Menu price calculator

A burger that costs $4.60 to make can be priced four ways. A 30% food cost gives $15.33. A $10.90 contribution margin gives $15.50. Adding labor and overhead with an 8% profit gives $15.54, and a 55% prime cost target gives $12.36. Rounded up to the next price ending in .95, the first becomes $15.95. On a delivery app taking 30% of each order, the same plate needs $23.64 to earn what it earns in the dining room, and a $1 price rise pays for itself unless you lose more than 8.1% of the plates.

The calculator prices a dish by all four methods at once, rounds it, prices it for delivery, tests a price rise and an ingredient cost rise, and classifies your whole menu into stars, plowhorses, puzzles and dogs.

Who reaches for this

You enter the dish’s recipe cost, the direct labor minutes it takes and the loaded hourly rate, and an overhead figure per cover. You set the four targets, choose which method gives the price you will use, and pick a rounding rule. The calculator shows each method’s price with the food cost percentage, contribution, prime cost percentage and the amount left after labor and overhead, so that you can see what each pricing rule really delivers.

Three further blocks build on the chosen price: a delivery price, a price rise and cost rise test, and a menu engineering table for the whole menu. The recipe cost itself comes from costing the recipe, which the recipe cost calculator does with trim and cooking yields, and the food cost percentage calculator shows how those costs compare with what the kitchen actually used.

The workhorse of menu pricing divides the recipe cost by a target food cost percentage. The burger costs $4.60. At a 30% target, the price is $4.60 ÷ 0.30 = $15.33, and the plate contributes $10.73. At 28% it is $16.43, and at 35% it is $13.14. It is fast, consistent across the menu, and easy to explain to a kitchen.

Its weakness is that it treats every plate as if ingredients were the only cost. Two dishes priced at the same 30% can differ enormously in the dollars they leave behind. The burger contributes $10.73 and a $10.60 steak priced at 30%, $35.33, contributes $24.73. The percentage is a fair rule for setting a floor, and a poor one for deciding how much a plate should earn. The markup vs. margin calculator converts between a cost multiple and a margin if you think in markups.

The price that hits the target may not be the price you can charge

A formula gives a number and the market gives a limit. A steak priced at $35.33 to hit 30% may sell far fewer plates than one at $29, and a salad priced at $9.33 is well below what guests will pay at $11.50. Use the formula to see how far each price sits from the target, then decide item by item whether the gap is a mistake or a choice.

Contribution margin pricing asks a different question: how many dollars should each plate bring in? Price = recipe cost + target contribution. If each burger should contribute $10.90, the price is $4.60 + $10.90 = $15.50, which is a 29.7% food cost. The same $10.90 target on the $10.60 steak gives $21.50, a 49.3% food cost.

That is the point of the method. A dollar target does not scale with the cost of the ingredients, so a high-cost plate ends up at a higher food cost percentage and a lower price than the percentage method would set. Whether that is right depends on the plate. Guests expect a steak to cost more than a burger, but not $35. A contribution target keeps every plate earning enough to pay for the seat it occupies, and it is the logic behind the menu engineering matrix later on this page. The contribution margin calculator covers the general case.

Two more methods bring in the rest of the cost of a plate. Prime cost adds direct labor to food. The burger takes 6 minutes of cooking labor at a $22 loaded hourly rate, which is $2.20, so its prime cost is $4.60 + $2.20 = $6.80. At a 55% prime cost target, the price is $6.80 ÷ 0.55 = $12.36. The prime cost ratio, food plus labor as a share of sales, is the number the restaurant break-even calculator builds on.

Full-cost pricing adds overhead and a profit margin. With $7.50 of overhead per cover, the burger’s full cost is $4.60 + $2.20 + $7.50 = $14.30. To earn an 8% margin on the price, divide by 0.92: $14.30 ÷ 0.92 = $15.54. At that price the plate leaves $1.24 after every cost, which is 8.0% of the price.

The overhead per cover comes from dividing overhead by the covers you expect. If overhead is $30,000 a month and you serve 4,000 covers, it is $7.50 each. The figure depends on volume: fewer covers push it up, and the price with it. Use a realistic cover count, and remember that spreading overhead per cover treats a $12 salad and a $35 steak alike, which may not be fair.

Getting the labor minutes right

Direct labor per plate is the least precise input. Time a cook making the dish during service, not in a quiet moment, and include the share of prep that belongs to it: the sauce made in batches, the patties formed in the morning, the garnish cut ahead. Six minutes for the burger might be two on the grill, one to assemble and plate, and three of allocated prep. Value the minutes at the loaded rate, wages plus payroll taxes and benefits, and revisit the figure when the kitchen or the wages change.

The number matters most for labor-heavy plates. A hand-rolled pasta with 15 minutes of labor at $22 an hour carries $5.50 of direct labor, more than most plates carry in ingredients, and a food-cost-only price would miss it entirely.

The four prices for the burger range from $12.36 to $15.54, and for the steak from $21.50 to $35.33. Each method encodes a different idea of what a price is for.

For the burger, three methods agree within 21 cents and the prime cost method is the outlier, because a 55% prime cost target is loose for a plate that carries $7.50 of overhead. For the steak they spread widely, because a percentage rule scales with ingredient cost and a dollar rule does not. Where the methods agree, a price is well supported. Where they diverge, that is the plate to think about.

The full-cost method is the only one that guarantees a profit at the volume you assumed. At the food-cost price of $15.33 the burger leaves $1.03 after labor and overhead, or 6.7% of the price. At the full-cost price it leaves $1.24. The gap looks small on one plate, and on 1,150 plates a month it is about $240. Use the percentage method as a floor and the full-cost method as a check.

Add-ons and modifiers

Extras are priced with the same arithmetic, and they are often the best contribution on the menu. Bacon that costs $0.90 an order, priced to a 30% food cost, is $0.90 ÷ 0.30 = $3.00, which adds $2.10 of contribution with almost no added labor. Because guests judge an add-on against the plate and not against your cost, they often accept a higher percentage than they would on a main. Track the take rate for each add-on, since a modifier that is rarely chosen is not worth a place on the menu.

A calculated price is rarely a menu price. $15.33 becomes $15.50, $15.95 or $16. The choice changes the economics a little. Rounding up always improves both food cost and contribution.

Going from $15.33 to $15.95 adds $0.62 per plate, 4.0%, and on 1,150 plates that is about $709 a month without any change in the kitchen. It is also a price rise, and guests may notice it at the margin. Whether an ending of .95 lifts sales is a question the evidence answers inconclusively, so treat it as a habit of presentation and not a lever. Round up when the calculated price is close to a price point, and check that the rounded price still looks right beside similar items.

A delivery order comes with costs that a dining room order does not: a platform commission, often promotions that the restaurant funds, and packaging. Charge the menu price on the app and the math changes. With a 25% commission, 5% of promotions and $0.60 of packaging, a $15.95 burger yields $15.95 × 0.70 = $11.17, less $4.60 of food and $0.60 of packaging, or $5.97. In the dining room the same plate contributes $11.35. You keep about half.

To earn the same $11.35 on the app, work backward from the fees. The price is (food cost + packaging + in-house contribution) ÷ (1 − commission − promotions) = ($4.60 + $0.60 + $11.35) ÷ 0.70 = $23.64. That is 48% above the menu price, and the food cost percentage at that price is 19.5%. Few restaurants can charge that much more on an app without losing orders.

What to do with the gap

There are only a few options. Raise app prices by some of the gap and accept a lower contribution on those orders. Offer a reduced menu on delivery, limited to plates whose contribution can carry the fees. Change the packaging or the portion. Or treat the app as marketing and accept a thin return on the first order in exchange for repeat business at full price. Each is a legitimate choice, and each should be a choice you made deliberately, with the per-plate figure in view.

The commission and promotion rates are inputs, because they differ by platform, plan and market. The 25% and 5% shown here are illustrations. Use the rates on your own statements, and include any fees on top of the commission, such as payment processing.

A price rise adds the same dollars to every plate that still sells and loses the contribution on every plate that no longer does. That gives a break-even. If the price rises by d and the contribution per plate was CM, the new contribution is CM + d, and profit on the item holds as long as the share of plates lost is no more than d ÷ (CM + d).

For the burger at $15.95 with an $11.35 contribution, a $1 rise takes the contribution to $12.35, so the break-even loss is $1 ÷ $12.35 = 8.1%. With 1,150 plates a month, profit is unchanged if sales fall to 1,057. If no plates are lost, the rise adds $1,150 a month. On a plate priced at $15.50 the figure is 8.4%. The higher the contribution, the smaller the share you can afford to lose, because each lost plate costs more.

The break-even says nothing about what guests will do. It gives you a test: do you believe a $1 rise will lose fewer than 8% of burger orders? For a popular item with few close substitutes, it may. For one that guests compare with a competitor’s, it may not. A small test, on one item for a few weeks, is worth more than a guess.

When ingredient costs rise

A cost rise raises the question of what to hold constant. An 8% rise takes the burger’s recipe cost from $4.60 to $4.97. Holding the dollars per plate needs a price of $4.97 + $11.35 = $16.32, up 2.3%. Holding the food cost percentage needs $17.23, up 8.0%. The first protects profit with a smaller increase, and the second protects the ratio with a larger one. Most operators end up between the two, guided by what the market will accept.

Pricing one dish is half the job. The other half is how the dishes work together. Menu engineering, popularly attributed to Kasavana and Smith in the early 1980s, classifies each item in a category on two measures: popularity, meaning its share of the plates sold, and contribution margin, meaning dollars per plate after food cost.

An item is popular if it sells at least 70% of an even share of the plates in its category. With seven items, an even share is 14.3% and the threshold is 10.0%. It is high-margin if its contribution is at or above the sales-weighted average, which is $9.94 for the example menu.

What to do with each class

Two cautions. Analyze one category at a time, because comparing a $4 appetizer with a $30 entree on one grid means little. And contribution here is price minus food cost, which is not profit after labor: an item that needs a lot of prep can be a star on the grid and a loss in the kitchen. Use the classification to decide where to look, and confirm it with what the plate really costs to make.

A quarterly pricing review

Prices go stale as costs move. A quarterly review keeps them honest. Update recipe costs from current invoices, rerun the four methods for the main dishes, refresh the menu engineering table with the last eight weeks of sales, and check the delivery prices against the current commission. Change a few prices at a time and note the date, so that the effect on plates sold can be read against the break-even. Prices that have not moved in a year, while costs have, are usually the first place to look.

Guides give target ranges for a restaurant’s cost structure. One says food at 28% to 35%, labor at 25% to 35% and profit at 3% to 9%. Another gives 25% to 30% for fine dining, 30% to 35% for casual, and 20% to 28% for bar items. Another says that 20% to 30% of a typical menu is dogs. None of these carries a source I could trace, and they describe a wide field of concepts.

Use them as a rough check and not as a rule. The right food cost for a plate depends on what it takes to make, what guests will pay and what else the plate has to carry. The right menu mix depends on your concept. What you can rely on is your own numbers: the recipe cost, the labor minutes, the overhead per cover, and the units sold. Those are what the calculator uses, and they are what determine whether a price works.

Check what the kitchen really used with the food cost percentage calculator, or see what your prices imply for covers with the restaurant break-even calculator.