In short
- Cost-plus gives you a floor, not the answer.
- Margin in money tells you which dishes are worth selling.
- Check the result against what guests expect to pay.
There is no single right way to price a dish. There are three useful lenses, and strong menus use all of them.
1. Food cost percentage (cost-plus)
A dish costs 4.20 and your target is 30%: 4.20 ÷ 0.30 = 14.00. If your menu prices include sales tax, add the tax afterwards. It is quick, consistent and easy to explain to a team. Its weakness is that it ignores what guests will actually pay and treats a cheap dish and a costly one the same way.
2. Contribution margin
This is the money each plate leaves you to pay everything else. A 12.00 burger with 3.60 cost leaves 8.40. A 34.00 ribeye with 13.60 cost leaves 20.40, despite a worse percentage. Use margin to decide which dishes to push on the menu and which to hide.
3. Market position
Look at what comparable places near you charge for comparable dishes, and where your service level and portion size put you. If cost-plus says 14.00 and every neighbour sells it for 11.00, either your dish is better in a way the guest can see, or the price will not hold. If the neighbours sell for 17.00, you may be leaving money on the table.
Putting them together
- Compute the cost-plus price. That is your floor.
- Check the margin in money. Is it worth the kitchen time?
- Compare with the market. Move up or down within a sensible range.
- Round to a price that looks natural on your menu.
A word on psychology
Menu writers argue about whether to drop currency symbols, or whether 13.90 sells better than 14.00. The evidence is mixed and depends on the market. Test small changes on one section at a time and watch what sells instead of trusting a rule.
Questions
Should every dish have the same food cost %?
No. Cheap dishes can run lower and premium ones higher. What matters is that the whole menu blends to your target.
How often should I review menu prices?
At least twice a year, and any time a major ingredient changes by more than a few percent.
