By Cynthia Montoya, EA
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December 4, 2025
A Candid Conversation That Revealed a Deeper Problem Just last week, I met with a restaurant owner whose operation appeared—at least externally—to be thriving. His dining room was consistently active, yet beneath that surface of apparent success was a financial trajectory that had been quietly deteriorating for months. Despite steady revenue, he was withdrawing money from his savings every single month to cover operating expenses. He admitted he had been reluctant to raise prices, relying instead on what surrounding restaurants were charging rather than on his own cost structure. His hesitation was rooted in fear—fear of guest backlash, fear of making things worse. But the numbers were unequivocal: If he continued operating under the same assumptions, he would exhaust his resources and have to close the doors within 18 months. The Crucial Question: “When Did You Last Cost Your Menu?” When I asked when he had last conducted a comprehensive plate-costing analysis, he paused, then confessed he couldn’t remember. He had a general sense of which items were “profitable,” but that belief was based more on intuition than on data. To establish a baseline, we chose one of his higher-priced, supposedly high-margin entrées and examined it in meticulous detail. Together, we itemized every cost associated with that dish: the ingredients, the small plastic containers for butter and cream, the complimentary rolls, and even the to-go packaging that roughly one-third of guests utilized. What emerged from that analysis was sobering. A plate he believed was generating strong profit was, in reality, carrying a 40% cost—a level that left little room for labor, overhead, or debt service. And if this was true for one flagship menu item, we both understood it was likely symptomatic of the entire menu. Menu Costing is Essential I reminded him of a truth we see repeatedly: restaurant owners often assume that their best-selling items are also their most profitable, even though these two metrics rarely align without deliberate cost control and menu strategy. You cannot manage what you have not measured. Menu costing provides more than clarity; it provides a structured method for transforming a menu from a passive list of offerings into an intentional, revenue-driving instrument. A Clearer Path Forward 1. Establish Data Integrity - Calculate plate costs with accuracy, capturing all expenses that typically slip through the cracks. 2. Identify Profit Leaders and Margin Eaters - Identify which dishes are supporting the business and which ones are quietly eroding margins. 3. Implement Strategic, Evidence-Based Pricing - Armed with reliable numbers, adjust prices—not reactively or fearfully, but with rational confidence. 4. Reposition the Frontline Team as Sales Professionals - Inform the staff which items truly contribute to financial stability, enabling them to guide customers intentionally Most owners are overwhelmed by the idea of auditing an entire menu, but the process truly begins with a single plate. Analyze one thoroughly, and you may uncover insights that fundamentally reshape how you view your business. Accurate, consistent plate costing is the cornerstone of profitability. Once you have it, even incremental adjustments can yield meaningful improvements. Your Menu Holds Untapped Value — Let’s Reveal It Countless restaurants operate with hidden vulnerabilities simply because their menu has not been designed to support the business strategically. Menu costing is not merely a financial exercise; it is a lifeline for owners who want their restaurants to thrive rather than survive month-to-month. If you’re ready to understand the true profitability of your menu and create a pricing structure that sustains your business, we can guide you through the process—and help you write a success story rooted not in guesswork, but in clarity and control. Schedule a free advisory session now.
