In many restaurants, menu changes are guided by intuition or anecdotal feedback from staff and guests. While this approach can work, it can also miss opportunities to maximize profitability or highlight high-performing dishes.
Today, modern point-of-sale (POS) systems allow you to take a more data-driven approach. Menu engineering using POS data helps you identify what’s working and what’s underperforming, and lets you boost profitability without sacrificing the guest experience.
“The key is to stop guessing,” says Spencer Michiel, technology consultant at Back of House. “Your POS data already tells the story of your menu, you just have to know how to read it.”
Before you can make meaningful menu changes, you need to understand what the numbers are actually telling you. The basics are simple — start with the right data and review it regularly.
When it comes to evaluating menu performance, Spencer recommends starting with three core POS metrics:
“These numbers form the foundation of your decision-making,” Spencer explains. “They show not only what’s selling but also how those items contribute to your bottom line.”
For best results, operators shouldn’t let that data sit idle. “You should be reviewing it weekly,” Spencer says. “Trends shift fast, and weekly check-ins let you catch changes before they impact your margins.”
One common pitfall, Spencer notes, is getting fixated on total revenue. “It’s not just about how much money an item brings in,” he says. “You have to look at what actually ends up as profit after costs — that’s where restaurant data-driven decisions really pay off.”
Once you’re reviewing the right metrics consistently, it’s time to dig deeper. POS data can show which items pull their weight, and which might be costing you more than they earn.
POS data can quickly reveal your standout items and your low-performing items. But Spencer cautions against relying solely on bestsellers or food cost percentages.
“Don’t just focus on your top-selling or lowest-cost dishes,” he says. “Look at which items deliver the highest contribution margin,” the sales revenue remaining after subtracting all variable costs associated with the dish. By looking at the dishes that perform best compared to their costs, “That’s where you’ll find your true moneymakers.”
Low-performing items can show up in several ways, and it’s important to read these signals carefully before making decisions:
These red flags often mean an item needs attention, whether that’s a price adjustment, a recipe tweak, a simplified preparation, or in some cases, removal from the menu altogether.
Understanding profitability requires a deeper look into how costs and sales interact. The right blend of POS and inventory data can reveal where your menu is truly making, or losing, money.
The most powerful menu insights emerge when you combine your POS data with inventory management.
“You really need both platforms working together,” Spencer says. “Your POS gives you sales data, and your inventory system provides the food cost data. When you pair them, you can see both the food cost percentage and the dollar contribution for every item.”
This pairing helps operators optimize their menu based on sales data, not just instinct.
Spencer points out that some high food-cost items can actually be your most profitable if they drive a strong contribution to the bottom line. “It’s all about understanding the balance between cost and contribution,” he says.
Beyond dollars and percentages, POS data can tell a story about your guests — what they prefer, when they order it, and how those patterns evolve over time.
POS systems also reveal deeper customer behavior trends. By segmenting data by order channel — dine-in, takeout, or delivery — restaurants can see how preferences shift depending on context.
“Maybe your pastas sell great in-house but not for delivery,” Spencer notes. “Or maybe your handhelds outperform online. That’s information you can use to refine packaging, pricing, and promotion.”
Tracking sales data week to week helps operators spot when certain items surge and adjust features or specials accordingly. Seasonal insights can also reveal when to promote specific items, rotate limited-time offers, or adjust ingredient orders to reduce waste.
For example, a spike in salads and cold beverages during warmer months could inform both menu placement and marketing campaigns, while increased demand for hearty stews or baked goods in winter can guide staffing and prep schedules.
By paying attention to these patterns, operators can align their menu offerings with guest preferences, maximize sales, and make smarter inventory and staffing decisions throughout the year.
Once you know which dishes drive the most value, that information can directly influence how your menu looks and feels. This is where true menu engineering using POS data comes into play.
“You can use the data to decide which items deserve prime real estate on your menu,” Spencer says. “If a high-margin item isn’t selling, maybe it’s buried where guests don’t see it. The data can show you where upsell opportunities are being missed.”
POS insights can help you improve your menu by identifying which dishes should be highlighted on your menu, grouped with complementary items, or moved to the top of sections where guests naturally focus.
For example, placing high-contribution items near the top of a section, using visual cues like boxes or icons, or featuring them as suggested add-ons can increase visibility and drive incremental sales.
By combining sales performance with strategic menu design, you can ensure that your most profitable items catch the guest’s eye.
Testing new items works best when done in limited runs.
“A seasonal feature sheet or weekly special gives you a low-risk way to gather data before making anything permanent,” he adds. “If it performs well, that’s your proof to roll it out.”
POS data doesn’t just inform your menu, it also helps your operations run more smoothly. From kitchen flow to waste reduction, the numbers reveal where processes can improve.
When paired with kitchen display system (KDS) analytics, POS data can show which items slow down service or strain the line. By tracking prep times, order flow, and modifications in the KDS while looking at sales and promo data from the POS, operators can pinpoint exactly which dishes create bottlenecks.
“If you’re seeing a lot of promos or voids tied to a specific item, that’s a red flag,” Spencer explains. “It might be too complex or time-consuming during peak hours.”
This combined insight allows you to simplify or rework recipes, adjust staffing, or move certain items to slower periods, ensuring smoother service without compromising menu variety or quality.
The role of technology in restaurant management is only growing. Emerging tools are making restaurant data-driven decisions faster, smarter, and more precise.
Looking ahead, Spencer sees technology continuing to push innovation forward. “AI and predictive analytics are the next evolution,” he says. “They’ll help restaurants forecast demand, anticipate ingredient needs, and even suggest ideal menu pricing based on historical trends.”
For operators, POS data isn’t just a look at what happened, it’s a roadmap for what’s next. By treating data as an everyday decision-making tool, restaurants can stay nimble, profitable, and guest-focused.
“Data doesn’t replace instinct,” Spencer concludes. “It sharpens it. The more you use your POS data, the more confident your menu decisions become.”
Even small insights can drive big results.
Start by reviewing your sales and inventory data weekly, identify your high-contribution items, and test menu tweaks in short runs. Over time, these restaurant data-driven decisions will help you optimize your menu based on sales data, reduce waste, improve profitability, and create a menu that truly works for your guests and your bottom line.
For personalized guidance on how to turn your POS data into actionable menu strategies, consider scheduling a consultation with Spencer or another Back of House consultant. Our team can help you identify opportunities, streamline operations, and make data-driven decisions with confidence.