Glossary
The Language of Restaurant Pricing & Analytics
Plain-English definitions of the terms that come up when restaurant brands get serious about their data — what each one means, how it is measured, and why it matters to an operator.
Pricing & Elasticity
The vocabulary of taking price with evidence: elasticity, pricing power, zones, testing, and optimization.
Price Elasticity
Price elasticity measures how much demand for a menu item changes when its price changes. An elastic item loses meaningful volume when its price goes up; an inelastic item holds its volume, so a price increase converts almost entirely into revenue. In restaurants, elasticity is not one number: the same item can be elastic in one store and inelastic in another, which is why item-level, store-level measurement matters.
Full definitionPricing Power
Pricing power is the amount of price a menu can absorb before customers meaningfully change their behavior — visiting less often, trading down, or leaving. A brand's pricing power is the sum of many small, item-level facts: some items can carry several increases without volume loss, others punish a fifty-cent move. Locating where that power actually lives on the menu is the core job of pricing analytics.
Full definitionZone Pricing
Zone pricing (also called tiered or market pricing) is the practice of charging different menu prices in different markets or store groups instead of one uniform price everywhere. Stores are grouped into zones based on what their markets can support — costs, incomes, competition, and measured price sensitivity — and each zone gets its own price file.
Full definitionDynamic Pricing
Dynamic pricing in restaurants means adjusting menu prices in response to conditions — time of day, day of week, channel, or demand — rather than holding one static price. In practice, most restaurant 'dynamic pricing' is structured and infrequent: happy-hour pricing, delivery-channel markups, or daypart offers, not minute-by-minute surge pricing.
Full definitionMenu Price Optimization
Menu price optimization is the process of setting each menu item's price using measured customer demand response, rather than applying uniform percentages or cost-plus markups. The output is a specific price file — item by item, and for multi-unit brands, store by store — designed to hit a revenue or check target with the least possible customer impact.
Full definitionPrice Testing
Price testing is trying a price change in a subset of stores and measuring customer response before rolling it out system-wide. A valid test compares test stores against carefully matched control stores — locations with similar volume, market, and trend — so that the difference in performance can be attributed to the price change rather than to weather, seasonality, or local noise.
Full definitionCost-Plus Pricing
Cost-plus pricing sets a menu item's price by marking up its ingredient cost to hit a target food-cost percentage — for example, pricing a dish with $3 of ingredients at $10 for a 30% food cost. It is the restaurant industry's default method because it is simple and protects margins on paper, but it prices from the kitchen's perspective and ignores what customers are willing to pay.
Full definitionMenu Intelligence
How menus are analyzed as portfolios: engineering, mix, contribution, rationalization, and cannibalization.
Menu Engineering
Menu engineering is the practice of classifying menu items by popularity and profitability to decide what to promote, reprice, rework, or remove. The classic framework sorts items into four quadrants: stars (popular and profitable), plowhorses (popular, low margin), puzzles (profitable, low volume), and dogs (neither). It turns the menu from a list of recipes into a portfolio with explicit roles.
Full definitionMenu Mix (PMIX)
Menu mix — commonly called PMIX, for product mix — is the breakdown of what customers actually order: each item's share of units sold or sales dollars. A brand's average check and margin are as much a function of mix as of prices, because customers shifting between items changes profitability even when no price moved and traffic held flat.
Full definitionMenu Rationalization
Menu rationalization is the systematic process of deciding which menu items earn their place and which should be removed, using data on sales, margin, operational cost, and — critically — what each item carries with it: the attach sales, the customers who visit specifically for it, and where its volume would go if it disappeared.
Full definitionContribution Margin
Contribution margin is the dollar amount a menu item leaves behind after its direct costs: selling price minus ingredient (and, done rigorously, direct preparation) cost. It is the number a menu should be managed on, because percentages mislead — a burger at 35% food cost contributing $6 per sale is worth more to the business than a side at 20% food cost contributing $1.60.
Full definitionCannibalization
Cannibalization is when a new item, promotion, or price change pulls sales away from a brand's own existing items rather than generating new demand. A limited-time offer that sells ten thousand units has not added ten thousand sales if most of its buyers would otherwise have ordered a full-price item — the launch number is gross, and the business impact is net.
Full definitionCustomer Analytics
Measuring guests honestly: trackability, retention, frequency, lifetime value, and basket behavior.
Customer Trackability
Customer trackability is the share of a restaurant's sales that can be attributed to identifiable customers — loyalty members, digital-order accounts, and recognizable payment cards. It is the denominator behind every customer metric: retention, frequency, and lifetime value are only measured on the trackable portion, so any customer analysis that doesn't disclose its trackability is describing a sample of unknown size.
Full definitionGuest Retention Rate
Guest retention rate is the share of a restaurant's customers who come back within a defined window — for example, the percentage of this quarter's identified guests who visit again next quarter. It converts the vague worry 'are we losing customers?' into a measurable number that can be tracked over time, compared across stores, and decomposed by customer segment.
Full definitionCustomer Lifetime Value (CLV)
Customer lifetime value (CLV) is the total contribution a guest is expected to bring over their entire relationship with a brand. For restaurants it is built from three measurable components: how often the guest visits, what they spend per visit, and how long they stay a customer. A guest visiting twice a month at a $14 check who stays three years is roughly a thousand-dollar relationship — which reframes what one bad visit or one good save is worth.
Full definitionVisit Frequency
Visit frequency is how often a guest visits within a period — visits per month or per quarter, measured on identified customers. Brand-level sales moves that get blamed on 'losing customers' are frequently a frequency story instead: the same guests coming slightly less often, a shift that is invisible in traffic counts but obvious in identified-customer data.
Full definitionAttach Rate
Attach rate is how often one item is purchased alongside another — the share of entrée orders that add a drink, a side, or a dessert. It measures the basket-building behavior of the menu: some items earn little on their own but reliably pull high-margin attachments with them, which makes their true value invisible in a simple item sales report.
Full definitionMeasurement & Market
The metrics operators report and the machinery for reading them honestly: comps, check, decomposition, incrementality, and baselines.
Same-Store Sales (Comps)
Same-store sales — comps, or comparable sales — measure sales growth at locations open long enough (conventionally at least a year) to be compared against their own prior-year performance. By excluding newly opened and closed stores, comps isolate whether the existing business is actually growing, rather than whether the brand is simply adding units.
Full definitionCheck Average
Check average is sales divided by transaction count — the average amount a customer spends per visit. It is one of the two levers of sales (the other is traffic), but it is a composite: check moves not only when prices change, but when mix shifts, attach behavior changes, party sizes move, or channels with different basket sizes grow or shrink.
Full definitionSales Decomposition
Sales decomposition is the discipline of breaking a sales change into its component causes — traffic versus check, price versus mix within check, channel shifts, daypart shifts, store groups, and market backdrop — until the driver is specific enough to act on. 'Sales are down 4%' is a symptom; 'lunch traffic at urban locations is down 9% since the March price increase' is a decision.
Full definitionIncrementality
Incrementality is the portion of a promotion's sales that would not have happened without it. A redeemed offer is not automatically an incremental sale: a discount used by a guest who was coming anyway, on an item they would have bought anyway, is a margin giveaway wearing a marketing costume. Incrementality separates the demand a promotion created from the demand it merely subsidized.
Full definitionCounterfactual Baseline
A counterfactual baseline is an estimate of what would have happened without the change being measured — what sales would have been if the price increase, promotion, or menu change had never shipped. It is the honest denominator for impact measurement, replacing the misleading defaults: last year's number, the week before, or the system average, all of which bundle the change's effect together with seasonality, weather, and market trend.
Full definitionTrade Area
A trade area is the geographic zone a restaurant location actually draws its customers from — typically defined by drive time or observed customer origin rather than a simple radius. It is the store's real market: its population, incomes, daytime traffic, and competitive set, which together determine what performance is achievable at that address.
Full definitionAverage Unit Volume (AUV)
Average unit volume (AUV) is a brand's average annual sales per location. It is the standard shorthand for a concept's unit-level strength — the number franchise buyers, lenders, and analysts reach for first — because it compresses the entire system's performance into one comparable figure.
Full definitionData Foundation
What restaurant analytics is built on: item-level POS data, menu mapping, and the governed warehouse.
Item-Level POS Data
Item-level POS data is the transaction-line detail a point-of-sale system records: every item on every check, with its price, modifiers, discounts, channel, and timestamp. It is the difference between knowing a store sold $8,200 on Tuesday and knowing exactly what was in every basket — and it is the raw material for every serious restaurant analytics question, from elasticity to attach rates to customer behavior.
Full definitionMenu Mapping
Menu mapping is the normalization of menu items across POS systems, locations, and channels so that the same real-world item is recognized as the same item everywhere — whether it was rung in as 'CHZBRGR', 'Cheeseburger Combo', or a delivery-platform variant. It sounds clerical; it is actually the load-bearing step under all menu and pricing analytics.
Full definitionRestaurant Data Warehouse
A restaurant data warehouse is a single governed repository that unifies a brand's data — item-level POS transactions, loyalty and digital-order data, labor, and market context — across every location, POS platform, and channel. Its job is to make the brand's numbers agree with each other: one definition of an item, a store, a customer, and a metric, so every downstream analysis starts from the same truth.
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