Forecasting is powerful, but profit is won (or lost) in the menu. Here’s how I use menu engineering + operational data to protect margins in hospitality.
Hi, I’m Karine Sarkisyan. I work at the intersection of financial analysis, hospitality operations, and public health, and I’m obsessed with one question:
How do we grow a hospitality business without sacrificing margin, quality, or community value?
In my last post, I shared how forecasting helps hospitality scale sustainably. This time, I want to talk about what usually decides whether those forecasts become reality:
The menu.
Most restaurants don’t “lose money” in one big dramatic moment. They leak it quietly through:
- inconsistent portions,
- underpriced best-sellers,
- rising ingredient costs,
- high waste and spoilage,
- and a menu that looks nice but doesn’t behave like a business system.
So here’s the practical playbook I use: menu engineering + cost control, grounded in data.
1) The menu is not a list. It’s your operating model.
If your menu isn’t tied to data, it becomes guesswork. And guesswork turns into:
- unstable COGS,
- chaotic purchasing,
- staffing pressure,
- and unpredictable profitability.
A data-driven menu acts like a control system: it tells you what to push, what to fix, and what to remove.
2) The two numbers that matter most: Contribution Margin + Popularity
I start with a simple matrix:
Contribution Margin (CM)
CM = Menu price – (ingredient cost + packaging + variable add-ons)
Popularity
How often it sells (units per week/month), ideally segmented by:
- dine-in vs delivery,
- daypart,
- season,
- promotions.
Then I categorize items into four types:
- Stars: high margin + high popularity
- Plowhorses: low margin + high popularity
- Puzzles: high margin + low popularity
- Dogs: low margin + low popularity
This is where strategy becomes clear.
3) What I do with each category (real decisions, not theory)
⭐ Stars
These are your growth engines.
- feature them in marketing
- protect ingredient availability
- standardize execution so quality stays consistent
🐎 Plowhorses
People love them, but they don’t pay the bills.
Common fixes:
- small price lift (even $0.50–$1.50 matters)
- portion calibration (especially proteins)
- bundle strategy (add high-margin side or drink)
- cost-reduction via ingredient swaps without changing the identity
🧩 Puzzles
High margin, low sales.
Usually a positioning problem.
- rename it
- move it on the menu
- improve photo/description
- create a limited-time highlight
- train staff on how to recommend it
🪨 Dogs
These usually create complexity without return.
- remove them
- or redesign them entirely
- or convert them into seasonal/limited offerings if they support brand story
4) The “silent killers”: portions, waste, and vendor creep
Even a perfectly priced menu fails if the kitchen is inconsistent.
Here’s what I track monthly:
- portion variance (standard grams/ounces vs reality)
- waste/spoilage rates
- vendor price drift (same ingredient, different cost over time)
- inventory turnover
- prime cost (COGS + labor)
If you want a single operational rule:
Margins don’t disappear in the spreadsheet. They disappear in the kitchen.
5) Tools I use (simple stack, strong output)
You don’t need a fancy tech budget to do this well.
- Excel / Google Sheets for margin math
- POS exports for item-level sales
- basic inventory tracking (or even structured weekly counts)
- dashboards (Power BI if available, but not required)
The key isn’t the tool. It’s the discipline:
consistent inputs → consistent visibility → consistent decisions.
6) Where public health meets profitability
This might surprise people, but nutritional innovation and profitability can support each other.
When you design menus with:
- balanced ingredients,
- stable sourcing,
- portion control,
- less waste, you often end up with:
- improved customer satisfaction,
- better consistency,
- fewer remakes/complaints,
- and cleaner unit economics.
Sustainability is not a vibe. It’s a system.
Closing thought
Forecasting tells you where you could go.
Menu engineering tells you whether you’ll survive the trip.
If you’re running a hospitality business (or advising one) and want:
- a menu engineering template,
- a margin calculator,
- or a simple “Stars/Plowhorses/Puzzles/Dogs” dashboard structure,
I’m happy to share what I use in practice.
Because in hospitality, growth is optional. Profitability is not.
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