Sales Mix, Menu Mix and Menu Engineering
What is definition of Sales Mix and how is it different than Menu Mix? What about Menu Engineering, how does that concept work into this discussion?
I’ve heard all three terms used interchangeably to describe an evaluation of your margin as it relates to the menu. And I’ve also heard each phrase used in a different context to describe other aspects of menu analysis. There is no general consensus or set in stone rule.
But having said that, here are the definitions of these 3 phrases which make the most sense to me as a chef, because I do see them to be 3 distinctly different perspectives of menu management.
Sales Mix is an evaluation of your Theoretical Food Cost based upon total items sold for a given period and the margin generated from those items. We’ll cover more on this topic below.
Menu Mix is often used interchangeably to refer to the same thing as Sales Mix. However, I consider Menu Mix to refer to how the menu items are distributed in the kitchen during service. Menu Mix evaluates the flow of menu items. For instance, if you have menu items which come from the grill station, sauté station, and fry station then ideally one third of the most popular items will come from each station during service.
This even distribution of production in the kitchen facilitates speed of service. Conversely, if 70% of your menu items come off of the grill and only 30% come from the other two stations, then your grill station will constantly be slammed and speed of service will be slow.
Menu Engineering most commonly refers to the layout of your menu, as in the printed layout. This involves the science of the way people read, which items attract them, and which parts of the physical menu capture the most attention. Items placed in the “best real estate” of the menu design will get better sales simply due to the science of how people read and perceive a menu.
But in my view, Menu Engineering has a much more broad meaning as it relates to the evaluation of your menu. It is the big picture. It involves all aspects of your menu, from printed design & layout, to the science of reading & marketing, its Sales Mix structure, and the impact of Sales Mix and Menu Mix. Menu Engineering evaluates the inter-relatedness of the kitchen, guest perception (of the menu), and the financial bottom line.
So, with that out of the way, let’s jump into Sales Mix and how to use it to strengthen your financial picture.
What is the Sales Mix Definition?
As already stated, Sales Mix is an evaluation of your Theoretical Food Cost based upon total items sold for a given period. In other words, based upon what you sold this should be your food cost…assuming no waste, no comps, no mistakes, etc. Sales Mix calculations will also often then compare the theoretical food cost with the margin generated from the items sold. The goal is to measure and compare three vital pieces of information: your theoretical food cost % based upon items sold, the margin (net profit as compared against cost of goods), and your actual food cost after inventory is taken for the given period.
As chefs, we are often taught that food cost % is the end all, the most important evaluation of our business success. That is a misconception, a failed concept, because it is only half the truth, half the picture. Sometimes a high food cost is good thing, perhaps even a better thing, than a low food cost. Keep reading!
To illustrate that sometimes a high food cost is a good thing, if you sell lobster at a 50% food cost, and spaghetti at a 30% food cost, your actual food cost will vary depending upon the quantities of each sold. If you sell lots of lobster you will have a lousy food cost…but you will have lots of cash! And more importantly, you will have a lot more net cash (margin). In the examples below 1,000 orders are served in each case. In one example it is mostly lobster, and in the other it is mostly spaghetti. At the end of the day would you rather have a 49.6% food cost and $23,000 net cash; or a 37.1% food cost and only $8,800 net cash? Give me the cash! That’s $14,200 more net cash for the same amount of covers, the same amount of labor…focusing on the “lousy” food cost is a mistake. The cash pays the bills, not the percentages.
| Cost | Sales $ | Food Cost | Margin | # Sold | TT Cost | TT Sales | Food Cost | Margin | |
| Lobster | $25.00 | $50.00 | 50% | $25.00 | 900 | $22,500 | $45,000 | 49.6% | $23,000 |
| Spaghetti | $3.00 | $10.00 | 30% | $7.00 | 100 | $300 | $1,000 | ||
| Total | $22,800 | $46,000 | |||||||
| Cost | Sales $ | Food Cost | Margin | # Sold | TT Cost | TT Sales | Food Cost | Margin | |
| Lobster | $25.00 | $50.00 | 50% | $25.00 | 100 | $2,500 | $5,000 | 37.1% | $8,800 |
| Spaghetti | $3.00 | $10.00 | 30% | $7.00 | 900 | $2,700 | $9,000 | ||
| Total | $5,200 | $14,000 | |||||||
Sales Mix Explained – Video Discussion
Access the video presentation of the Sales Mix -vs- Food Cost discussion!
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The sales mix calculation tool below will help you get a better picture of the dynamics of your menu, which items are most popular, which ones drive the most revenue, which ones are stars, and which ones are dogs. It will give you a theoretical food cost, a sort of snapshot picture, of your food cost based upon the menu items sold.
It’s important to note that your actual food cost will be higher than your Theoretical Sales Mix food cost, roughly by about 2 to 5 percentage points. There are many reasons for this disparity, a few of which include incorrect recipe costing, theft, waste, re-fired food, food comps, wait staff errors, and over portioning to name a few. Read the 40 thieves of food cost article for the full list of food cost perpetrators.
How to Use the Sales Mix Form Video Tutorial
Here is a detailed video showing how to use this form. You can download it farther down the page.
The Sales Mix Form is available to Premium Members
Microsoft Excel required (not included)
Notes:
If you need to unprotect the sheet and don’t know how to do it then view my video on how to unprotect an Excel sheet.
To see how to change the currency from U.S. dollars to any other standard view this video.
Comments from before Site Migration
AARONWT – the password is listed on the “Instructions” tab under the heading Final Notes. I believe the password is “open”.
I need to add a category or 2, but I can’t create more sheets b/c of password. What is the password so I can tweak the spreadsheet to work for me?
UPDATE: Nevermind…found it. :-/
Thanks,
Aaron
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Thank You very much for great worksheet.
Thank You very much for knowledge and great worksheet
Content is superb.but i couldnt download the sheets.very helpfull site.
Thanks
Thanks Julian!
Most of the forms require a membership to access.
Hot Damn! About time this information gets the exposure it deserves. I’ve been preaching the gospel of “margin over food cost” for 30 years and felt very alone in the fight. The pure blank looks from senior management when I try to explain why running a high food cost isn’t the metric they should be looking at boggles my mind. Your clear and concise explanation is going into my kitchen management toolbox as the “big hammer” to try and get these folks to come around. Thanks. Great Job.
I know! So many restaurant owners, even corporate level owners, do not understand margin -vs- food cost %. It’s my hope that this article will help chefs who understand it explain it to their budget people in a simple to understand way.