How to price a menu for profit

Start from a target food cost %

Every price starts with one decision: what share of the selling price are you willing to spend on ingredients? That's your target food cost percentage. Most kitchens land somewhere between 25% and 35%, depending on the style of food and what the local market will bear.

Once you've set it, the price falls out of a single line of arithmetic:

Say a plate of pasta costs you $3.20 in ingredients and you're aiming for a 30% food cost. Then $3.20 ÷ 0.30 = $10.67. Round it to a sensible menu price, $11.00, and your food cost lands at 29%, a touch better than target. That rounding in your favour is real money across a busy service.

Percentages don't pay rent, cash does

Here's where a lot of menus go wrong. The lowest food cost % isn't automatically your best dish. What actually lands in the till is the contribution margin, the gross profit in dollars after ingredient cost.

Compare two items. A side salad sells for $6 at a 20% food cost, so it contributes $4.80 per plate. A steak sells for $32 at a 38% food cost, a "worse" percentage, yet it contributes $19.84. Sell ten of each and the steak puts four times the cash on the table. Chase the percentage alone and you'll happily promote the dish that earns the least.

So watch both numbers: the % keeps you disciplined on ingredient spend, and the gross profit per dish tells you what's really feeding the business. Read them together.

Menu engineering: the four quadrants

Menu engineering is just sorting every item by two things, how often it sells (popularity) and how much cash it makes (profitability), and putting it in one of four boxes. Plot them and four types appear:

• Stars, high popularity, high profit. Your heroes. Protect them, feature them, keep the quality dead steady.
• Plough-horses, high popularity, low profit. People love them but they earn little. Re-cost or re-portion before you dare nudge the price.
• Puzzles, low popularity, high profit. Great margin, nobody orders them. Move them up the menu, rename them, let staff recommend them.
• Dogs, low popularity, low profit. They earn little and sell less. Fix them or cut them; they clutter the menu and slow the kitchen.

You don't need software to start, a notebook and last month's sales mix will get you a first read. The point is to stop treating every dish the same.

The levers you can actually pull

Once an item is in the wrong box, you have four honest moves:

• Re-portion. Trim the plate to a sensible spec. A 20g cut to a garnish nobody finishes is margin you didn't have to argue about.
• Re-cost. Rebuild the recipe with current prices. Most "bad margin" is just a stale cost from before the last few supplier increases.
• Re-price. If the dish is loved and underpriced, raise it, usually in small, confident steps rather than one jolt.
• Re-design the menu. Move the puzzles into the eyeline, demote the dogs, and let your stars sit where people read first.

And whatever you do, watch supplier price creep. Costs rarely jump, they drift up a few cents at a time until a dish that was healthy is quietly losing money. If you're not tracking the history, you won't see it until the month-end numbers sting.

Where Plate Pro does the heavy lifting

All of this works on paper, until a price moves and you have to redo it. That's the part Plate Pro handles. For every item it shows the live food cost %, the gross profit in dollars, and a suggested price to hit your target food cost, so you can see the percentage and the cash side by side instead of choosing one.

Set your target and it flags target vs. actual on every dish, so the plough-horses and dogs surface on their own. And because a supplier price change cascades through every recipe it touches, your margins stay current without you rebuilding a single spreadsheet cell. The maths from this article, kept live.

New to the numbers? Start with the food cost formula, then come back here to price the whole menu. Or see the full picture of what Plate Pro does.