How menu engineering works
Food cost percentage tells you how efficient a dish is. Menu engineering asks a more useful question: which dishes actually bring in the money, and which are just taking up space? It sorts every item by two measures.
- Profit per plate (contribution margin): the selling price before tax minus the food cost. A dish is high-profit if it earns more per plate than the menu's average, weighted by how many of each you sell.
- Popularity (menu mix): the dish's share of all items sold in the category. A dish is popular if its share is at least 70% of an equal share. With 8 mains an equal share is 12.5%, so anything over 8.75% counts as popular.
The 70% rule comes from the original menu engineering method developed by Michael Kasavana and Donald Smith in the 1980s, and it's still the standard. It stops a long menu from making nearly everything look unpopular.
The four categories
| High profit per plate | Low profit per plate | |
|---|---|---|
| Popular | Star Protect and promote | Plough horse Reprice or re-cost |
| Unpopular | Puzzle Reposition and sell | Dog Remove or replace |
A worked example
The calculator opens with eight mains from a four-week period in a mid-sized bistro. 830 mains were sold, the weighted average profit per plate is $20.34, and with eight dishes the popularity threshold is 8.75% of sales.
- Stars: fish and chips (210 sold, $20.80 a plate) and steak frites (95 sold, $25.50). Leave them alone and put them where the eye lands first.
- Plough horses: the chicken burger (180 sold, $18.10) and Caesar salad (120 sold, $16.40). Fifty cents on the burger price, or fifty cents off its plate cost, adds about $90 a month with no extra work.
- Puzzles: pork belly ($25.80) and lamb shanks ($24.20) earn more per plate than almost anything else, but only 55 and 40 sell. Move them up the page and have staff recommend them before touching the price.
- Dogs: mushroom risotto and seafood linguine. The risotto is the only vegetarian main, so it stays, costed tightly and placed low. The linguine misses on both measures by a whisker: a small price rise or a sharper description could tip it into Puzzle or Star.
Change the numbers to your own and the picture will be different. That's the point.
Getting reliable results
- Compare like with like. Run mains, starters and desserts separately. A $12 dessert will never out-earn a $40 main, and putting them together makes every dessert look like a Dog.
- Use a decent sales period. Four to eight weeks smooths out weather, events and one big booking. Your POS can export the item sales report.
- Get the plate costs right. The whole exercise rests on them. If you haven't costed a dish recently, the menu price calculator will do it in a couple of minutes.
- Use prices excluding tax. GST and sales tax aren't profit.
- Change one thing at a time. Reprice a Plough horse or move a Puzzle, then re-run the numbers after the next period. If you change everything at once you won't know what worked.
Mistakes to avoid
- Cutting every Dog. Some dishes are on the menu for a reason: the vegetarian main, the children's option, the dish a regular orders every Friday. Keep them, cost them tightly, and don't give them prime space.
- Judging dishes by food cost % alone. A steak at 39% food cost can be a Star while a pasta at 22% is a Dog. Profit per plate is what pays the rent.
- Over-pricing your Stars. Small, regular rises are fine. A big jump on the dish people come for can turn a Star into a Puzzle.
- Running it once. Menus drift. Supplier prices move and tastes change. Re-run it every time you reprint the menu, or at least twice a year.
For the bigger picture on where food cost goes, read how to reduce your restaurant food cost percentage. For pricing tactics once you know which dishes to move, see how to price menu items.
Frequently asked questions
What is menu engineering?
A method of sorting every dish by popularity and profit per plate, then acting on each group differently: promote Stars, reprice Plough horses, reposition Puzzles and remove Dogs.
How is the popularity threshold calculated?
Divide 100% by the number of dishes, then take 70% of that. With 10 dishes the threshold is 7% of items sold.
How is the average profit per plate calculated?
Total profit across all dishes divided by the total number sold. It's weighted, so a dish that sells 200 a month counts more than one that sells 20.
Can I use this for drinks?
Yes. Run cocktails, wines by the glass or beers as their own group. The pour cost calculator will give you the cost per drink.
How often should I do menu engineering?
Every time you change the menu, and at least twice a year. It takes about twenty minutes once you have the item sales report.
Where do I get the numbers from?
Your POS item sales report for the last four to eight weeks gives the number sold and price — a system like TouchBistro pulls that straight off your till instead of you exporting and re-sorting it by hand. Food cost per dish comes from your plate costings — the menu price calculator will do that in a couple of minutes. (Affiliate link: we may earn a commission if you book a demo through it, at no extra cost to you.)