Keeping track of your star dishes is critical to keeping your bottom line in the fast lane.
As prices and consumer preferences change faster than ever, it’s critical to have a system in place to identify your menu’s strongest points.
Restaurant leaders deal with a lot. Wholesale beef prices are expected to rise 13.4% by the end of 2023, according to the USDA. The agency also noted wholesale pork prices increased by 4.1% in July 2023 but remained 3.6% below July 2022 levels and are expected to end the year about 5% less than 2022’s prices. Meanwhile, prices for farm-level eggs increased by 5% percent in July 2023 after a five-month climb earlier this year.
The National Restaurant Association shared some good news in August, reporting that wholesale food prices remained relatively flat for the third consecutive month and that average wholesale food prices declined in five of the previous six months – representing a total drop of more than 6%.
Then think about all the tasty food that was only on a few radars a couple of years ago: hot chicken, birria, and vegan options in the most unlikely places.
As restaurant leaders and their menus continually adapt and evolve, it’s critical to consistently, regularly, and objectively examine how each item is performing. Several factors determine a dish’s “strength.” First, ask how many people order the item. Second, examine how much it costs your business to produce it. Finally, assess how much each item contributes to the bottom line.
If you’re using modern restaurant management software tightly integrated with your POS, all that information will be available in a product mix report, also known in the biz as PMIX or menu mix. This is the natural place to start examining your menu and allows leaders to easily see the profitability of each menu item versus its popularity in a single matrix.
Getting to this manually is possible but unlikely due to exponential increases in the amount of math required to cover each item on your menu and then consolidate them all. Doing so would require calculating menu item cost, gross profit per item, total sales, sales percentage, food cost percentage (and theoretical food cost), contribution margin, and menu mix percentage to see how sales of an individual menu item compare to overall sales.
By combining and understanding (and reporting) each item’s popularity and profitability, you can plot them on a graph to see your biggest opportunities. The chart will be split into four quadrants that categorize items into the following four buckets.
Stars are just what they sound like: your best dishes. They lead in both profitability and popularity. Your menu design and wait staff should highlight your stars. Keep these dishes consistent and promote them in any way possible. When it comes to menu design, you want to place your stars near the top of your menu and emphasize them. You can do that by adding color, a box around them, or a callout like “customer favorite” or” most “popular.” Keep close tabs on star stats like gross profit per item and food cost percentage to keep your stars in a position where they can continue to shine.
If you’re sure customers who like your puzzles are pleased with them, consider ways to highlight and promote them better. Change plating and presentation, or consider creating a couple of specials around them to see if that attracts more orders. Sometimes lowering the price of these dishes, even just a little, can help sales, but be sure you know each dish’s performance metrics to avoid turning any into a loss leader.
Dogs are the dishes that you should re-work or eliminate. However, there are some items you can’t eliminate, such as the kid’s menu or special diet items. Since these are low profit and the people who need them will find them anyway, de-emphasize or even place them on a standalone menu available upon request.
Opportunities are dishes guests love and order frequently but have low margins. These dishes are often where much of your attention and analysis should go, as they present the lowest-hanging fruit for grabbing higher margins
When it comes to opportunities and how to turn them into stars, there are a few paths:
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Knowing which of your menu’s dishes are popular is critical to keeping your business growing. The same goes for each item’s profitability. By having a restaurant management system that integrates with and extracts sales data from your POS system and pairs it with accurate, up-to-date data from your purchasing and inventory functions, restaurant leaders can truly understand, in real time, how the business is performing. Doing this empowers leaders to ensure that the most profitable items continue to make a strong contribution to the bottom line while working with staff to understand and then turn every other item into a margin machine.