Turn Your Menu Into a Profit Driver

Introduction

Many restaurant owners make menu decisions based on what they think is popular. This often means promoting items that don't actually increase profits.

This guide shows you how to stop guessing. We will use a real-world example from a fast-food business dataset to show how you can use Terno AI to analyze your sales data. You will learn how to ask simple questions to find your most profitable items and improve your menu.[See the full Terno AI conversation here]

The Foundation: Understanding Your Sales Landscape

The first step is to get a clear, high-level view of your business performance. We started by asking Terno AI analyst a simple question based on the sales data:

Prompt: Summarize the structure of the dataset and key metrics

Prompt: Show me daily and weekly sales trends. 

This chart gives us a quick look at our busiest days. As you can see, sales are highest on the weekend and dip on Monday. This helps us understand the weekly flow of business, setting the stage for a deeper look into what items are selling on those busy days.

The Crucial Step: From Revenue to True Profitability

Popularity doesn't always equal profitability. A top-selling item with a razor-thin margin can be a "Plow horse" that consumes resources without significantly boosting your bottom line. To find our true profit drivers, we must go beyond sales price and introduce the Cost of Goods Sold (COGS).

Since our original dataset didn't include this, we provided Terno AI with a hypothetical cost for each item sold.

Prompt: Here is the hypothetical Cost of Goods Sold (COGS) for each item: Sandwich: ₹35, Frankie: ₹25, Cold coffee: ₹18, Vadapav: ₹8, Aalopuri: ₹9, Panipuri: ₹10, Sugarcane juice: ₹7. Now, calculate the profit margin for each item.

This simple table is the key to our analysis. Terno.ai has instantly calculated the true profit margin for every item. We can now see which products are most profitable per sale, like Sugarcane Juice, and which are less so. This information is crucial for making smart menu decisions.

Engineering the Menu: Identifying Your Winners and Losers

With profit margins calculated, we can now perform a classic menu engineering analysis. The goal is to classify every item into one of four categories:

• Stars: High Profitability, High Popularity. (Your best items. Promote them!)
• Plow horses: Low Profitability, High Popularity. (Keep customers happy but don't drive profit. Can you re-price or reduce their cost?)
• Puzzles: High Profitability, Low Popularity. (Your hidden gems. How can you sell more of them?)
• Dogs: Low Profitability, Low Popularity. (Taking up space. Consider removing them.)

We asked Terno AI to perform this classification for us.

Prompt: Using the profit margin data and the total quantity sold for each item, classify each item as a Star, Plow horse, Puzzle, or Dog.

Actionable Strategies from AI Insights

Now that we've identified our categories, we can use Terno AI to devise concrete strategies to improve profitability.

Strategy 1: Boost Your 'Plow horses' with Smart Combos

Our analysis shows that Panipuri is a 'Plow horse'—wildly popular but with a low margin. How can we make it more profitable? By bundling it with a high-margin item.

Prompt: Identify opportunities for combo deals or bundling, especially pairing a low-margin item with a high-margin one.

Strategy 2: Promote Your 'Puzzles' to the Right Customers

Our analysis identifies Vadapav as a 'Puzzle'—high margin but not enough people are buying it. We need to find the right channel to promote it.

Prompt: Which items sell better online vs cash transactions? Specially 'Vadapav'.

Summary

Here is the consolidated, end-to-end summary of our analysis on “Balaji Fast Food Sales-2.csv,” followed by targeted profit-boosting strategies by Terno AI:

1. Data Overview & Key Metrics 

• 1,000 transactions, 10 fields (order_id, date, item_name, item_type, item_price, quantity, transaction_amount, transaction_type, received_by, time_of_sale) 

• Total revenue: ₹275,230; avg. transaction: ₹275.23; avg. quantity: 8.16 

• 7 menu items (Sandwich, Frankie, Cold coffee, Vadapav, Aalopuri, Panipuri, Sugarcane juice); 2 types Fast foodd 68.6%, Beverages 31.4%) 

2. Sales Trends 

• Daily and weekly interactive charts (with moving averages) highlight clear weekly seasonality and a gradual upward revenue drift. 

3. Profit Margins 

• Sugarcane juice: 72% 

• Vadapav: 60% 

• Aalopuri & Cold coffee: 55% 

• Frankie & Panipuri: 50% 

• Sandwich: 41.7% 

4. Channel Performance 

• Panipuri is the only item stronger online (567) vs. cash (552). 

• Vadapav: Cash 531 vs. Online 372 

5. Short-Term Demand Forecast (Next 7 Days) 

• Each item’s forecasted daily quantity set to its historical average (see “forecast_next_7_days__198201.csv”). 

6. Monthly Revenue Forecast (Next Quarter) 

• Apr-23: ₹9,678.93 

• May-23: ₹9,773.79 

• Jun-23: ₹9,869.57 

7. Combo-Deal Insights 

• No true co-purchases in order data, so recommended promotional bundles of high-volume/high-margin pairs, e.g.: 

– Cold coffee + Sugarcane juice 

– Panipuri + Frankie 

– Vadapav + Aalopuri 

8. BCG Matrix Classification 

• Stars: Sugarcane juice, Cold coffee 

• Plow horses: Panipuri 

• Puzzles: Aalopuri, Vadapav 

• Dogs: Sandwich, Frankie 

Profit-Boosting Strategies 

• Push Highest-Margin Beverages: Run “buy 2 get 1” or bundled deals on Sugarcane juice and Cold coffee, especially alongside fast-food items. 

• Leverage Online Strength for Panipuri: Offer digital-only combos (e.g., “Panipuri + Cold coffee” at a special price) to accelerate online growth. 

• Bundle Meal Deals: Pair one fast-food item (e.g., Vadapav, Aalopuri) with a beverage at a slight discount to raise average ticket size. 

• Dynamic & Time-of-Day Pricing: Introduce small off-peak price incentives (Morning, Midnight) to smooth daily revenue swings. 

• Upsell & Cross-sell Prompts: Train staff and embed digital prompts (“Would you like Sugarcane juice with your Frankie?”) to increase add-on sales. 

• COGS Negotiation & Menu Engineering: Negotiate better ingredient costs for lower-margin items (Sandwich) and shift focus to higher-margin “Stars” (beverages). 

• Loyalty Programs & Subscriptions: Launch point-based or prepaid meal cards to secure repeat purchases and stabilize monthly revenue. 

• Monitor & Iterate: Keep tracking daily/weekly trends and revise bundles or promotions based on real-time performance. 

These data-driven actions will help maximize margins, boost average order values, and balance cash vs. online growth—driving sustained profitability. 

Conclusion: Your Menu, Reimagined

In just a few steps, we've moved from a raw spreadsheet to a sophisticated, data-driven menu strategy. By combining sales data with cost information, Terno AI empowers any F&B business to:

• Identify true profit drivers ('Stars').
• Optimize popular but low-margin items ('Plow horses').
• Strategically market hidden gems ('Puzzles').
• Make tough decisions about underperformers ('Dogs').

Your menu is no longer a static list—it's a dynamic tool for growth, engineered for maximum profitability.

Ready to stop leaking money and turn your menu into a strategic asset? Book a free demo of Terno.ai today and see your profit drivers in minutes.

Useful Links

• Terno AI: https://terno.ai
• Dataset link: Restaurant Sales report
• Detailed analysis: https://nikita.app.terno.ai/chat/share/da3dfefc-e488-4ff1-8f59-b2001ec30e59