Menu engineering answers a simple but expensive question: which menu items are helping profit, and which ones are only helping volume.
Many operators assume top sellers are always good items. In practice, some high-volume dishes quietly drain margin while lower-volume items carry the business.
This guide gives you a practical workflow you can run with real sales and cost data.
Quick Summary
- Classify items by two metrics: popularity and contribution margin.
- Use category actions, not one-size-fits-all price increases.
- Recheck after ingredient spikes, wage shifts, or seasonal menu changes.
- Adapt execution by country and local guest behavior.
Step 1: Measure the Two Core Metrics
Popularity
Popularity % = Item units sold / Total units sold x 100Popularity tells you customer pull. If an item has low popularity, solve discoverability and positioning before assuming the recipe is wrong.
Contribution Margin
Contribution margin = Selling price - Item costItem cost should include current recipe cost assumptions and any relevant packaging costs for the channel.
Step 2: Build the Four-Box Matrix
Set your baselines:
- Popularity baseline: often 70% of average item popularity
- Margin baseline: average contribution margin across items in scope
Then classify:
Star: high popularity, high marginPlowhorse: high popularity, low marginPuzzle: low popularity, high marginDog: low popularity, low margin
The matrix is not the final decision. It is the starting point for targeted actions.
Worked Example (Neighborhood Fast-Casual)
Assume one month of item-level results:
| Item | Units Sold | Price | Item Cost | Contribution Margin |
|---|---|---|---|---|
| Smash Burger | 620 | $12.50 | $4.60 | $7.90 |
| Chicken Wrap | 480 | $11.00 | $5.20 | $5.80 |
| Grain Bowl | 210 | $13.50 | $4.90 | $8.60 |
| Soup Combo | 170 | $10.00 | $4.40 | $5.60 |
| Kids Plate | 95 | $8.50 | $4.10 | $4.40 |
Total units sold: 1,575
Average popularity: 20%
Popularity baseline (70% of average): 14%
Average contribution margin: 6.46
Classification:
- Smash Burger:
Star - Chicken Wrap:
Plowhorse - Grain Bowl:
Puzzle - Soup Combo:
Plowhorse - Kids Plate:
Dog
Step 3: Take Category-Specific Actions
Star
- Keep quality and consistency stable.
- Protect positioning on menu and digital ordering screens.
- Avoid unnecessary discounting.
Plowhorse
- Improve margin with portion calibration or minor price architecture changes.
- Bundle with high-margin add-ons instead of broad discounts.
- Watch guest price sensitivity before full repricing.
Puzzle
- Move to high-visibility placement.
- Improve item naming and description clarity.
- Train staff scripts for recommendation moments.
Dog
- Check strategic role first (family option, category anchor, seasonal relevance).
- If no clear role, simplify or replace to reduce operational drag.
Country-Specific Execution Examples
The matrix logic is universal, but execution differs by market.
United States
In delivery-heavy U.S. markets, plowhorses often hide channel fee pressure. Validate margins by channel and protect combo economics before running app promotions.
United Kingdom
In UK high-street lunch trade, puzzle items may need clearer lunch-value framing. Small wording and placement changes can move demand without a large price change.
Australia
In Australian cafe-heavy neighborhoods, weekend demand patterns can distort item rankings. Review weekday and weekend matrices separately to avoid false conclusions.
Canada
In Canada, seasonality and regional basket differences can shift mix quickly. Run matrix reviews before winter menu rollouts and promo windows.
Monthly and Quarterly Rhythm
Monthly (light review):
- Update top item costs.
- Recompute contribution margins.
- Flag any item with rapid margin drift.
Quarterly (full review):
- Recalculate matrix baselines.
- Reclassify all core items.
- Assign one action per non-star item.
- Measure impact over the next cycle.
Common Mistakes
- using outdated recipe costs
- mixing dine-in and delivery economics in one number
- removing low-volume items without checking strategic role
- changing too many prices at once and losing signal clarity
Do This Now
- Export one month of item-level sales by units.
- Update costs for your top 20 items.
- Build your first matrix with clear baselines.
- Pick one plowhorse and one puzzle for action this month.
- Review impact after four weeks before scaling changes.
FAQ
How often should I run menu engineering?
Run a light check monthly and a full classification at least quarterly, or immediately after major cost and pricing changes.
Should I remove every low-performing item right away?
No. First confirm its strategic role, seasonality, and contribution to combo or category sales before deciding.
What matters more: popularity or contribution margin?
Both matter together. Popularity drives volume, while contribution margin protects profit. The matrix helps balance both.
Related Guides
- Prime Cost Guide
- New Menu Cost Simulation Guide
- US Combo Meal Pricing Guide
- US Menu Price Rounding Guide
- UK Menu Price Review Checklist
- Australia Menu Price Review Checklist
- Canada Menu Price Review Checklist
KitchenCost helps you keep item costs current so menu engineering decisions are based on current margins, not stale spreadsheets.