Developing a profitable menu requires more than a great design and intuition about the layout and pricing of the menu items. The more data you can generate about sales and profit, and the better you can analyze this data, the more likely you are to have a menu that contributes to your restaurant's bottom line.
The Quadrant Analysis is a powerful tool that provides a "profitability snapshot" of each menu item within its respective menu category (appetizers, soups & salads, etc.). Each menu item is plotted in a four-quadrant grid using its gross profit contribution and number of items sold per day.
The X axis (horizontal) indicates Item Gross Profit in dollars, and the Y axis (vertical) indicates Items Sold Per Day. The intersection of the average gross profit and average number of items sold per day for the whole category creates the "arms" of the four quadrants. Over time you'd like these averages to grow, representing higher sales and profits for you.
Each plotted item falls into one of four categories:
In the sample below, we've plotted the following data:
Assassins like the Vanilla sundae should be eliminated from your menu due to their lack of popularity or profitability. They're just taking up valuable menu real estate.
Dogs have sufficient popularity to remain on the menu, but should be repriced to boost their gross profit contribution. In this sample, there are no "Dogs" to worry about.
Diamonds in the Rough offer good gross profit, and just need a boost in sales. Chocolate Peanut Pie should become the focus of menu engineering tactics such as highlighting or showcasing, tabletop merchandising, and suggestive selling.
Stars? Items like the Brownie Sundae and Boston Cream Pie are winners. Keep on selling them!
Conduct a quadrant analysis approximately once a quarter to keep tabs on your menu's profitability. You can use a spreadsheet program like Microsoft Excel to create your own Quadrant Analysis, and never underestimate the power of a pad of graph paper.
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