Which of your menu items deserves the most prominent places on your menu? How can you maximize your menu profitability? Calculation of the gross profit contribution of your items can lead to higher profits.
There are many who belong to the old school that teaches that profitability is directly tied to cost of sales. In other words, a food cost over 40% is too high. We should bury those items deep within in the menu. The focus should be on selling the items with the 29% food cost, right?
Not necessarily. My philosophy is this...
You take dollars to the bank, not percentages.
Your food cost percentage isn't necessarily an accurate picture of how profitable your menu is. The gross profit contribution of an item tells the real story. Look at the chart below:
Based on this information, students of the old school would encourage sales of the Tuna Sandwich over the Turkey Club. But look at the gross profit. Despite it's higher cost of sales, the Turkey Club offers an extra dollar in flow through profit.
Although the retail price of the Turkey Club is higher, we will assume for comparison purposes that each sandwich is fairly priced. The point is to avoid making decisions based on food cost percentage.
The first step is to accurately determine the cost each of your menu items. If you need help, download our Menu Item Costing Worksheet and protocols. It must become your mission to utilize all your skills to focus on the menu items that have the most dollar profit, not the lowest percentage cost.