Most menus are a list of things the kitchen can cook, priced by looking at what the place down the road charges.
A menu is a margin instrument. Here is how to use it as one.
Step 1 — Plate cost, properly
For every dish: every ingredient, at current cost, at actual portion weight — including the things nobody counts.
Include: garnish, oil, seasoning, sauce, bread, butter, the wastage rate on prep, and the trim loss on proteins.
Exclude: labour and overhead. Those come out of the contribution margin, not the plate cost.
Most kitchens under-state plate cost by 8–15% because of the small things. On a 68% target margin, that is the difference between a dish working and not.
Recost quarterly. Input costs have moved substantially — total business costs are up 24.6% since March 2020 — and a menu costed in 2024 is fiction.
Step 2 — Contribution margin, not food cost percentage
Food cost percentage is the traditional metric and it is misleading.
Contribution margin = menu price − plate cost
A dish at 22% food cost sounds better than one at 34%. But if the first sells for $18 (contributing $14.04) and the second sells for $38 (contributing $25.08), the “worse” dish contributes 79% more per plate.
You bank dollars, not percentages.
Step 3 — The matrix
Plot every dish on two axes: popularity (units sold) and contribution margin.
| Low contribution | High contribution | |
|---|---|---|
| High popularity | Plowhorses | Stars |
| Low popularity | Dogs | Puzzles |
Stars — high margin, high volume
Protect these. Do not change the recipe, do not change the price without care, and make sure they are the easiest thing on the menu to find. Position them top-right of each section, where the eye lands first.
Plowhorses — low margin, high volume
Your biggest opportunity, because volume magnifies every cent.
Fix the cost first: portion size, ingredient substitution, prep efficiency, supplier. A 40c reduction on a dish selling 90 a week is $1,872 a year.
Fix the price second, in small increments. High-popularity dishes tolerate more than owners expect.
Puzzles — high margin, low volume
These make money when they sell. The problem is they do not sell.
Reposition, rename, describe better, train staff to recommend them, or move them next to a Star. If none of that works after a fair trial, they become Dogs.
Dogs — low margin, low volume
Remove them. Every Dog occupies menu space, prep time, fridge space and stock lines. The only exceptions are dietary-requirement dishes that make a table possible — those earn their place through the covers they enable, not their own margin.
Step 4 — Design the menu deliberately
Limit choice. Seven items per section is a reasonable maximum. More creates decision paralysis and pushes customers to safe, familiar, usually lower-margin choices.
Position Stars where the eye goes — top-right of each section, or in a visually distinct box.
Anchor with a premium item. One expensive dish makes everything else look reasonable. It does not need to sell well to earn its place.
Drop the dollar signs and the column of prices. Prices in a right-aligned column invite comparison shopping. Set them after the description, in the same font.
Describe, do not list. “Slow-braised beef cheek, red wine, soft polenta” outperforms “Beef cheek” on both selection rate and price tolerance.
What this is worth
For a venue doing $1.2m with a 68% average gross margin, moving the blended margin two points is $24,000 a year — from recosting, portion control and removing four Dogs.
No price rise, no new customers, no additional labour.
Then reprice on top of it, anchored to the 4.75% award increase from 1 July 2026, which your customers can look up.
Where to go next
- Hospitality Wage Costs After the 2026 Award Increase\n- Gross Margin by Service Line\n- How to Raise Prices Without Losing Customers\n- Pricing for Profit
Sources: Fair Work Commission Annual Wage Review 2026; AMP Bank GO Small Business Cost Pressure Index 2026. Worked figures illustrative. General information, not financial advice.