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Operations

Contribution margin

​The dollar profit per item after subtracting plate cost from menu price. "$8 menu price minus $2.50 plate cost = $5.50 contribution margin." Distinct from gross margin (a percentage). Drives menu engineering recommendations.

Related Terms

Operations
Plate cost
The total ingredient cost of producing one serving of a menu item. Includes the protein, sides, garnish, sauce, and consumables (oil, salt). Subtract plate cost from menu price to get contribution margin. Drives pricing decisions.
Menu Design
Menu engineering
The discipline of analyzing menu item performance — popularity (PMIX) and contribution margin — to optimize pricing, descriptions, and placement for higher revenue per cover. Classic framework categorizes items as Stars, Plowhorses, Puzzles, and Dogs.

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