Quick answer: Menu engineering sorts each drink by popularity (units sold) and contribution margin (price minus ingredient and packaging cost), compared with your menu averages. Stars (high on both) get protected and featured; plowhorses (popular, low margin) get repriced or re-portioned; puzzles (high margin, less popular) get promoted; dogs (low on both) get reworked or removed. Run it quarterly using POS data.
Key takeaways
- Two numbers per item: units sold and contribution margin.
- Compare each item with your menu average.
- Four categories, four different actions.
- Repeat quarterly and after big cost changes.
The matrix
The menu engineering matrix, developed by Michael Kasavana and Donald Smith at Michigan State University in the 1980s, plots items by popularity and contribution margin relative to the menu's averages.
| Above-average margin | Below-average margin | |
|---|---|---|
| Above-average popularity | Star: protect and feature | Plowhorse: fix price or portion |
| Below-average popularity | Puzzle: promote or reposition | Dog: rework or remove |
Step 1: Pull your data
From your POS, export 30–90 days of units sold per item. Then calculate the cost of each drink (ingredients plus cup, lid, sleeve and straw) using our cost per drink guide.
Step 2: Calculate contribution margin
Contribution margin = menu price − item cost
Use the margin in dollars, not percentage. A $6 drink with a $1.50 cost contributes more dollars than a $3 drink with a $0.60 cost, even though the cheaper drink has a lower cost percentage.
Step 3: Find the averages
- Average margin = total contribution margin ÷ total units sold
- Popularity threshold: a common approach uses 70% of an even share. With 20 items, an even share is 5%, so the threshold is 3.5% of units.
A worked example
Illustrative espresso menu, one month:
| Drink | Units | Price | Cost | Margin | Category |
|---|---|---|---|---|---|
| Latte (12 oz) | 2,400 | $5.25 | $1.15 | $4.10 | Star |
| Drip coffee | 2,000 | $3.00 | $0.55 | $2.45 | Plowhorse |
| Seasonal mocha | 420 | $6.25 | $1.45 | $4.80 | Puzzle |
| Lavender oat cortado | 150 | $5.00 | $1.55 | $3.45 | Dog |
Assumes an average margin around $3.50 and a popularity threshold of about 400 units.
Step 4: Act on each category
Stars - Keep quality and portion exactly the same. - Give them the best spots on the menu board. - Test small price increases carefully.
Plowhorses - Raise price slightly, especially if competitors charge more. - Review portions and packaging cost. - Pair with higher-margin add-ons (a pastry, a flavor).
Puzzles - Move to a more visible position on the menu. - Train baristas to suggest them. - Rename or describe them better; photograph them for social.
Dogs - Remove, simplify or re-test for about four weeks with a new name or recipe. - Check whether they use ingredients nothing else uses. Removing those can cut waste.
Coffee shop wrinkles
- Modifiers matter. Track syrups, alt milks and extra shots separately; underpriced modifiers can turn stars into plowhorses. See our alt milk upcharge guide.
- Sizes are separate items. A 16 oz latte may be a star while the 8 oz is a plowhorse.
- Seasonal drinks should be judged against their season, not the whole year.
- Drip coffee is often a plowhorse that brings in loyal regulars; price it fairly, but don't remove it.
Menu design follow-through
After you categorize, update your menu board. Put stars and puzzles where eyes land first, keep descriptions short, and remove clutter. See our menu pricing guide and price increase guide if prices change.
Make the stars look like stars
Featured drinks deserve standout packaging. Affogato Bean prints branded cups, sleeves and menu signage with design help included. See products or talk to us.
Frequently asked questions
What is menu engineering?
Menu engineering is a method for analyzing menu items by popularity (how many sell) and contribution margin (price minus ingredient and packaging cost), then deciding which items to promote, reprice, reposition or remove.
What are stars, plowhorses, puzzles and dogs?
Stars are popular and high-margin; plowhorses are popular but low-margin; puzzles are high-margin but less popular; dogs are low on both. Each category calls for a different action.
How often should a coffee shop do menu engineering?
Quarterly works for most cafés, plus a check after seasonal menus end or after significant cost changes like milk or coffee price increases.
Sources
Sources checked October 2026. Statistics are reported as published by each source.