Menu Analysis: How to Identify What Works and What Doesn't Sell

What Is Menu Engineering and Why Does It Matter?

Menu engineering is the discipline that combines financial analysis with consumer psychology to optimize the profitability of each item on your menu. Developed in the 1980s by professors Michael Kasavana and Donald Smith at Michigan State University, the methodology has become a global standard in the food service industry — and is more relevant than ever for restaurants that need to maximize every dollar of revenue.

The premise is simple: not all dishes on your menu contribute equally to the bottom line. Some sell well and have good margins (they're your heroes). Others sell well but have low margins (they're taking up kitchen capacity without generating profit). And some don't sell and are expensive to make — these are literally costing your business money.

The difference between an optimized menu and a neglected one can represent 15% to 25% more net profit — without changing any prices, without investing in marketing, just by reorganizing what you already offer.

The Menu Engineering Matrix: Classifying Your Dishes

The central tool of menu engineering is a 2x2 matrix that classifies each dish along two dimensions: popularity (sales volume) and profitability (contribution margin per unit). This generates four categories:

Stars (high popularity + high profitability): These are your best dishes. They sell well and generate good margins. The strategy is to keep them prominently placed on the menu, ensure absolute consistency in execution, and resist the temptation to change the recipe or the price. Common examples: chef's signature dishes, well-priced artisanal burgers, pastas with affordable ingredients but high perceived value.

Plow Horses (high popularity + low profitability): They sell a lot, but the margin is insufficient. These are often the most "traditional" dishes on the menu — that steak everyone orders but where the cost of meat erodes the margin, or the Saturday special that fills the house but barely covers costs. The strategy is to find ways to increase the margin without losing popularity: renegotiate with suppliers, slightly adjust the portion, substitute an expensive ingredient with an equivalent, or gradually increase the price.

Puzzles (low popularity + high profitability): They have good margins when they sell, but they don't sell much. These are usually innovative dishes, chef's specials, or options the public hasn't discovered yet. The strategy is to increase their visibility: improve menu positioning, create tasting promotions, train servers to suggest these dishes, and improve photos and descriptions.

Dogs (low popularity + low profitability): They don't sell and don't generate margin. These should be immediate candidates for removal or radical reformulation. Every "dog" item on the menu creates hidden costs: inventory of specific ingredients, production complexity, and visual clutter on the menu. Restaurants with more than 20% of items in the "dog" category have a serious menu problem.

How to Collect and Analyze the Data

To apply menu engineering, you need two sets of data for each dish: sales volume (how many were sold in a period) and unit contribution margin (selling price minus ingredient cost).

The ideal analysis period is 30 to 90 days — short enough to be recent, long enough to smooth out weekly variations. If your restaurant uses a POS (point of sale) system, this data is already available. If you still work with manual tickets, consider recording at least 4 weeks of sales before starting the analysis.

The step-by-step calculation: (1) List all menu dishes with selling price and ingredient cost. (2) Calculate the contribution margin of each one (price - cost). (3) Sum the total units sold of each dish in the period. (4) Calculate the average popularity (total sales / number of items) and the average profitability (sum of margins / number of items). (5) Classify each dish: above or below average in each dimension.

An important tip: analyze by category (appetizers, mains, desserts, beverages) instead of mixing everything together. A dessert at $18 will seem unprofitable if compared with a main course at $65, but within the desserts category it may be a star.

Sales Mix: Understanding Customer Behavior

The sales mix shows the proportion of each dish relative to total sales. Analyzing the mix over time reveals valuable patterns:

Seasonality: Salads sell 40% more in summer, soups 60% more in winter. If you don't adjust your menu seasonally, you're leaving revenue on the table. Consider rotating menus or "seasonal specials" that take advantage of cheaper and more in-demand ingredients in each period.

Day of the week: Monday's mix is different from Friday's. Executives at lunch order quick, straightforward dishes. On Friday evening, the average check is naturally higher and customers are more open to appetizers, desserts, and drinks. Adjust server suggestions and promotions accordingly.

Positioning effect: Items in the first and last position of each menu section sell significantly more (primacy-recency effect). If a star dish is buried in the middle of the list, reposition it. If a dog item is in the featured position, it's stealing sales from your best dishes.

Cannibalization: When two dishes are very similar, they compete with each other. If you have three chicken options on the menu and none sells well, the problem may not be the chicken — it's the excess of options confusing the customer. The rule of thumb is that each section should have between 5 and 9 options. Above that, "choice paralysis" reduces satisfaction and the average check.

Redesigning the Menu Based on Data

After classifying all dishes, it's time to act. Data-driven menu redesign follows a clear logic:

First, remove or reformulate the dogs. Every item removed simplifies operations: less inventory, less complexity in the kitchen, fewer decisions for the customer. Restaurants that reduced their menu by 20% frequently report a 10-15% increase in net profit.

Second, reposition star items to the areas of greatest visual attention on the menu — typically the upper right corner (on single-page menus) or the first and last positions of each section.

Third, work on the visibility of puzzles. A professional photo, an appetizing description, or a server's suggestion can turn a puzzle into a star. Invest in storytelling: "A recipe from our chef's family farm" sells more than "Free-range chicken with rice."

Fourth, optimize the plow horses. Renegotiate ingredients, adjust portions, and consider small, frequent price increases (2-3% at a time) instead of one large annual increase.

Tools for Continuous Analysis

Menu engineering is not a one-time exercise — it's an ongoing process. The best restaurants review their data monthly and make quarterly adjustments. With the technology available today, this process can be largely automated.

The usemise.io Menu X-Ray uses artificial intelligence to analyze your menu structure and identify optimization opportunities. In less than two minutes, you receive a complete diagnosis that points out which dishes deserve prominence, which need adjustment, and which are compromising your margins. Get your free X-Ray and discover the hidden potential in your menu.

Sources

• Kasavana, M.L. & Smith, D.I. Menu Engineering: A Practical Guide to Menu Analysis. Hospitality Publications, 1982 (revised 2012).
• Abrasel — Brazilian Association of Bars and Restaurants. Food Service Industry Indicators, 2025.
• SEBRAE. Menu Engineering: How to Increase Your Restaurant's Profitability, 2024.
• National Restaurant Association (NRA). Restaurant Industry Operations Report, 2025.
• Instituto Foodservice Brasil (IFB). Food Service Consumer Behavior Report, 2025.