Menu item profitability, dish by dish

Ask most operators which dish on the menu is the most profitable and they will name the one with the biggest margin per plate: the steak, the lamb, the dish with the highest price. They are often wrong, or at least only half right. A dish that earns a lot per plate but takes a cook fifteen minutes at the busiest station on the busiest night may earn less, for the time it takes, than a humble dish that is plated in three.

Menu item profitability has more than one dimension. Cash margin per plate matters. So does how many plates you sell. And so does how much of the kitchen's most limited resource, its time at the peak, each plate uses. Rank the menu by each, and the orders rarely agree.

This guide shows how to rank every dish by cash margin, by total contribution and by margin per minute of kitchen time, why those rankings differ, and what to do with the dishes that look very different depending on how you measure them. Every figure in it is an example from an invented menu.

Menu item profitability is how much each dish contributes to the business. At its simplest, it is the cash a dish leaves behind after its ingredient cost. But a full picture looks at three things.

The first is the cash margin per plate: the selling price, net of tax, minus the plate cost. It tells you what one plate earns.

The second is total contribution: the cash margin multiplied by the number of plates sold. It tells you what the dish earns for the business over a period, and it depends on the menu mix as much as the margin.

The third is margin per minute of kitchen time: the cash margin divided by the minutes of active kitchen work each plate needs. It tells you how well the dish uses the kitchen's capacity, which is often the real limit on how much a venue can earn on a busy night.

Everything starts with an accurate plate cost: the cost of every ingredient in one portion, including the garnish, the sauce, the side and a realistic allowance for trim and waste. A plate cost that leaves out the butter, the oil and the garnish understates the cost and overstates the profit.

Cost each dish from its recipe, using current supplier prices, and re-cost when prices or recipes change. Our guide to plate cost, the arithmetic behind a single dish covers the sums, and our guide to recipe costing, one dish from box price to plate covers the method.

Use the price net of tax. A dish sold at 24 including tax does not earn 24 for the venue; the tax belongs to the government. Margins built on prices including tax overstate every dish.

Gross profit per dish, or cash margin, is the net selling price minus the plate cost. A dish sold at a net price of 20 with a plate cost of 6 earns a gross profit of 14 per plate. In accounting terms it is close to the contribution margin: the price less the costs that rise with every sale.

That figure, in money, is far more useful for decisions than the food cost percentage. A cheap dish with a low food cost percentage can earn less cash per plate than a dearer dish with a higher percentage, and cash is what pays the rent and the wages. Our guide on why gross profit per dish beats food cost percentage explains in detail.

For the rest of this guide, margin means cash margin per plate, unless another measure is named.

Here are eight example mains for one month, with net price, plate cost, cash margin, plates sold and the active kitchen minutes each plate needs at the peak:

The minutes are active minutes during service: the time a cook spends on that plate when it is ordered, not the hours of braising or roasting done earlier in the day.

Ranked by cash margin per plate, from highest to lowest, the order is:

This is the ranking most operators carry in their heads. It favours the expensive dishes, and it suggests that the burger and the fish and chips are the weakest dishes on the menu. On its own, it would point a manager towards promoting the lamb and the steak and perhaps repricing the burger.

Ranked by total contribution, the margin multiplied by the plates sold, the order changes:

The burger, near the bottom on margin per plate, is second for total contribution, because guests order it so often. The lamb, top on margin, is seventh, because it sells modestly. This is where the menu mix, the share of sales each dish takes, enters profitability. Our guide to menu mix: what your guests order, not what you sell covers how to read it.

Neither ranking so far says anything about the kitchen. Yet on a busy night, the kitchen's time is often the scarcest resource the venue has. Every station can produce only so many plates in an hour, and the grill or the sauté section is usually the first to reach its limit.

A dish that ties up a cook for fourteen minutes at the peak uses capacity that could have produced several quicker dishes. If the room is full and the kitchen is the bottleneck, that dish is costing the venue covers, even if its margin looks healthy.

Kitchen time does not show up in any costing. It has to be measured separately, and once it is, it changes how several dishes look.

Measure the active minutes each dish needs during service: the time a cook spends on it from the moment the order arrives to the moment it is plated. Exclude work done earlier in the day, such as braising, roasting or making a sauce, because that happens when the kitchen has time to spare.

The simplest method is to watch and time each dish a few times during real services, ideally on a busy night, and take a typical figure. Ticket times from the kitchen screen give a useful check, though they include waiting time as well as cooking time. Our guide to ticket times, the only kitchen metric that moves covers how to read them.

Note which station each dish uses, too. Minutes on a station that is overloaded at the peak matter more than minutes on one that is quiet.

Divide each dish's cash margin by its active minutes, and you get margin per minute of kitchen time:

Now the risotto, mid-table on margin per plate, is last. The roast chicken, mid-table on margin, is second. The burger, bottom on margin, is third.

The three rankings disagree because they measure different things. Cash margin measures value per plate. Total contribution adds how often the dish sells. Margin per minute adds how much of the kitchen's capacity each plate uses.

Dishes that do most of their work in advance, like the braised lamb and the roast chicken, use little kitchen time during service, so they rank highly per minute. Dishes cooked entirely to order, like the risotto and the duck, use a lot, so they rank lower. Popular dishes rise on total contribution, whatever their margin.

None of the rankings is the true one. Each answers a different question, and the useful work is in understanding why a dish ranks differently on each, then deciding what to do about it.

Margin per minute matters most when the kitchen is at capacity. At three o'clock on a quiet afternoon, a dish that takes fourteen minutes costs nothing extra, because the cook has time. At eight o'clock on a Saturday, with every station full, those fourteen minutes may cost two other plates.

So weight kitchen time by when the dish is ordered and which station it uses. A risotto ordered mostly at lunch, when the kitchen is quiet, is less of a problem than one ordered mostly at the dinner peak. A dish on a station that always has spare capacity is less of a problem than one on the bottleneck station.

In practice, focus the per-minute analysis on the busiest services and the busiest stations. That is where kitchen time is truly scarce, and where changes earn the most.

Some costs fall outside both the costing and the kitchen minutes. A dish that needs a specialist ingredient used nowhere else may carry hidden waste, because part of every pack goes unused. A dish that only one cook can make well creates a risk on the nights that cook is off. A dish that is often sent back, or remade, costs ingredients and time twice.

Note these alongside the rankings. A dish with a good margin, good speed and a high remake rate is less profitable than its numbers suggest. A dish whose key ingredient is wasted every week has a true plate cost higher than its costing.

None of these needs precise measurement. A simple note beside each dish of anything unusual, waste, skill or remakes, is enough to stop a decision being made on the numbers alone.

Put the three rankings side by side and look for patterns:

Our guide to the menu engineering matrix, with a real menu covers the popularity and margin view in detail. The kitchen-time view adds a third dimension the matrix does not show.

Each pattern suggests a different action.

For dishes that use too much kitchen time at the peak, look at the method. Can a component be prepared in advance? Can the dish be finished rather than cooked from raw during service? A risotto that is part-cooked in advance and finished to order can take a third of the time, with little loss of quality if done well.

For workhorses with low margins, look at price and cost: a small increase or a cheaper side can lift a popular dish's total contribution substantially. For dishes with high margins and low sales, look at how they are sold: their position on the menu, their description and whether servers recommend them.

Only after those steps should removal be considered, and then for dishes that rank low on every measure and serve no other purpose, such as a dietary need.

Menu engineering is the wider practice of judging dishes by popularity and profitability and acting on the results. Menu item profitability, measured carefully, is its foundation. A matrix drawn on inaccurate plate costs, or on prices including tax, will put dishes in the wrong places.

The kitchen-time view is a valuable addition, especially for busy venues where the kitchen is the limit. It explains why some dishes that look like stars on the matrix still cause trouble on a busy night, and why some apparent plowhorses are quietly among the most valuable dishes on the menu.

Our guide to menu engineering, and the four dishes you must act on covers the actions for each quadrant. Use the profitability rankings in this guide to check those actions before you take them.

Re-rank the menu whenever plate costs change significantly, whenever the menu changes, and at least every few months. Supplier prices move, portions drift, and the menu mix shifts with the seasons, so last quarter's rankings can mislead.

Kitchen time needs measuring less often, because methods change less often than prices. Re-time a dish when its recipe or method changes, or when the kitchen team changes significantly.

Keep each set of rankings. Comparing them over time shows whether actions worked: whether a price rise lifted a workhorse's contribution, or whether a change in method moved a slow dish up the per-minute ranking.

An invented brasserie ranks its mains and finds that its mushroom risotto, a favourite with the chef, is last per minute of kitchen time. It is cooked entirely to order on the busiest station, and on Saturday nights, orders for it slow every other dish on that station.

Rather than removing it, the kitchen changes the method. The rice is part-cooked in the afternoon, cooled and finished to order with stock and the final ingredients, cutting its active time from fourteen minutes to five. The risotto's margin per minute rises from under 1 to over 2.5, and the station clears its Saturday backlog faster.

At the same time, the brasserie raises the price of its burger, the second biggest contributor, by a small amount. Sales hold, and the burger's total contribution rises by more than the risotto earns in a month. Neither change would have come from looking at margin per plate alone.

In servearound, the menu report gives the sales side of menu item profitability: units sold, checks, revenue and share of sales for every dish and category over any dates, which is the menu mix behind total contribution. Kitchen analytics give the kitchen side: ticket times by station, ticket time by day and hour, and which dishes take up the most kitchen minutes in total, so the dishes that load the kitchen at the peak stand out.

servearound does not hold recipes or dish costs today, so plate costs and cash margins come from your own costing sheet, with the units and revenue taken from the report. Inventory tracking, for the stock behind the menu, is coming. See Analytics.

How much each dish contributes, measured as cash margin per plate, total contribution over a period and, for busy venues, margin per minute of kitchen time.

Take the selling price net of tax and subtract the plate cost: every ingredient in one portion, including sauces, garnishes and an allowance for waste.

Because cash pays the bills. A cheap dish with a low percentage can earn less per plate than a dearer dish with a higher one.

The cash margin multiplied by the number of plates sold over a period. It shows what the dish earns for the business, combining margin and menu mix.

The cash margin divided by the active minutes a cook spends on the dish during service. It shows how well a dish uses the kitchen's capacity.

No. Count only the active minutes during service, when kitchen time is scarce. Work done in quiet hours does not compete with other plates.

Look first at the method: prepare components in advance or finish the dish rather than cooking it from raw, before considering removal.

None on its own. Each answers a different question; the useful work is in understanding why a dish ranks differently on each.

Whenever plate costs or the menu change, and at least every few months. Re-time dishes when their method changes.

Menu item profitability is more than margin per plate. Rank every dish by cash margin, built on an accurate plate cost and the price net of tax; by total contribution, which adds how often it sells; and, for busy venues, by margin per minute of active kitchen time at the peak. The three rankings rarely agree, and the differences are where the useful decisions are.

Protect dishes that rank highly on all three, change the method of high-margin dishes that are slow at the peak, lift the price or lower the cost of popular workhorses, and consider removal only for dishes that rank low on every measure and serve no other purpose. Note hidden costs such as waste and remakes, and re-rank whenever costs or the menu change.