Menu Engineering - Marketing (price & Promotion)

Marketing (price & Promotion)

By using guest demand (also called the menu mix) and gross profit margins, the relative performance of each menu item is determined, and assigned one of the following terms (based on the BCG Matrix):

Stars Stars are extremely popular and have a high contribution margin. Ideally Stars should be your flagship or signature menu items.

Plow Horse or Cash Cows Plow Horses are high in popularity but low in contribution margin. Plow horse menu items sell well, but don’t significantly increase revenue.

Puzzles Puzzles are generally low in popularity and high in contribution margin. Puzzle dishes are difficult to sell but have a high profit margin.

Dogs Dogs are low in popularity and low in contribution margin. They are difficult to sell and produce little profit when they do sell.

In general, items within a relevant comparable set (for example, entrees, or chicken entrees) should be priced to have similar contribution margins - this way, the restaurant would make the same amount of money, no matter what item the guest chooses to order.