Menu engineering: which dishes make you money and which don't

Your best-selling dish isn't always the one that makes you the most money, and neither is the one with the lowest food cost. Menu engineering crosses two numbers you already have, how much of each dish you sell and how much each one leaves you, and tells you which to protect, which to adjust, which to promote and which to drop.

What menu engineering is

It's a method to sort your menu items into four groups based on two questions:

• Does it sell a lot or a little? (popularity)
• Does it leave a lot or few dollars per plate? (margin: price minus cost)

Notice the question is about dollars, not percentage. A dish with low food cost can leave you few dollars if its price is low, and one with high food cost can leave you plenty.

What data you need

• How many of each dish you sold in a period (a month is a good start). It comes from your POS.
• The price of each dish.
• The cost of each dish, with yield. If you don't have it, start with how to calculate recipe cost.

Analyze each category separately (appetizers with appetizers, entrées with entrées). Comparing a drink to an entrée doesn't tell you much.

Step 1. Calculate each dish's margin

Margin = Menu price − Cost per plate

Enchiladas at $11.49 that cost $3.40 leave $8.09.

Step 2. Calculate popularity (menu mix)

It's what percentage of all dishes sold each one accounts for.

Menu mix % = Units of that dish ÷ Total units sold × 100

Step 3. Get the two cutoffs

• Margin cutoff: the weighted average margin. Add up the margin on everything sold (margin × units for each dish) and divide by total units sold.
• Popularity cutoff: in the classic method it's 70% of each dish's share if all dishes sold equally.

Popularity cutoff = (1 ÷ Number of dishes) × 70%

With 8 dishes, each would get 12.5%; 70% of that is 8.75%. A dish with more than 8.75% of sales counts as popular.

Step 4. Classify each dish

• High popularity, high margin: star.
• High popularity, low margin: plowhorse.
• Low popularity, high margin: puzzle.
• Low popularity, low margin: dog.

Example with 8 entrées over one month

A taquería sold 2,800 entrées. The weighted average margin came out at $9.00 and the popularity cutoff is 8.75%.

Two things this example teaches:

• The quesadilla has the lowest food cost on the menu (21%) and is still a plowhorse: because its price is low, it leaves only $7.89 per plate. The percentage fools you; the dollars don't.
• The molcajete runs a 37.5% food cost but leaves the most per plate ($17.49). The problem isn't its cost, it's that hardly anyone orders it.

What to do with each group

Stars: protect them.

• Don't change the recipe or portion. They're why a lot of people come back.
• Put them in the most visible spots on the menu.
• If their ingredients go up a lot, raise the price gradually: they handle an adjustment better.

Plowhorses: make them leave more.

• Raise the price a little; since they already sell well, a small adjustment usually goes unnoticed.
• Review the recipe and portion: is there an expensive ingredient the customer doesn't value?
• Pair them with something that leaves more: a drink, an add-on or a combo.

Puzzles: get them selling.

• Move them to a more visible spot: top of their category or in a box.
• Improve the name and description, and add a photo if your menu uses them.
• Have servers recommend them, and let them taste them so they can describe them.
• If nothing works, check the price: it may be outside what your customers expect.

Dogs: drop them or rework them.

• They take up space on the menu, in storage and in prep, and force you to stock ingredients that can spoil.
• Before dropping one, ask whether it plays another role: the only vegetarian option, a favorite of a group of regulars or a dish that uses ingredients you already carry.
• If you keep it, rework it so it costs less or leaves more.

How much money it can make

Using the example above, three small changes:

• Enchiladas +$0.50 600 × $0.50 = $300 a month
• Quesadilla +$0.50 380 × $0.50 = $190 a month
• 40 more molcajetes a month 40 × $17.49 = $700 a month
• Total $1,190 a month, more than $14,000 a year

That assumes customers keep ordering the same; that's why it's best to make one change at a time and measure the following month.

What menu engineering doesn't tell you

• It doesn't measure labor: a high-margin dish that takes 20 minutes to make can jam your kitchen at peak hour.
• One month can mislead: seasons, a promotion or an 86'd ingredient change sales. Compare several months.
• It depends on your costs: if your recipe costs are stale, so is the classification.

Do it every three months, or whenever you change your menu or prices. Both numbers it needs, what you sell through the POS and each dish's up-to-date cost, are already in Kitchfly.

Frequently asked questions