Part of menu analysis involves comparing menu item profits with how popular each item is to give you clarity as to which dishes should be kept and promoted or tossed to make room for something more profitable.
It takes a lot of work to manually figure out the formulas to calculate first each item’s profitability, and secondly to plot your menu on an x/y axis by popularity and food cost percentages. An x/y axis, you say? Yes, it’s a graphic way to visualize this information to make it easier to understand where your items stand in comparison to one another. The chart is separated into four quadrants: Plow Horse, Dog, Star, and Puzzle. (As fun as those names are, we can’t take credit for them because they’re inherited from the industry.)
Each quadrant has their own special benefits and challenges, but thankfully there is a lot of overlap in terms of how you can try to improve profitability across the graph. This blog looks at each of the categories and discusses actionable ways in which you can make powerful, data-driven decisions about your menu.
What is a Plow Horse? Low Profit, High Popularity
Dishes that fall under the Plow Horse category have both higher food costs and high popularity, meaning they’re less profitable for you, but your customers love them. Take for instance poke bowls. Sashimi-grade fish keeps plate costs high (low profits for you) and no one can resist shoyu salmon or spicy ahi over a steaming bowl of rice (a big hit with your customers).
In order to raise your profit margins, you really have one goal when it comes to Plow Horses: lower food costs but not in a way that lowers the dish’s popularity. Clearly the dish is a hit, so think about ways that you might be able to lower food costs outside of changing the dish’s ingredients.
Since this is a high-volume item, you may be able to negotiate a lower bulk order price with your vendor or find a vendor who is offering the same products at a lower cost. If you switch vendors, MarginEdge will automatically map the new vendor item to your existing recipes, meaning you can immediately see the new menu prices per impacted item as soon as the first invoice comes in. Even better, you can watch your profitability trends over time and be able to directly see the positive financial impacts these changes make for your restaurant.
Alternatively, you can also try reducing portion sizes, increasing the menu price, or promoting the dish along with a low food cost item to offset the margins lost from your Plow Horse. In the case of poke bowls, you can increase your lower cost toppings like veggies, and use less proteins. You can also figure out how playing with portion sizes and menu price will impact their margins easily with menu pricing in MarginEdge’s Recipes module.
What is a Dog? Low Profit, Low Popularity
Dogs. Not the greatest name, and no offense to Fido, but Dog menu items have low profitability and low popularity making them the worst things to have on your menu from a financial point of view.
We understand that while restaurants are businesses, not every decision is made from a purely financial standpoint and there can sometimes be emotions involved. Say for instance you use your great-grandmother Gertie’s clam chowder recipe on the menu, but no one orders it. New England clam chowder is already pretty pricey when you use fresh littlenecks straight from Cape Cod (grannie Gertie don’t mess with that canned crap), and there isn’t much of a market for it where you serve it at your steakhouse in Lincoln, Nebraska.
If you’re slower to sell a high cost ingredient, it’s very likely that there’s waste happening that is costing you real money. If you are a MarginEdge user, you can calculate just how much your waste is costing you by looking at your Theoretical Usage Report. Within that report you’ll see that each of your cream, potato, and canned clam’s target and actual costs show a huge difference. When you make changes to improve this item, you can track these costs and see if they are getting closer or further and adjust accordingly. If the sales volumes are too low to avoid waste, try something a bit more local and less perishable like a corn chowder! (That is if you think great-grandma Gertie will ever forgive you.)
So, what can you do with your Dogs? There are basically three options: rebrand the item as a limited-time special so you don’t have to buy as many ingredients to make it, rethink the recipe (like turning it into a corn chowder), or 86 it from your menu entirely. We know that making these choices can be tough, but hard numbers to back up your decision should make them a little easier (and we think great-grandma Gertie would totally understand!).
What is a Puzzle? High Profit, Low Popularity
Puzzles have high margins, but not many people order them. These are in a similar position as Stars in that they are already great menu items for profitability, so opportunities for improvement really come down to how you promote them.
The first step you should take is determining why they aren’t selling. Let’s say this time you make an incredible vegan pasta dish that is cheap to make, but just doesn’t sell. Is the dish presented poorly or does it taste too salty? Is it hiding on your menu or could the description use some love? Is calling the dish vegan turning people off when a less divisive buzzword like “plant-based” would make it more appealing to your more carnivorous clientele? Minor tweaks can make a big difference in boosting a Puzzle’s popularity.
Another promotional option you can explore is implementing an in-house competition amongst your waitstaff. Whoever can sell the most of your Puzzles wins extra PTO or another kind of prize (like a pizza party). It’s not a novel idea, but who doesn’t love a little old-fashioned competition and wouldn’t be motivated by the promise of hot cheesy, carb-laden goodness?
What is a Star? High Profit, High Popularity
Stars are exactly what they sound like, high profitability, high popularity menu items. You might think, ok well these are obviously working for us so why do they need to be included in menu analysis? And you’d be partially right. They don’t need much work and as the saying goes, if it ain’t broke, don’t fix it.
What Stars present is an easy opportunity to make the good even greater. Start promoting the item in any way you can. An Instagram or Facebook post (who doesn’t love food porn), or an inevitably cringey TikTok can do wonders for your Stars. Your customers will know about the item before they come in and it can boost sales even higher.
If social media is not your thing, you can take a more subtle approach such as highlighting the item on your menu by putting it in a separate box, or on a leaflet insert that the customer will have to touch while reading the rest of the menu. If the dish is a Star on your dinner menu, maybe try adding a smaller portioned version to your lunch or brunch offerings. In essence, do everything you can to make your Stars shine even brighter because the effort to result ratio is in your favor.
The Bottom Line
While we’ve given you actionable ways to improve your menu’s profitability, we also want to recognize that menu analysis is far from simple and even further from easily done. Most restaurants don’t have the extra time it takes to drill down into the numbers to make educated decisions about improving Puzzles, Plow Horses, and Dogs on a monthly or quarterly basis.
Tools like a restaurant management system can make this process a lot smoother, particularly if they are integrated with your POS (so you can see sales data to track popularity). For MarginEdge users, menu engineering is made even more accessible with the menu analysis function in the Recipes model, as the platform maps out your quadrants for you based on your recipes and food costs that are up to date with your most recent invoices.
Whether it’s figuring out a way to sell more Star burgers or finding a way to break it to great-grandma Gertie’s ghost that her clam chowder just ain’t cutting it, menu analysis provides restaurant operators with data and hard numbers to navigate these decisions confidently.