Page 24 - GBC Spring 2020 ENG

the dollar profit. The second most important aspect is to look at the profitability of items relative to other similar items on your menu, both in terms of profit as well as popularity. We do this with a QuaM Graph – Quantity Margin Graph. This is a scatter graph that plots items in a menu category in terms of its dollar profitability and popularity. To plot this graph, you need the quantity of items sold over a period of time. You can get this from your point of sale system - generally the longer the time period the better (but even just one month of data is fine). To the right is an example of what a QuaM graph might look like for entrée items on a menu.
Profit margin runs along the X Axis (that is sale price minus food cost) and the quantity sold runs along the Y Axis. Each dot represents that item’s profit margin and quantity. The blue lines represent the averages for each axis. This particular data set is for one month of data (and is a restaurant that does approximately $2 million in annual sales).
As an example, the filet of sole has a profit margin of $8.40 (sales price minus food cost) and it sold 262 items for the month. From a purely business point of view, that item is a liability on the menu. Even though it is above average in popularity, it is well below average in profitability. If we were to do nothing more than remove that item from the menu, we would increase the restaurant’s annual profit by more than $5,000 – 260 guests each month would now order something that on average would make $10.20 profit instead of the $8.40. Because this is a popular item, removing it from the menu is probably not the right thing to do – but increasing the price by $2.00 so that the profit is in line with the average definitely makes sense. You will also note that the percent cost of the item doesn’t play into this at all - it really doesn’t matter whether it is a 27% food cost or a 35% food cost.
Now, keep in mind, that this information isn’t the only factor of menu decisions. A lot of other factors come into the decision- making process – prep labour involved, speed of kitchen line execution, other menu items that might be ordered with the item (eg. beer with chicken wings), competitor pricing, etc. Many factors need to be evaluated when engineering a menu. That being said, clearly the profitability of the items themselves needs to be one of the key factors.
So when we look at this graph for menu analysis, we generally break it into 4 quadrants as shown above:
STARS
These are your “winning” items. They are above average in both popularity and profit margin. These are the items that are really driving your menu profitability success. Generally, we don’t touch them as they are doing what they need to do.
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