Menu Engineering, The menu analysis technique described in this video was developed by Michael L. Kasavana and Donald I. Smith and was described in a book published in 1982. Known as menu engineering, the technique is now widely known and respected.
The menu composition percentage is the same as the popularity index, it is calculated by dividing
the number of units sold by the total number of units sold for all items. /"
Contribution margin (CM) is defined as the selling price minus the variable cost per unit.
The menu cost for the item is simply the number sold multiplied by the individual cost,
Similarly, menu revenue for an item is the number sold multiplied by the item's sale price.
The menu contribution margin is obtained by multiplying the number of units sold for each menu item by its contribution margin.
the average contribution margin, determined by dividing the total contribution margin by the total number of units sold,
Item percentages require careful consideration. This is the percentage of an entire menu represented by each item on that menu, multiplied by 70 percent.
Some may wonder why we use 100 percent of the average rather than 70 percent. The Menu Engineering authors simply stated that using 70% of the average makes the results more realistic.
Many restaurant operators may want to use 100 percent of the average number sold instead of 70 percent.
Whether to use the 70 percent figure (as the original authors of Menu Engineering used) or the 100 percent figure (as many have suggested) is a matter of personal preference. Using either of these figures does not change the financial situation.

Entries in the contribution margin category, low and high, are made after comparing the contribution margin of each menu item with the average contribution margin of the menu.
Stars: Stars are both profitable and popular and should normally be left alone unless there is a valid reason to change them. Due to the popularity of stars, it is sometimes possible to increase the price of their menus without affecting the volume, thereby increasing their profitability.
Workhorses are popular, but relatively unprofitable. They should remain on the menu, but efforts should be made to increase their contribution margins without decreasing volume. One possibility is to slightly reduce the standard portion size while improving the appearance of the product. Another solution is to increase the prices of these items, assuming that their volume will not be significantly affected.
Puzzles Puzzles are relatively profitable, but relatively unpopular. They should remain on the menu, but efforts should be made to increase their popularity without significantly diminishing their profitability. There are many ways to do this, including repositioning items to more favorable locations on the menu, presenting items as specials suggested to diners by servers, and changing the appearance or menu descriptions of those items to increase their appeal.
/"Dogs Because dogs are both unprofitable and unpopular, they should be removed from the menu and replaced with more profitable items unless (1) there is a valid reason to continue selling a dog ( as for an item that promotes other sales) or (2) its profitability can be increased in some way to an acceptable level.
This will require the item to be modified in some way. A way to change
one piece of a dog to a puzzle is to increase the contribution margin per unit,
which can be done by increasing the selling price. /"
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0:00 Menu engineering
0:20 Menu mix
1:43 Contribution margin
2:10 Menu cost
2:32 Menu revenue
3:01 Menu contribution margin
3:40 Average contribution margin
4:15 item percentages
Contribution margin category 5:49
7:30 p.m. Category Menu Mix
8:55 a.m. Menu Engineering Categories
10:46 a.m. Star menu engineering
11:09 a.m. Menu engineering Workhorses
11:53 Menu engineering
12:35 p.m. Dog menu engineering

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