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How do I calculate the minimum price of a dish to cover my restaurant costs?
Divide the plated food cost of the dish by your target food cost percentage written as a decimal. A dish with 2.60 of plated food cost and a 30% target food cost needs a menu price of at least 8.67. The gap between price and food cost is what pays for labour, rent, utilities and profit, so a lower target percentage means a higher minimum price.
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Continue with my numbers Free · no card · 20 messages a dayHow it is calculated
- Weigh every ingredient that goes on the plate for one serving, at the quantity you really use.
- Price each ingredient at what you pay per gram or per millilitre, then add them up for the main ingredients cost.
- Add sauce, garnish, spices, oil and anything else that leaves the kitchen on the plate.
- Add a waste allowance for trim, peeling, spillage and portions that go in the bin.
- Choose your target food cost percentage: how much of the menu price you accept the food to eat up.
- Divide the plated food cost by that percentage divided by 100. This is the minimum price.
- Compare the minimum price with the price you plan to charge and check the food cost percentage that comes out.
- Plated food cost of the dish, waste included = (Cost of the main ingredients in one serving + Cost of sauce, garnish, spices and oil in one serving) × (1 + Waste and trim allowance on the ingredients ÷ 100)
- Minimum menu price to hit your target food cost = Plated food cost of the dish, waste included ÷ (Target food cost as a share of the menu price ÷ 100)
- Margin left over at the minimum price = Minimum menu price to hit your target food cost - Plated food cost of the dish, waste included
- Food cost percentage at the price you plan to charge = Plated food cost of the dish, waste included ÷ Menu price you actually plan to charge × 100
An example
Cost of the main ingredients in one serving: 2.25 currency · Cost of sauce, garnish, spices and oil in one serving: 0.25 currency · Waste and trim allowance on the ingredients: 4 % · Target food cost as a share of the menu price: 30 % · Menu price you actually plan to charge: 9 currency.
Result: Plated food cost of the dish, waste included: 2.60 currency · Minimum menu price to hit your target food cost: 8.67 currency · Margin left over at the minimum price: 6.07 currency · Food cost percentage at the price you plan to charge: 28.89 %.
Worth keeping in mind
- The target food cost percentage is your choice, not a rule. Full service kitchens often sit between 28% and 35%.
- The result is a floor, not a final price. Round up to a price that looks right on the menu.
- The margin has to cover labour, rent, utilities, breakage and profit. If it does not, lower the target percentage.
- Ingredient prices move. Recost the dish when a supplier price changes, not once a year.
- If your prices are shown with tax included, work out the price before tax first, then add tax at the rate that applies where you trade.
Sources
Text drafted with the assistance of artificial intelligence, from the sources listed, and checked against the worked example. It is a tool for orientation: for tax or contractual decisions, your accountant has the last word.
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