Articles · Hospitality
Menu Engineering in Excel: Optimise Your Menu by Contribution Margin
Menu engineering shows which dishes on your menu are popular and profitable – and which only take up space. You need just two numbers per dish: portions sold and contribution margin per portion.
The idea in one sentence
The Kasavana and Smith method (1982) places every dish by two questions: Is it ordered often? Does it earn more margin per portion than average? That gives four classes.
- Star – popular and profitable
- Plowhorse – popular but low margin
- Puzzle – profitable but rarely ordered
- Dog – neither popular nor profitable
Step 1: Collect numbers per dish
Take portions sold for one month from your POS. Food cost per portion comes from your recipe costing.
Contribution margin = Net price − Food cost per portion
Step 2: Calculate the two thresholds
The classic popularity threshold is 70% of the average menu mix. The margin benchmark is the weighted average across all dishes.
Popularity threshold = 0.7 × Total portions ÷ Number of dishes
Average margin = Sum (Portions × Margin) ÷ Total portions
Example: seven main courses in one month
1,040 portions across 7 dishes: threshold = 0.7 × 1,040 ÷ 7 = 104 portions. Average margin = €10.89.
| Dish | Portions | Margin / portion | Class |
|---|---|---|---|
| Pizza Margherita | 260 | €8.40 | Plowhorse |
| Spaghetti Carbonara | 220 | €10.60 | Plowhorse |
| Cheeseburger | 190 | €10.10 | Plowhorse |
| Wiener Schnitzel | 180 | €13.70 | Star |
| Mushroom risotto | 80 | €12.40 | Puzzle |
| Salmon fillet | 70 | €16.00 | Puzzle |
| Vegetable curry | 40 | €7.90 | Dog |
The schnitzel is the only Star. Pizza, carbonara and burger carry the kitchen but earn below average. Salmon and risotto pay off but are rarely ordered. The curry is a candidate for removal.
Step 3: The formula in Excel
With portions in column B, margin in column C and the thresholds in F1 and F2:
=IF(AND(B2>=$F$1,C2>=$F$2),"Star",IF(B2>=$F$1,"Plowhorse",IF(C2>=$F$2,"Puzzle","Dog")))
What to do with each class
| Class | Action |
|---|---|
| Star | Keep quality, feature it prominently, do not cut the price. |
| Plowhorse | Raise the price slightly or lower portion cost (side, supplier). |
| Puzzle | Describe it better, place it better, have staff recommend it. |
| Dog | Rework the recipe or take it off the menu. |
Common mistakes
- Comparing drinks and mains in one matrix – analyse by category.
- Using gross prices – always net.
- Looking at one weak month – use at least a full month, ideally a quarter.
Free Excel template
The Restaurant Profit Analyzer runs this analysis automatically: matrix chart, classes and recommendations per dish, filterable by category and month.