A COMMISSIONED STUDY CONDUCTED BY FORRESTER CONSULTING ON BEHALF OF MASTERCARD, JUNE 2024 Optimize Menus With Insights And Testing
Executive Summary Menu optimization, including new items, deletions, limited-time offers (LTOs), and category management can have a big effect on customer loyalty and incremental sales and, subsequently, on the overall success of a restaurant. Despite the importance of data-driven menu optimization, many restaurant organizations have not standardized their approaches to menu analysis. To better determine the effects of menu changes, restaurants must establish comprehensive and reliable workflows that use all available menu data to inform changes, while taking potential traffic and profit losses into consideration. In a study commissioned by Mastercard, Forrester Consulting surveyed 319 menu and category leaders at quick-service, fast-casual, and full-service restaurant franchises to assess their current strategies, challenges, and the potential benefits of systematic approaches to menu optimization. ABOUT FORRESTER CONSULTING Forrester provides independent and objective research-based consulting to help leaders deliver key outcomes. Fueled by our customer-obsessed research, Forrester’s seasoned consultants partner with leaders to execute their specific priorities using a unique engagement model that ensures lasting impact. For more information, visit forrester.com/consulting. © Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. [E-59637] Project Team: Rachel Baum, Market Impact Consultant Contributing Research: Forrester’s Customer Experience research group © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 2 3
Menu Optimization Is Fundamental To Achieving Top Goals NORTH AMERICA (N=81) LATIN AMERICA (N=69) EMEA (N=108) APAC (N=61) Top Goals By Region Improving operating margin Improving operating margin Enhancing customer satisfaction Improving operating margin Enhancing customer satisfaction Enhancing customer satisfaction Optimizing the menu Enhancing customer satisfaction Reducing supply chain costs Growing customer loyalty Increasing customer spend per visit Reducing supply chain costs Increasing visits or visit frequency Optimizing the menu Reducing supply chain costs Increasing customer spend per visit Increasing customer spend per visit Reducing supply chain costs Increasing visits or visit frequency Driving brand awareness Optimizing the menu Increasing visits or visit frequency Improving operating margin Optimizing the menu 63% 57% 66% 61% 53% 54% 60% 56% 51% 51% 56% 46% 47% 48% 48% 46% 46% 42% 47% 43% 59% 57% 61% 56% of respondents believe menu optimization is vital to their restaurant’s ability to achieve its organizational goals. 70% 5 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 4 Base: 319 decision-makers at the director level or above at quick-service, fast-casual, or full-service restaurants with decision-making power in optimizing the menu Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Full-service Quick-service and fast-casual Enhancing customer satisfaction 62% 60% Reducing supply chain costs 52% 55% Improving operating margin 61% 54% Optimizing the menu 55% 50% Expanding market share 37% 30% Increasing visits or visit frequency 48% 45% Increasing customer spend per visit 39% 55% Reducing consumer-facing fees 15% 22% Different Restaurant Types Have Different Goals Menu strategy leaders’ top annual goals included enhancing customer satisfaction, improving operating margins, and reducing supply chain costs. Although increasing customer spend ranks fifth overall, there are significant differences in priorities between quick service and full-service restaurants. 7 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 6 Base: 220 decision-makers at the director level or above at quick-service and fast-casual restaurants and 90 at full-service restaurants with decision-making power in optimizing the menu Note: Showing eight responses Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
However, Rigor Is Not Universally Applied Across Analyses And Restaurant Types Inconsistencies emerge in the degree of rigor applied to reviewing insights that could influence menu changes and help determine the impacts of these changes. Currently, full-service restaurants have a more rigorous approach. QUICK-SERVICE AND FAST-CASUAL FULL-SERVICE Very rigorous approaches to gathering and assessing customer feedback. 29% 44% My organization only deletes menu items to make way for new additions. Agree/Strongly agree Agree/Strongly agree 38% 23% My organization conducts rigorous analyses before deciding on menu additions or deletions. Agree/Strongly agree Agree/Strongly agree 69% 76% 9 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 8 Base: 220 decision-makers at the director level or above at quick-service and fast-casual restaurants and 90 at full-service restaurants with decision-making power in optimizing the menu Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Restaurants Use Multiple Insights To Identify Optimization Opportunities Restaurants Use Multiple Approaches To Test Menu Changes 62% 50% Examine historic patterns in sales performance Gather information from restaurant managers 43% 58% Facilitate customer surveys Examine historic patterns in customer purchasing behavior 40% 51% Conduct qualitative customer focus groups Understand customer loyalty to a certain product QUICK-SERVICE AND FAST-CASUAL FULL-SERVICE Leverage in-app or website A/B testing Measure the sales impact of localized menu offerings that cater to regional preferences Test menu items in limited regions or stores Test menu items in limited regions or stores Conduct profitability analyses based on projected menu changes Conduct profitability analyses based on projected menu changes Project the impact of new prices Project the impact of new prices Quantify transaction loss based on projected menu changes Quantify transaction loss based on projected menu changes Trial new menu designs or layouts in limited regions or stores Leverage in-app or website A/B testing Measure the sales impact of localized menu offerings that cater to regional preferences Trial new menu designs or layouts in limited regions or stores 68% 66% 55% 45% 45% 39% 34% 74% 64% 60% 59% 48% 42% 25% 11 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 10 Base: 220 decision-makers at the director level or above at quick-service and fast-casual restaurants and 90 at full-service restaurants with decision-making power in optimizing the menu Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024 Base: 319 decision-makers at the director level or above at quick-service, fast-casual, or full-service restaurants with decision-making power in optimizing the menu Note: Showing six responses Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Without speed to insight that keeps pace with decision-making, respondents’ restaurants may have suboptimal menu offerings that leave money on the table or create higher costs of execution. Change Aversion, Silos, And Slow Time To Action Inhibit Menu Optimization Barriers To Menu Optimization By Restaurant Type Full-service Quick-service and fast-casual Low executive buy-in 15% 17% Insights and recommendations are not always clear and actionable 34% 28% Current technology does not allow for consistent approaches across use cases 36% 32% Bandwidth requires tradeoffs between number of analyses and depth of insights 31% 32% Lack of bandwidth internally to execute analysis 26% 32% Approaches cannot keep pace with the speed needed to make decisions 38% 35% Resistance/reluctance to change with a “this is the way we have always done it” mentality 52% 42% 13 12 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. Base: 220 decision-makers at the director level or above at quick-service and fast-casual restaurants and 90 at full-service restaurants with decision-making power in optimizing the menu Note: Showing seven responses Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Restaurants Across The Globe Face Barriers To Menu Optimization APAC (N=61) Resistance/reluctance to change with a “this is the way we have always done it” mentality 52% Lack of expertise internally to execute analysis 41% Current technology does not allow for consistent approaches across use cases 41% Approaches cannot keep pace with the speed needed to make decisions 38% NORTH AMERICA (N=81) Resistance/reluctance to change with a “this is the way we have always done it” mentality 49% Siloed information with transaction data locked behind resource-constrained specialists 37% Approaches cannot keep pace with the speed needed to make decisions 36% Current technology does not allow for consistent approaches across use cases 36% Lack of expertise internally to execute analysis 46% EMEA (N=108) Siloed information with transaction data locked behind resource-constrained specialists 52% Lack of expertise internally to execute analysis 44% Approaches cannot keep pace with the speed needed to make decisions 35% Insights and recommendations are not always clear and actionable 32% Resistance/reluctance to change with a “this is the way we have always done it” mentality 49% LATIN AMERICA (N=69) Resistance/reluctance to change with a “this is the way we have always done it” mentality 46% Siloed information with transaction data locked behind resource-constrained specialists 43% Approaches cannot keep pace with the speed needed to make decisions 41% Insights and recommendations are not always clear and actionable 41% Lack of expertise internally to execute analysis 43% Siloed information with transaction data locked behind resource-constrained specialists 51% 15 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 14 Base: 319 decision-makers at the director level or above at quick-service, fast-casual, or full-service restaurants with decision-making power in optimizing the menu Note: Showing top five responses for each region Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Top 5 Benefits By Restaurant Type TOP 2 BENEFITS OVERALL Clear And Actionable Insights Are Key Benefits Of Systematic Menu Optimization 55% 54% Assessments on the true profit impact of a new menu optimization strategy Understanding shifts in customer behavior between categories QUICK-SERVICE AND FAST-CASUAL FULL-SERVICE Assessments on the true profit impact of a new menu optimization strategy 55% 54% Assessments on the true profit impact of a new menu optimization strategy Understanding the shifts in customer behavior between categories 51% Understanding the shifts in customer behavior between categories 60% More clear insights and actionable recommendations 51% Ability to project customer loss or gains from adding or deleting a menu item 49% Accelerated speed to insights that keep pace with decision-making 47% 48% Accelerated speed to insights that keep pace with decision-making More clear insights and actionable recommendations 47% Better utilization of resources to analyze new menu strategies 47% 17 16 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. Base: 220 decision-makers at the director level or above at quick-service and fast-casual restaurants and 90 at full-service restaurants with decision-making power in optimizing the menu Note: Showing top responses Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Top 5 Benefits Of Implementing Systematic Menu Analysis By Region NORTH AMERICA (N=81) EMEA (N=108) LATIN AMERICA (N=69) APAC (N=61) Understanding the shifts in customer behavior between categories 58% Assessments on the true profit impact of a new menu optimization strategy 63% Accelerated speed to insights that keep pace with decision-making 51% More clear insights and actionable recommendations 64% Accelerated speed to insights that keep pace with decision-making 46% Accelerated speed to insights that keep pace with decision-making 50% More clear insights and actionable recommendations 49% Understanding the shifts in customer behavior between categories 54% Better utilization of resources to analyze new menu strategies 44% More clear insights and actionable recommendations 47% Ability to project customer loss or gains from adding or deleting a menu item 49% Better utilization of resources to analyze new menu strategies 52% Improved accuracy due to more consistent analytical approaches across the organization 44% Ability to project customer loss or gains from adding or deleting a menu item 47% Understanding the shifts in customer behavior between categories 48% Ability to project customer loss or gains from adding or deleting a menu item 48% Assessments on the true profit impact of a new menu optimization strategy 57% Understanding the shifts in customer behavior between categories 55% Better utilization of resources to analyze new menu strategies 49% Assessments on the true profit impact of a new menu optimization strategy 56% 19 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 18 Base: 319 decision-makers at the director level or above at quick-service, fast-casual, or full-service restaurants with decision-making power in optimizing the menu Note: Showing top five responses for each region Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Key Features Of Menu Optimization Products By Restaurant Type Quick-service and full-service restaurants are prioritizing different features to identify products for menu restructuring and enable more comprehensive testing and measuring of new menu strategies. QUICK-SERVICE AND FAST-CASUAL FULL-SERVICE Identifying common pairings of items to determine menu restructuring strategies Testing new strategies at select test locations before scaling 87% 87% Accurately measuring the financial impact of a new menu optimization strategy Identifying common pairings of items to determine menu restructuring strategies Analyzing check-level data to develop new menu optimization strategies Accurately measuring the financial impact of a new menu optimization strategy 85% 86% 75% 77% 21 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 20 Base: 220 decision-makers at the director level or above at quick-service and fast-casual restaurants and 90 at full-service restaurants with decision-making power in optimizing the menu Note: Showing top three responses for each restaurant type Source: A commissioned study conducted by Forrester Consulting on behalf of Mastercard, March 2024
Conclusion As insights-driven decisioning becomes the norm across industries, restaurants have an opportunity to apply greater quantitative rigor to menu optimization. This study suggests that restaurants would benefit from the following: Improved understanding of the impact of changes on consumer spend by category. Restaurants understand which customers stay or churn, but they are less sure if customers substitute spend in other categories or at a competitor. Calculating true lift and incrementality. Restaurants often focus on customer experience, but menu changes are business decisions. Restaurants must study their impact on overall revenue. Greater analysis of the operational changes required to adjust to menu changes. While restaurants are diligent about getting customer feedback on menu changes, operational feedback ensures the kitchen can deliver. Methodology In this study, Forrester conducted an online global survey of 319 menu optimization decision-makers and influencers at quick-service, fast-casual, or full-service restaurant chains. The study was completed in March 2024. Note: Percentages may not total 100 due to rounding. ROLE C-level executive 16% Vice president 41% Director 43% RESTAURANT TYPE Quick-service/ fast-casual 69% Casual/full-service 31% ANNUAL REVENUE More than $5B 10% $1B to $5B 17% $500M to $999M 16% $200M to $499M 56% REGION North America 25% APAC 30% EMEA 23% Latin America 21% NUMBER OF RESTAURANTS 500 or more 6% 400 to 499 13% 300 to 399 31% 200 to 299 24% 100 to 199 15% 50 to 99 10% Demographics 23 © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. © FORRESTER RESEARCH, INC. ALL RIGHTS RESERVED. 22
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