How to price the dishes on your menu

Step 1: cost every recipe

A recipe costing (or recipe cost card) is the cost sheet for a dish: what goes into one portion, how much of each ingredient and what it costs you. Without it, any price is a hunch.

For each dish, write down:

• Every ingredient, with the quantity in one portion.
• The purchase price, taken from your recent invoices, without VAT if you’re VAT-registered.
• The “little things”: oil, salt, spices, garnish, sauce. Weighing each one is a chore; a realistic fixed amount per portion is enough.

The quickest way to do it is the free recipe cost calculator: enter the ingredients, quantities and purchase prices, choose your target food cost percentage and it works out the cost per portion and the selling price with and without VAT.

Step 2: don’t forget the yield

You pay for the whole fish, but only the clean fillet reaches the plate. That difference is the yield loss, and it’s the most common mistake in recipe costing.

• Yield = clean weight ÷ purchased weight.
• Real cost per kilo = purchase price ÷ yield.

If you buy whole hake at £9.00/kg and, once filleted, you keep 60%, the clean kilo costs you 9 ÷ 0.60 = £15.00. A 180 g portion of clean fillet costs £2.70, not £1.62.

On top of trimming loss, add cooking loss: grilled meat or boiled octopus lose weight. The best figure is your own: trim and cook a piece, weigh it before and after, and write it down. In the recipe cost calculator every ingredient has a yield box, so the cost already comes out corrected.

A full example

Hake with clams and parsley sauce, one portion. The prices are examples; use the ones on your invoices.

Step 3: from cost to price

The food cost percentage is the cost divided by the selling price before VAT. As a rule of thumb, many people in the trade aim for 25–35%. To get to the price:

Price excl. VAT = cost ÷ target percentage

With a 30% target: 4.48 ÷ 0.30 = £14.93. Restaurant food is standard-rated in the UK (HMRC, VAT Notice 709/1), so with 20% VAT it comes to £17.92. On the menu: 18. In the US you’d stop at the pre-tax price, because sales tax is added to the check.

The same with a multiplier, which is handier day to day:

4.48 × 4.00 = 17.92. The same result.

Two important caveats:

• The percentage isn’t everything. A rib-eye at 40% food cost can leave you more pounds per plate than a salad at 20%. You bank pounds, not percentages. That sum is the basis of menu engineering.
• The multiplier doesn’t see labour. A dish that takes twenty minutes of hand work needs more margin than one that comes off the griddle in three.

Step 4: look at your competitors and perceived value

The cost tells you your lowest sensible price. The market sets the ceiling. Look at five or ten places similar to yours, in your area and with your kind of customer, and place yourself: are you above, in the middle or below, and does that make sense?

Don’t simply copy prices: their costs, rent and customers aren’t yours. And remember the customer doesn’t pay for ingredients, they pay for what they perceive:

• Origin and produce: “line-caught”, “Cornish” (only if it’s true).
• Portion and presentation in line with the price.
• A description that explains why the dish is worth what it costs.

Step 5: how prices are shown

• No £ sign on every line. In a Cornell University study with 201 diners, those given a menu with prices without a currency symbol spent a little more on average. It’s a single, small study: take it as a hint, not a law. Plain numbers and a note at the foot (“All prices include VAT”) are enough.
• No dot leaders to the price if you want customers to choose by dish rather than by figure. On long menus with several price columns, an aligned column is still practical.
• Never list dishes from cheapest to most expensive.
• One number format: either 17.50 and 9.00, or 17.50 and 9. Mixing 9 with 12.5 looks careless.
• Simple endings. Round numbers or .50 usually sit better in a restaurant than supermarket-style .99.

In MenuDesign you choose in the Design panel whether you want a currency symbol and dot leaders, and the menu lays itself out again. More in restaurant menu design.

How to price a set lunch

A set lunch is worked out the same way, but with the average cost of a full set menu:

1. Cost every starter, main and dessert.
2. Work out the average cost of each course. If you know which dishes sell most, weight the average by sales.
3. Add anything else included, such as bread or coffee.

Example: average starter £1.20, average main £3.00, average dessert £0.60 and bread and butter £0.20. The menu costs you £5.00. If you’re aiming for 40% food cost, the price before VAT is £12.50 and with VAT, £15.00: three courses for 15.

Set menus often run at a higher food cost than the main menu, because they live on volume. To stop one expensive main unbalancing it, give it a visible supplement: “Sirloin steak (+5)”. The full method is in how to make a set lunch menu.

When to update prices

• When a key ingredient goes up. Set yourself a threshold, say 10%, and redo the costing of the dishes affected.
• At every menu or seasonal change, go through every dish.
• Raise prices with judgement, not across the board. Start with the dishes that sell most and make least. Sometimes adjusting the portion or the garnish is better than changing the price.
• Don’t wait for the annual reprint. A price corrected in biro looks careless.

Do it with real numbers

Open the recipe cost calculator, enter your dishes with the prices from your latest invoices and note the cost and price of each one. If you need to work back from a VAT-inclusive price, the VAT calculator does it in a second. Then take those prices into MenuDesign: if a cost changes tomorrow, you change the figure and download the PDF again in a couple of minutes.