Menu engineering sorts each dish by two measures: how often it sells and how much it earns after ingredient cost. High on both makes a star. Popular but low margin is a plowhorse. Profitable but slow is a puzzle. Low on both is a dog. Then you act on each group.
Two numbers per dish
For every dish you need two numbers. The first is popularity: how many of that dish you sold in the period, as a share of all dishes in its category. The second is contribution margin: the menu price minus the ingredient cost of the plate. Use dollars, not percentages, for the second one. A high-percentage cheap dish can earn less per sale than a lower-percentage expensive one.
The four boxes
Draw a cross. Put popularity on one axis and margin on the other. Set the dividing line for popularity near the average share for the category. Set the margin line at the average contribution margin.
Stars are popular and profitable. Protect them. Keep the recipe consistent and give them a good place on the menu.
Plowhorses are popular but earn little. Try a small price rise, a smaller portion, a cheaper side or a better recipe cost. Do not push them harder.
Puzzles earn well but sell slowly. Move them up on the menu, rename them, add a short description, or ask servers to suggest them.
Dogs sell slowly and earn little. Consider removing, replacing or reworking them.
An example, made up
Suppose a category has four dishes. One sells a lot and earns well, so it is a star. One sells a lot and earns little, so it is a plowhorse. The other two sell little, one with a good margin and one without. The numbers here are invented to show the sorting.
Cautions
Do not use menu engineering on too few sales. Do not treat the lines as rules. A dish that ties the menu together may deserve its place. Be careful of price rises on your most popular dish without watching the effect.
Also check recipe costs first. A wrong cost puts a dish in the wrong box. See how to build a recipe cost card.
How to do it
Export item sales for a period, add the plate cost for each, compute the margin, and place each dish on the cross. A spreadsheet is enough. A system that ties recipes to sales makes the data easier to get. See recipe costing and the inventory and food cost page.
Review the menu again after a quarter and watch what changed.