By Phil Lempert

Menu Manipulation
Ever considered being a menu engineer? That's someone whose job is to figure out how the placement, pricing, and descriptions on menus can be organized in a format to maximize a restaurant’s profits. Gregg Rapp is one of these experts. He recently discussed how restaurateurs, and, by extension, specialty food retailers, can get customers to order products that contribute to the bottom line.

Take, for example, meat products, which increased in raw material cost last year. Restaurant owners wanted to encourage customers to order seafood instead because it yields more profit. Rapp suggests adding special descriptions to seafood dishes and placing them on the upper right of the page where the diner’s eyes go first. Regarding expensive meat products, Rapp told restaurateurs to be creative with cheaper cuts, such as using Asian sauces and Caribbean marinades. That’s a technique specialty food retailers could apply to prepared food selections.

You know how Wal-Mart associates specific numbers like .88 or .64 with discount pricing. Rapp suggests restaurant owners (and specialty retailers) follow that familiar format. He says .00 is a “hard” price whereas .95 is a “softer” price that makes patrons feel more comfortable.

Bundling or putting together a combo meal increases profits because customers are more likely to order peripheral items—also a good tactic for food retailers. Other points discussed were creating low-carb sections to let customers know you are in tune with their needs, and using better descriptions.

The Price of Bottled Water
The major water brands—Coke, Pepsi and Nestle—are readying for a price war that could drive down retail prices.

The bottled water category has become competitive, as soft drink manufacturers entered into a business they hoped would rescue them from slowing soda sales. Pepsi’s Aquafina is the best-selling U.S. water brand, while Coke’s Dasani ranks second. (Both of the leading brands bottle purified, not spring, water.) Nestle has the biggest share of the market with brands consumers recognize, such as Perrier, Poland Spring and Deer Park.

According to ACNielsen, Americans spent about $9 billion on bottled water in 2003. Dollar sales have grown more than 10 percent over the past year or so—though unit sales are off just over a percentage point. In other words, consumption is slowing, and prices are increasing.

With this business too big and profitable to risk, Nestle reportedly is considering an 8 percent price cut on all its bottled water products. Analysts believe Coke and Pepsi are likely to follow.

A broader water-related trend is also taking place. ACNielsen tells us that over the past year, sales of water conditioner filters and units are down 6.4 percent, and water filtration storage units are off almost 16 percent. People may be getting more water through the tap, or through the unit on their refrigerator/freezer doors.

Although specialty spring waters encouraged Americans to switch, most now find Aquafina or Dasani within reach and the taste difference may not be enough to keep the bottled water industry growing.

Impact of Low-Carb Diets Quantified
According to new research from ACNielsen, more than 17 percent of U.S. households report that someone in the household is currently on a low-carb diet. Importantly, a slightly higher number (19.2 percent) reported that someone in their household was once on such a diet, but is no longer. The report states, “The low-carb diet craze is having a significant impact on how people eat, and the number of people on low-carb diets is impressive and likely under-represents the true story since many more people may be selectively decreasing carbohydrate intake without considering themselves on a complete low-carb diet. However, the number of people who have tried a low-carb diet and are no longer on it is compelling as well.”

Although interpretation should go beyond dollar sales trends and also look at unit sales, these numbers show how dramatic the shift in eating has been over the past year.

The ACNielsen Homescan® Panel*Views survey of more than 10,000 nationally representative households—members of the 61,500-household Homescan consumer panel—was conducted in October and November of 2003.

Phil Lempert is the editor of The Lempert Report and SupermarketGuru.com, correspondent for NBC’s Today Show and columnist for The Los Angeles Times. You can reach Phil at Plempert@SupermarketGuru.com.