person average net profit per transaction, then increase the amount by a reasonable profit goal (e.g., 10% to 20%). This goal will be your benchmark for setting the retail price and measuring success.
2. Ensure the combo-deal components have broad appeal to everyday lifestyles. Successful combo-deal structures will target the total day-part meal experience and allow the customer to easily combine multiple items and upgrade options. Customer perceptions of your variety can change by highlighting new or healthy items as suggestive upgrade options to the base combo deal.
For example, a hot dog and fountain drink deal is effective, but it’s tired and overdone, with limited nutrition and demographic appeal. Also, it drives category profit down in the short term while higher-profit categories go unnoticed. A refreshing alternative: Offer an everyday value sandwich with side choices (e.g., chips, salad or fruit) to encourage customers to create an even higher profit bundle. Structure drink-size upgrades and you have four meal deals from one promotion.
3. Make the offer convenient and consistently available to purchase. Take the guesswork out of the customer’s purchase decision with attractive, clean signage placed where the customer can see the offer and immediately grab a component. Make it easy to understand which items are included and how to upgrade choices. Also, motivate employees to create awareness about the menu promotion. Then set control standards to monitor inventory and minimize out-of-stocks.
4. Commit long-term plans to an annual promotional calendar. Your strategy needs a longevity plan. Structure your seasonal menu introductions and test items into the combo deal as LTOs (limited-time offers). The combo meal promotion should specifically target consumers to accomplish these goals:
- Entice current shoppers to spend more per visit and repeat purchase frequency.
- Attract new customers for trial purchase to expand your core customer base and to create loyalty in new long-term shopping habits.
- Sell more product to more people more often, for more money!
Deborah Holand is a chief business consultant to the foodservice industry. She specializes in new concept development and revitalization to help operators create sound solutions to achieve financial results. Got a question for Deborah? Email jbulat@winsightmedia.com, subject Ops Talk.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.