BTHE BARATELLI INSTITUTE · Mentoring at Scale
FOR INDEPENDENT RESTAURANT OWNERS

Stars · Plowhorses · Puzzles · Dogs.

The classic menu-engineering analysis. Plot every menu item by popularity × contribution margin, see exactly which items drive your business and which quietly bleed it. The chefs and GMs at the top-quartile restaurants run this quarterly. Most independent operators have never run it once.

4
Quadrants
CM
Contribution margin
28%
Food cost target
60%
Prime cost ceiling
YOUR RESTAURANT
1
Restaurant profile
2
Cost structure
3
Menu items
4
Settings
5
Engineering matrix
STAGE 1 OF 5

Tell me about your restaurant

Defaults are typical for a 90-seat full-service neighborhood concept doing ~$2.4M annual revenue.

Total billed revenue, excluding sales tax. National average independent full-service: $1.5-3M; upscale concepts $3-8M; fast-casual $1-2M.
$
Total covers per year. Drives per-cover average check downstream.
STAGE 2 OF 5

Cost structure

The "prime cost" (food + labor as % of revenue) is the single most-watched restaurant metric. Top quartile under 55%; healthy 60%; struggling 65%+.

Cost of all food and beverage at wholesale. Industry healthy zone: 28-32% of revenue for full-service; 22-28% for upscale; 30-35% for casual/pizza.
$
All wages + payroll taxes + benefits + workers comp. Healthy zone 28-35% of revenue; tipping-state full-service can run lower on FOH side.
$
Healthy zone: 6-10% of revenue. Above 12% is often unprofitable regardless of operations. Includes utilities, common area, property tax.
$
Marketing, supplies, insurance, repairs/maintenance, technology, third-party fees (delivery commissions), licenses.
$
Prime cost discipline. Prime cost (food + labor) = the single number that decides whether your restaurant is healthy. If you do nothing else, set a daily/weekly prime-cost target and review actuals against budget every Monday morning. Most independent operators check P&L monthly — by which point a 3-point prime-cost slip has already cost six weeks of profit.
STAGE 3 OF 5

Your menu items

Enter your top 8-15 items. Each one needs sales count (last 30 days), food cost, and sell price. The matrix in Stage 5 plots them.

Good data inputs. Pull last 30 days of sales counts from your POS (Toast / Square / Lightspeed). Food cost should be true cost — including waste, prep loss, and accurate portion size. The biggest source of menu-engineering errors is using "menu cost" (the recipe card cost) instead of "actual cost" (what plates actually cost in the trash + on the table).
STAGE 4 OF 5

Matrix settings

The classic Kasavana & Smith approach uses median-based thresholds. Adjust if you have a strong prior on what "high popularity" or "high CM" should mean for your concept.

Why thresholds matter. The Kasavana & Smith default (1982, the foundational paper) uses 70% of average sales count for popularity and average CM. This is intentionally generous on popularity — you don't want to call a #5-of-12 item "unpopular" just because it's not a top seller. Median-based thresholds force a strict 50/50 split, which can be useful for concepts with very flat popularity distributions.
STAGE 5 OF 5 · MENU ENGINEERING MATRIX

Engineering matrix

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—
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The four-quadrant matrix

Hover dots for item names. Y-axis: contribution margin per unit. X-axis: relative popularity.

CONTRIBUTION MARGIN
PUZZLES (low-pop / high-CM)
STARS (high-pop / high-CM)
DOGS (low-pop / low-CM)
PLOWHORSES (high-pop / low-CM)
POPULARITY (sales count)

One-line action per quadrant

P&L health metrics

Per-item profitability ranking

Recommendations

PAIRS WITH
CFO & Controller's Guide · Liquidity Event Playbook
The CFO Guide covers restaurant-specific topics: prime cost discipline, menu repricing cadence, third-party-delivery economics, labor scheduling math, and the multi-unit operator playbook. The Liquidity Event Playbook covers exit-prep for restaurant operators considering a sale to a multi-unit consolidator. Subscribe to the library →
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Prime cost discipline, menu repricing cadence, daypart analysis, third-party delivery economics, labor scheduling math, recipe costing standards, and the multi-unit growth playbook.

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Menu engineering analysis based on the Kasavana & Smith (1982) framework. Quadrant thresholds are conventional defaults; your concept may justify different cut-points. Per-item profitability uses contribution margin (sell price − food cost), which intentionally excludes labor — labor allocation per dish is rarely accurate enough to use in this analysis. P&L benchmarks based on industry-typical full-service ranges (NRA Restaurant Industry Operations Report, Toast Restaurant Industry Report, RestaurantOwner.com benchmarks). Your peer-specific targets vary by region and concept. This is not financial or operational advice.
WANT THE METHODOLOGY BEHIND THIS TOOL?
This calculator is one chapter of CFO & Controller's Reference Guide.
The tool gives you the answer. The guide gives you the argument — the case law, the worked examples, the negotiation playbook, the cross-check tables, the exception cases. Read the chapter and you can defend your number to a board, a buyer, an examiner, or a counterparty.
The methodology behind this calculator is in Ch 28 KPI Dashboards (restaurant) of the reference guide.
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