The Foodpreneur #001
While a lot of heat-and-eat businesses start as a labor of love, it’s revenue and profitability that will keep your doors open to continue following your passion. We’d like to talk about one of the most important aspects of running one of these businesses: setting the right menu.
We won’t pretend to know better than you do which dishes your customers will love—nobody will understand your customers’ tastes more completely than you will, after all. But we can offer some pointers that can help you make sure you’re getting the best return—and that means making sure you’re limiting spoilage and waste.
1. Analyze your customers’ preferences
This can be a bit harder for those who are just starting out in this business, but a crucial early step is to determine what your customers will want to eat. Established businesses can base new menu items off of existing orders—it’s a simple matter of figuring out which dishes were ordered most often, and by whom. If you don’t have a deep customer history to analyze, your best bet is to research your target market to spot preferences and trends. If, for example, your business is offering heat-and-eat food that’s keto-friendly, you’ll want to research the types of dishes that are most popular within that niche.
This is probably going to be the most time-consuming step as you’re building out a new menu, and arguably the most difficult for those starting out early. In the future, we’ll provide a more in-depth guide on the best ways to do market research like this, so keep an eye out for it
2. High-margin add-ons
Traditional restaurants frequently make most of their profit on beverages and side dishes, and the same can hold true for heat-and-eat businesses, too. Some of our most successful customers offer products that are small and relatively inexpensive (like a muffin, for example), but have a high profit margin.
The key aspects of a good add-on are pretty straightforward. First, they’re simple to make in greater bulk than most entrees. The goal is to select something that you can produce quickly in higher volume, to help cut down on labor. Second, they’re popular enough that your customers can buy them on an impulse as they’re checking out. Third, the profit margin on each one is high, even if the sale price is low. If you can spend $5 in ingredients to make a dozen of these and sell each for $3 , that’s an excellent return. Keep this in mind as you create new add-ons!
3. Streamlining ingredient usage
This is more of a process change than anything else, but it’s valuable nonetheless. Some of the most successful businesses in this industry carefully optimize their menu as they design dishes that use overlapping ingredients. For example, if you’re selling a pasta dish that includes mushrooms, consider offering a chicken dish that also uses them. Keep this in the back of your mind as you’re planning what to offer, because approaching your menu this way can pay serious dividends down the line. A menu that’s been optimized to use ingredients as efficiently as possible will cut down on spoilage and waste dramatically.
Not only can using similar ingredients for different items reduce your waste, it can add even more benefits—it provides an opportunity to buy ingredients in greater volume, potentially at a lower unit cost. Inventory costs add up very quickly, so even relatively minor savings can really help your bottom line and improve your profitability.
4. Inventory monitoring
This is where the Heat-and-Eat industry has a huge advantage over traditional restaurants. The nature of your business means that you’ll know what ingredients you need to fulfill your orders. When you do your shopping, you don’t need to estimate based on past experiences—you can simply refer to your list of pending orders, and buy what you need to cover them.
Our recommendation is to stay vigilant when it comes to ordering your ingredients, and keep a very close eye on how much you have, how much you need, and what’s about to spoil. This requires a measure of organization, and there are systems you can use to automate that, but generally you should closely monitor your grocery list every week. Make sure you’re not overbuying, because it gets exceptionally wasteful exceptionally quickly. This will help keep your inventory cost as low as possible—and can essentially eliminate spoilage, with just one process change.
These are just some of the things you’ll want to consider as you build out your menu. But the most important aspect is to make sure each menu item is one that you can make a profit on. Now get out there and start growing your business!
Your menu represents your business, and is one of the main ways your customers are going to interact with you. It’s your identity, and a demonstration of your passion. Your customers will have a better understanding of who you are and what you represent based on your menu. So make sure your passion shines through in your menu—while doing what you can to keep it profitable.