INDUSTRY KNOW-HOW
Four Simple Steps That Could Save You Thousands
Your POS is sitting on a pile of information you already paid for and probably never open. Most owners can rattle off their bestsellers from memory. Far fewer can say which of those bestsellers actually makes money, and that gap is exactly where profit slips out the back door. Full-service restaurants often clear just 3 to 5 percent after costs, [1] and neither a bar nor a bottle shop can afford to guess wrong about which items carry the rest. The report that closes it takes about five minutes to run. Here are the four steps.
Step 1: Find the Report
Log into your POS back office and look for something called Product Mix, Item Sales, or Menu Analysis. Every brand names it differently, but it is the same thing: a line-by-line list of what sold, how many times, and how much it brought in. Set the range to the last thirty or ninety days so one strange weekend does not throw off the read. Bars and restaurants will see menu items. Liquor stores and convenience shops will see SKUs. Same report, same math.
Step 2: Read the Two Numbers That Matter
You can ignore most of the columns. Two of them do the real work.
- Units sold. Your volume, the stuff moving off the shelf or out of the well.
- Profit per item. What is left after what you paid for it. A house pour and a top-shelf cocktail can sell in equal numbers and earn wildly different money.
Sort by profit, then hold it up against volume. That comparison is the whole trick.
Step 3: Sort Everything Into Four Piles
With both numbers in front of you, every item lands in one of four groups. Restaurant researchers mapped this exact grid back in 1982, and forty years on it still sorts a beer cooler as cleanly as a cocktail list. [2]
- High volume, high profit. Your stars. Feature them, protect them, and never run out.
- High volume, low profit. Popular but thin. A small price bump or a cheaper supplier usually fixes it.
- Low volume, high profit. Quiet earners worth a better spot on the menu, or a shelf at eye level, which is where shoppers look first and buy most. [3]
- Low volume, low profit. Dead weight. Cut it and give the space to something that pulls its own weight.
Step 4: Put it to Work
A report you do not act on is just homework. Menu engineering, the practice built on this exact data, is credited with lifting restaurant profits by 10 to 15 percent. [4] Reprice one thin bestseller, move one quiet earner to eye level, and drop one item nobody will miss. Then run the report again next month and see what moved. Five minutes, no finance degree, and your POS did the hard part while you were busy plunging the toilet.
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