Reducing your menu can significantly improve your profitability. By focusing on your best-performing dishes, you increase efficiency and lower costs. But how exactly do you calculate what this delivers?
Why a smaller menu can deliver more profit
A menu with 40 dishes seems attractive to guests, but can undermine your profit. You hold more inventory, have more waste, and your chef has less time to perfect each dish.
💡 Example:
Restaurant with 40 dishes vs. 20 dishes:
- 40 dishes: average 2.5 portions per dish per evening
- 20 dishes: average 5 portions per dish per evening
- More volume per dish = better purchasing terms
Result: 8-15% lower purchasing costs per dish
Analyze your current menu
Before you can calculate what reducing delivers, you need to know which dishes are currently underperforming. Divide your dishes into four categories:
- Stars: Popular and profitable (keep)
- Plowhorses: Popular but low profit (improve or remove)
- Puzzles: Profitable but not popular (promote or remove)
- Dogs: Not popular and not profitable (remove immediately)
💡 Example analysis:
From 40 dishes, you typically find:
- 5 dishes = 40% of sales (Stars)
- 10 dishes = 35% of sales (Plowhorses)
- 15 dishes = 20% of sales (Puzzles)
- 10 dishes = 5% of sales (Dogs)
Calculate the cost savings
Reducing your menu saves money on multiple fronts. Add up these savings for the total impact:
1. Inventory costs
Fewer dishes = fewer different ingredients = lower inventory value.
💡 Inventory cost calculation:
Current inventory value: €8,000
- 20 fewer dishes = 30% fewer unique ingredients
- New inventory value: €5,600
- Savings: €2,400 in tied-up capital
At 8% interest = €192 per year less interest costs
2. Waste costs
Fewer dishes means fewer ingredients that expire.
3. Purchasing advantages
More volume per ingredient = better prices from suppliers.
⚠️ Note:
Only count realistic savings. A reduction of 2-5% on purchasing costs is achievable, 20% usually isn't.
Calculate the revenue impact
Removing dishes also means revenue loss. But this is often less serious than you'd think, because guests switch to other dishes.
💡 Revenue impact calculation:
20 removed dishes sold €2,000/month combined
- 70% of guests choose an alternative from remaining menu
- Actual revenue loss: €600/month
- But: food cost of retained dishes 5% lower
- Net effect: often positive
The total formula
Calculate the margin impact like this:
Total impact = Cost savings - Revenue loss + Efficiency gains
- Cost savings: Inventory + Waste + Better purchasing prices
- Revenue loss: Removed revenue × (1 - Substitution factor)
- Efficiency: Faster service + Fewer errors + Better quality
💡 Total example:
Restaurant with €50,000 monthly revenue:
- Cost savings: €800/month
- Revenue loss: €600/month
- Efficiency gains: €400/month
Net benefit: €600/month = €7,200/year
How do you calculate the margin impact? (step by step)
Analyze your current sales figures
Look at the last 3 months to see how much you've sold of each dish. Also calculate the food cost per dish. This shows you which dishes sell poorly and generate little profit.
Select the 20 best dishes
Choose the dishes that make up 80% of your sales together. These are usually your 15-20 best-performing dishes. Keep these, the rest can go.
Calculate inventory and waste savings
Add up how much less inventory you need and how much less waste you expect. Calculate with 20-40% lower inventory value and 30-50% less waste.
Estimate revenue loss and substitution effect
Look at the revenue from removed dishes. Calculate that 60-80% of those guests choose an alternative from your new menu. The actual revenue loss is therefore much lower than the total revenue of removed dishes.
Add it all up
Cost savings minus revenue loss plus efficiency gains = your net margin impact. Calculate this per month and per year for the complete picture.
✨ Pro tip
Start by removing the 5 least-sold dishes and measure the impact for 4 weeks. That way you learn the effect before cutting more drastically.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
How many dishes should I have on my menu at most?
For most restaurants, 15-25 dishes is optimal. More than 30 dishes makes purchasing and inventory complex, fewer than 15 can feel too limited for guests.
What if guests miss their favorite dish?
Usually it's not a big deal. Only 10-20% of guests ask about a removed dish. Most simply choose something else. Focus on keeping your 5 most popular dishes.
How long before I see the benefits?
You'll see cost savings immediately in your next order. Revenue effects become clear after 4-6 weeks. You best measure the full margin impact after a quarter.
Should I also count seasonal dishes?
Count seasonal dishes separately. You replace those 2-4 times a year anyway. Focus your analysis on the fixed menu that's available year-round.
Can I calculate this without POS system data?
Yes, but it will be less accurate. Then estimate based on your experience which dishes are ordered most. Or count manually for a week what dishes the kitchen makes.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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