Up-sell to improve profitability

While COVID-19 persists and restrictions remain in place for hospitality venues, the notion of making every order count has never been more important. In this article, we look at ways to successfully incorporate up-selling into your business.

COVID-19 has thrown us more than one or two curveballs. Our ability to be agile has helped us see off most challenges. But with things not expected to return to normal in the near future, now is the time to implement strategies that will consistently maximise your income.

Up-selling is a technique that has been popular in hospitality ever since the staff at McDonald’s started asking “Would you like fries with that?”. Given the margins on hot chips, it’s likely been a cornerstone of the burger giant's enormous profitability.

But up-selling also takes in the bundling of items to increase the customer spend. This can be as simple as combining a soft drink and slice of brownie with a sandwich into a lunchtime meal deal and taking a small hit on the overall margin in order to increase the total bill.

While it might seem counterintuitive to introduce value deals when you’re trying to retain or increase margins, the goal of up-selling is to entice diners into spending a little more than they perhaps had originally intended. Any margin you make on these extras is a bonus, and in some cases bundling additional items can actually increase your margin.

There are two main reasons to sharpen your up-sell and meal bundle offers right now. First, it’s likely that many of your customers currently have less discretionary income, so are looking for value while browsing through your menu. Second, reduced operations due to social distancing mean you should be looking to maximise the spend of every single customer.

“The central idea around creating a smart up-sell offer is to create your base product with the ability to easily add to it,” says executive chef and hospitality consultant, David Martin.

“The basic burger is a great example. Ask the customer: can I get you a slice of cheese with that, perhaps our signature sauce, and how about some hot chips, too? Suddenly you’ve gone from a $5 burger to a $14 order and your margin is through the roof because the chips cost you 12% of what you sell them for.”

There can be traps around the items you bundle into an up-sell offer on your menu. According to Martin, the best quality up-sell is one that can be delivered with speed and efficiency.

“In terms of items to up-sell, they are the ones that are at-hand, and don’t require any extra labour. You don’t want them to be so complex and clunky that your staff won’t do them because they’re too hard.”

Martin says that adding a coffee to an order isn’t necessarily effective because to make that coffee takes a degree of effort. “Keep it from being labour heavy to being swift and easy for your staff,” he suggests.

“Sauces are a really good example of something easy to work with. For example, you can quickly pre-prepare a lime hollandaise as an add-on with a really nice margin. With a minimum of fuss, it can make a piece of grilled fish, chicken burger or eggs benedict into something a bit special.”

Needless to say, your staff plays a key role in the up-sell process.

“It’s easy enough to put together a menu with up-sell opportunities and it’s easy enough to market it, but you rely heavily on the consistency of your service staff to execute the up-sell,” says Martin.

“You really have to be clear about your expectations of staff in this space. It’s really about educating and encouraging your staff to up-sell at every opportunity, without being pushy. It’s probably the hardest part of the whole thing.”

For those venues lucky enough to be emerging from the shadows of COVID-19, Martin recommends using strategic loss leaders to rebuild the customer base.

“To increase customers, I once implemented an aggressively priced mid-week pork roast for $10. You got a couple slices of pork, some baked potatoes, pumpkin and greens. It brought in so many people and provided a significant lift in trade,” he says.

The bonus is that once the customer is there, they are captive to the glass of wine and a dessert.

A further benefit to introducing specials that generate foot traffic is that when your venue looks busy, it creates further interest from passers-by.

SoulPod, an organic, plant-based café in Melbourne’s eastern suburbs, is using a variety of methods to make every bill count. Encouraging staff to up-sell into their thick-cut chips is a key focus when a customer orders one of their lunch meals.

As the venue also offers takeaway and delivery, its owners have worked hard to incorporate up-selling into those platforms, too.

For example, the venue takes app-based orders via Skip, which gives them the functionality to include a wide variety of add-ons. In this way, online orders can be made much like they are in-venue, where options and add-ons are a cornerstone of the café’s menu.

SoulPod has also put a focus on the way it handles phone orders. Staff are trained to use up-selling techniques over the phone, and the venue uses on-hold messaging to promote offers and upcoming events.

Says Martin: “It’s more important than ever for your phone technique and online ordering set up to be spot on so that you’re not missing a single opportunity to make an extra dollar.”