You Take Dollars To The Bank, Not Percentages

Which menu items should be the focus of your sales efforts? Hint...don't make your decision based on food cost.

There are many menu engineering and merchandising techniques that can boost sales of a specific menu item. You can read about some of my favorites on this web site. But which of your menu items deserve special sales and merchandising attention to maximize your menu's profitability?

There are many who belong to the old school that teaches that profitability is directly tied to cost of sales. They would believe, for example, that a food cost over 40% is too high and that items with such a food cost should be buried 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 look at the cost of sales and encourage sales of the Tuna Sandwich over the Turkey Club. But look at the gross profit. Despite its 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 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. We've attached a Menu Item Costing Worksheet and protocols to help you. 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.

Bill Main, FMP, FCSI, is a nationally-recognized author, foodservice consultant, and professional speaker. His goal is to help you define who you are, where you want to go, and the best way to get there. Bill Main & Associates (www.billmain.com) offers a wide range of consulting services, resources and tools in the areas of strategic growth, marketing, menu, leadership, training, and management development.