Here’s What You Need To Know About Restaurant Menu Profitability Analysis

One of the most important components of menu engineering is profitability analysis. If your restaurant is not making a profit or just breaking it even, it will soon empty your pockets. In this forever growing competitive world it is very difficult to start and sustain your business especially when it comes to the food industry. While interior designers leave no stone unturned for that perfect ambience, profit generation in initial stages becomes a distant goal. And keeping up with the food bloggers and their reviews makes things even more hectic. Therefore, employing a thorough routine of menu profitability analysis makes the process of restaurant handling buttery!

How to perform Menu Profitability Analysis in your Restaurant?

The motto is to start thinking of ‘Dollars and not percentages’. To explain it better, imagine that you are renting out your apartment. One person gives you a higher percentage of his salary and another one gives you higher rent irrespective of the fact of how high or low is income is. Within a spur of the moment, you realize that you will rent it out to the latter one, right? Similarly, you want people to give you more dollars. On average the ‘target’ food cost is 30%, it could be more or less depending on what type of restaurant it is. A few dishes in your menu will have a lower raw food cost and therefore, it will fetch you more profit.

While doing a menu analysis, study your customers and their choices and particularly what dishes sell out the most. Do a survey and find out what works best in your restaurant and then calculate your inventory cost. There is a chance that your best-selling dish might not be the one getting you a lot of profit, while your most profitable dish is not liked much by your customers. Reconsider the position of food items! Apply marketing strategies and try to focus the customer’s attention to the dish that you want them to buy.

Learn to read the charts and find the overall ranking of profitability.
PC: EZchef Software

Who you can do Menu Profitability Analysis

Even though the term sounds a bit complicated, you do not have to be a math wizard or a numbers geek to review this, being a mere crossword puzzle solver would do the job too. And when it comes to making money there is no harm in learning a few things from here and there. That being said, it is advisable to hire someone with a tad bit knowledge of profit calculations and percentages to increase the sales and income.

A step-by-step guide to analyzing menu

Try to arrange all your dishes into one of these categories and then see how you should treat them.

Something like this:

1.     High in sales quantity and unit profitability

These are the items that get you ample profit so try to introduce a variety of these food items with certain variations temporarily and check if they do good and can be added to the menu in the future.

2.     High in sales quantity but low unit profitability

The dishes listed here needs a makeover! Come up with multiple versions of the dish by adding or removing certain ingredients and see if they fetch you the much-needed profit.

3.     High in unit profitability but not sales

Employ your marketing strategists to deal with these dishes. Do creative promotions of these food items, if that does not work, try altering the portions of the dish and see if that works out for your menu and customers.

4.     Low in unit sales and unit profitability

These dishes are mere deadbeats for you, so try to get rid of them or stay up with the trends and try to give your dish a millennial makeover to increase their sale!

An example chart could be ^
PC: pos.toasttab.com

The pointers may look simple but they are not a kid’s game. We are talking about money here and your entire restaurant business stands on the foundation of profitability. So put your thinking glasses and switch those grey cells on, or hire someone to help you do some menu analysis. You love it or hate it but there is no denying the fact that it is necessary and important. It can rocket up your sales to those unbelievable numbers that you always dreamt of but never achieved. You are literally just four steps away from the successful venture!

Read more about the technicalities involved in the food world.
Questions To Answer Before Launching A Food Menu
Menu Design And The Psychology Behind It
Breweries In Bangalore: Kill Your Mid-Week Blues Here! Or Maybe Bring In A Happy Weekend Too

Join the Conversation

3 Comments

Leave a comment

Your email address will not be published. Required fields are marked *