Menu ABC Analysis: How to Turn a List of Dishes into Profit
Restaurant business
A menu isn't a list of dishes — it's a financial asset. ABC analysis turns guesswork into a system: it shows what makes money, what only takes up space, and where the profit you're leaving on the table every day is hiding.
01The core idea — the Pareto principle
The 80/20 rule plays out especially vividly in a restaurant: roughly 20–30% of dishes generate 70–90% of revenue. The rest of the menu sells rarely or adds mere pennies. ABC analysis sorts items into three groups:
A — leaders: ~20–30% of items, 70–80% of revenue. B — middle of the pack: ~15–20% of items, the next 10–20%. C — laggards: the remaining 50–60% of items deliver just 5–10%.
02Three dimensions of analysis
One cut isn't enough. You run ABC three times — by revenue, by units sold, and by gross profit (revenue minus food cost). This catches the main intuition trap: high revenue ≠ high profit. The classic example is the Greek salad: it sells great, but pricey ingredients mean it barely earns anything.
| Group | Share of items | Share of metric | What to do |
|---|---|---|---|
| A | 20–30% | 70–80% | keep, promote, protect |
| B | 15–20% | 10–20% | optimize |
| C | 50–60% | 5–10% | fix up or cut |
03What data to collect
| Per dish | Per network and channel |
|---|---|
| category and name | location, city |
| units sold, revenue | channel: dine-in / takeaway / delivery |
| food cost, food-cost % | aggregators: Grab, Foodpanda, LineMan |
| gross profit, average price | discounts and promos by channel |
| discounts, promos, returns | menu split by location |
Channel-level detail matters: the same dish can be a "star" in the dining room and a flop on delivery. The data usually comes from the POS/ERP and is consolidated into a single table.
04The menu-engineering matrix
The most intuitive tool is a matrix with two axes: popularity (how often it's ordered) and profitability (margin). This yields four types of dishes, each with its own strategy.
05ABC×ABC and decisions
Cross ABC by sales with ABC by profit, and every dish gets a pair (A/A, A/C, C/A, C/C…) — and with it, a ready-made decision:
- A–A — heroes. Popular and profitable: keep them front and center, protect the ingredients, you can nudge the price up a bit.
- A–C — plowhorses. Hits with thin margins: raise the price, trim expensive ingredients, rethink the portion.
- C–A — puzzles. They sell little but are profitable: promote them — photos, descriptions, placement, staff training.
- C–C — dogs. No revenue, no profit: cut them or rework them radically.
From there, each item gets a set of actions: keep it, raise the price, lower the food cost, change the recipe, rewrite the name and photo, promote it, reposition it on the menu, or remove it. It helps to pick 3–5 dishes each month to "spotlight."
06How many items on a menu
An oversized menu hurts efficiency: the guest falls into "choice paralysis," and the kitchen drowns in write-offs. Behavioral research converges on 5–7 items per category as the optimum, with an overall ceiling of about 30–50 dishes for a typical venue.
Brands with short menus are usually more profitable: fewer ingredients means less waste and simpler purchasing. McDonald's, Chipotle, and Sweetgreen deliberately limit their range; The Cheesecake Factory, with 250+ dishes, is the exception, held together by rigorous standardization.
07Channels, promos, categories
Channels
Build ABC separately for dine-in, delivery, and each aggregator. A single dish can sit in group A at one location and in C at another (because of a promo, for instance). This tells you whether to run a single menu or adapt it — and what to drop from delivery altogether.
Promos
An item may "survive" purely on discounts: pull the promo and sales collapse. Analyze without artificially inflated sales. Often, instead of a straight discount, it's better to bundle a dish as a complimentary add-on to a best-seller — that way it gets promoted without sacrificing price.
Categories
Run ABC at the category level too. If "Bowls" deliver 40% of revenue and 50% of profit while "Desserts" bring 5% and 2%, the focus is obvious. For a multi-cuisine menu this matters especially, otherwise a strong category "smears" the picture of the rest.
08A system for THE BAR
For the THE BAR chain (categories: Bowls, Sushi, Sandwiches, Wraps, Wok, Smoothies, Desserts, Drinks), the methodology should be baked into three recurring reports plus auto-recommendations:
- Daily. Units sold / revenue / food cost / profit for the day; top 10 by revenue and by profit; a list of items with zero sales.
- Weekly. ABC profile for each category and the full menu; change versus the previous week; the week's "stars" and which ones slipped.
- Monthly. Full ABC by revenue, units, and profit; the ABC×ABC matrix; candidates for price/recipe changes; leading categories.
- Auto-recommendations. Rules like "C on profit and C on sales → remove," "A on sales and C on profit → raise the price or lower the food cost."
You can implement this in Google Sheets or a BI tool (Looker Studio, Power BI), or — even simpler — through the built-in ABC reports in your POS (Poster, iiko, Syrve), which calculate margin themselves and suggest an action. The key is daily data refresh and an eye on seasonality.
- Gross profit up 10–15% with no new guests — through pricing, food cost, and removing loss-making items.
- A higher average check — via cross-selling stars and promoting puzzles.
- Less waste and fewer write-offs — a shorter menu, fewer ingredients.
- More efficient marketing — budget on stars and puzzles, not on everything at once.
- Decisions by the numbers, not "by eye."