Menu pricing: how to calculate prices for your dishes

Determine the cost of goods per dish

Anyone who wants to calculate menu prices starts with the plate. The cost of goods sold is the sum of all ingredients used for one portion – at the purchase price without value-added tax. This includes more than many initially write down:

• Main ingredient with cutting and cooking loss: From one kilogram of raw material, fewer than four portions of 250 grams each are produced.
• Side dishes, sauce and garnish.
• Small quantities such as oil, butter, spices, and bread, which are often forgotten.
• A surcharge for spoilage if ingredients are not fully consumed.

Create a recipe sheet with quantities and purchase prices for each dish. This is time-consuming, but it pays off: you immediately see when a supplier becomes more expensive, and the same sheets serve as documentation for allergens.

Surcharge and calculation factor

You get from the cost of goods to the selling price using a markup factor. It indicates the number by which you multiply the cost of goods so that all other costs and your profit are covered. A simplified example with made-up numbers:

• Product usage for a dish: 4.00 € net.
• Calculation factor of your business: 3.5.
• Net sales price: 4.00 € × 3.5 = 14.00 €.
• This is in addition to the value-added tax of your country, then the price is rounded to a round number.

Which factor is right for you cannot be taken over from others. It depends on your costs, rent, staff, and utilization. Your tax advisor can derive it from the figures of the last year.

Do not forget fixed costs and personnel

The factor must cover everything that is not on the plate: wages in the kitchen and service, rent, energy, cleaning, insurance, repairs, cash register system, accounting. A dish with elaborate preparation binds more labor time than one that is plated in three minutes. Some businesses therefore calculate labor-intensive dishes with a higher factor.

Mixed calculation via the menu

Not every dish needs to earn the same amount. A steak has high food costs and cannot be sold at just any price; soups, pasta, or drinks often carry a larger margin. What matters is that the menu as a whole works out.

For this, you need the revenue per dish as well as the sales figures. Your POS system shows what is ordered frequently and what is ordered rarely. A dish that generates little revenue and is ordered rarely is a candidate for the deletion list.

Regularly recalculate

Purchase prices change, often several times a year. Therefore, schedule fixed dates on which you update the recipe sheets, for example with each seasonal change. If a dish is significantly below the target, you have three options: adjust the price, change the recipe or portion, or replace the dish.

With a digital menu, the price change is quickly handled. It is only important that printed menus, the chalkboard, and the digital menu show the same prices afterward.

Common errors in calculation

• Do not forget small quantities such as oil, butter, bread, or garnish.
• Calculate with gross prices when purchasing and then add value-added tax again.
• Do not include cutting and shrinkage losses.
• Take over the factor from another business without knowing your own costs.
• Calculate once and then not recalculate for years.

A table with all recipe sheets, in which you only update the purchase prices, saves you a lot of work. This way, you can immediately see which dishes are affected by any price increase from a supplier.

Frequently asked questions