Restaurant owners who guess at menu pricing lose an average of 12% profit per dish. Setting the right price makes the difference between a thriving business and one that barely breaks even. Master this calculation process and you'll never wonder if your new dishes are actually making money.
Start with your ingredient costs
Before pricing anything, calculate exactly what each dish costs to make. List every ingredient that touches the plate.
💡 Example: Pasta carbonara
For one serving you need:
- Pasta: €0.45
- Bacon: €1.20
- Eggs: €0.35
- Parmesan: €0.85
- Cream: €0.25
- Garlic, pepper, oil: €0.15
Total ingredient costs: €3.25
Don't skip the small stuff: cooking oil, seasonings, garnishes. They look minor but they'll eat into your margins fast.
Determine your target food cost percentage
Food cost represents what percentage of your selling price goes toward ingredients. Most restaurants aim for 28-35%.
- 28-30%: Conservative approach, cushion for unexpected costs
- 30-33%: Industry standard for casual dining
- 33-35%: Aggressive pricing with minimal error room
⚠️ Heads up:
Avoid exceeding 35% food cost. You'll have too little left for labor, overhead, and actual profit.
Calculate your minimum selling price
Now you can determine the lowest price that keeps you profitable.
Formula: Minimum selling price (excl. VAT) = Ingredient costs ÷ (Food cost % ÷ 100)
💡 Example: Carbonara calculation
Ingredient costs: €3.25
Target food cost: 30%
Minimum price excl. VAT: €3.25 ÷ 0.30 = €10.83
Menu price (incl. 9% VAT): €10.83 × 1.09 = €11.80
Check your competition
Your calculated price represents break-even minimum. But does it align with market reality?
- What do similar restaurants charge for comparable dishes?
- Does this price match your establishment's positioning?
- Will your target customers pay this amount?
If your price significantly exceeds competitors', you've got two choices: reduce ingredient costs or accept lower margins on this item.
Account for waste
Real kitchens aren't perfect. Products spoil, portions vary, accidents happen. Build in a 5-10% buffer for these realities.
💡 Example: Safety margin
Calculated price: €11.80
With 10% safety margin: €12.95
Round to: €13.50
Test and adjust
Launch with your calculated price and track performance. After 3-4 weeks, the market will tell you if you got it right. Most kitchen managers discover too late that they should've monitored these numbers from day one rather than waiting months to realize a dish was bleeding money.
- Steady sales: Price hits the sweet spot
- Poor performance: Likely overpriced for your audience
- Extremely popular: You might have room to increase
Food cost calculators help you instantly see whether any price point delivers the margins you need.
How do you set the price? (step by step)
Calculate exact ingredient costs
Add up all the ingredients that go into the dish. Also the small things like oil, spices, and garnish. Calculate using the prices you actually pay your supplier.
Choose your target food cost percentage
Determine what percentage of your selling price can go to ingredients. For restaurants, 28-33% is standard. The lower, the more margin you have.
Calculate minimum selling price
Divide your ingredient costs by your food cost percentage. This gives you the minimum price excluding VAT. Multiply by 1.09 for the menu price including VAT.
Compare with the market
Check what competitors charge for similar dishes. Does your price fit your restaurant's level and can your guests afford it?
Add a safety margin
Factor in an extra 5-10% for waste, larger portions, and unexpected costs. Round to a nice price that fits your menu.
✨ Pro tip
Track food costs on your top 3 dishes for 30 days straight. If those numbers stay solid, you've secured 70% of your profit foundation.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Should I include VAT in my cost price calculation?
Never include VAT in food cost calculations. Your menu shows prices with VAT, but all profitability math uses pre-tax numbers.
What if my calculated price exceeds competitor pricing?
You have two options: source cheaper ingredients or accept thinner margins on this dish. Never price below your break-even point, though.
How often should I recalculate menu prices?
Review ingredient costs quarterly minimum. Supplier prices change constantly, and food costs above 35% demand immediate action.
Can different dishes have different food cost percentages?
Absolutely. Signature items might run higher food costs if profitable sides and beverages balance things out. It's about overall profitability.
What if customers resist the new pricing?
Run a test period first. If sales truly suffer, adjust portion sizes or ingredients rather than dropping below profitable pricing.
How do I handle seasonal ingredients with volatile pricing?
Calculate using annual average costs, or adjust menu prices seasonally. For extreme price swings, consider rotating the dish off-menu temporarily.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
Calculate it yourself with KitchenNmbrs
All the formulas you learn here — KitchenNmbrs calculates them automatically. Enter your ingredients and instantly see your food cost, margin, and selling price. Try it free for 14 days.
Start free trial →