Why your best-selling item might not be your most profitable one

There is a question we ask almost every new client. "Which item on your menu makes you the most money?"

Most of the time, they point to their best seller — the thing they sell the most of, the thing customers always order, the thing they are most proud of.

And most of the time, they are wrong.

Selling a lot and making money are not the same thing

The thing you sell the most of is the most popular item. That is not the same as the most profitable item. Popularity is about volume. Profitability is about margin — how much money is left after you account for the cost of making it.

A dish that sells 200 portions a month at a 20% margin makes you less money than a dish that sells 80 portions at a 65% margin. But most owners only look at the first number.

In this example, the house salad makes more profit than the best-selling burger — despite selling fewer portions. The kids meal barely contributes anything despite appearing on a lot of bills.

Why does this happen?

Usually it comes down to ingredient costs that have crept up over time without a corresponding price change. A dish that had a good margin two years ago might have a terrible margin today because the cost of one or two key ingredients went up — and nobody noticed, or nobody wanted to raise the price.

What to do with this information

Once you know the margin on every item, a few decisions become very obvious. You know which items to feature more prominently. You know which items might need a small price adjustment. You know which items are probably not worth keeping.

You do not have to overhaul your whole menu. Usually it is two or three small changes that make a real difference to how much money you keep at the end of the month.

The information was always in your numbers. It just needed someone to look properly.