The short answer
To price a dish from its food cost, divide the food cost by your target food cost percentage. A dish that costs CA$4.10 to make, at a 28% target, should sell for about 4.10 ÷ 0.28 = CA$14.64 before tax.
The formula
Menu price = food cost ÷ target food cost %. A pizza that costs CA$4.10 to make, priced for a 28% food cost, should sell for 4.10 ÷ 0.28 = CA$14.64 before tax. At a 32% target it would be CA$12.81. Round to a price that fits your menu, then check the result the other way: CA$14.99 gives a 27.4% food cost.
The food cost calculator shows this range for any dish: the prices at which it would have a 28% and a 35% food cost.
Check the dollars, not just the percentage
A percentage can flatter a dish that earns little. What pays the rent is its contribution margin: menu price minus food cost.
- A CA$15.99 pizza with CA$4.10 of ingredients contributes CA$11.89 (food cost 25.6%).
- A CA$6.99 side with CA$1.40 of ingredients contributes CA$5.59 (food cost 20.0%).
The side has the better percentage and the pizza earns twice the dollars. Selling more pizzas helps you more than selling more sides, even though the side “looks” more profitable. Use the percentage to find dishes that are mispriced for what they cost, and the dollars to decide what to promote.
Price each size from its own cost
Sizes are where menus quietly lose money. Ingredients grow with a pizza’s area, while prices usually step up by a fixed amount, so the largest size ends up with the highest food cost. Cost each size, then decide its price; the pizza costing guide works through four sizes.
Allow for delivery app commissions
A delivery app’s commission comes out of the sale after it happens. If an app takes, say, 20% of a CA$15.99 pizza, that is CA$3.20 gone before food or labour, and the pizza contributes CA$8.69 instead of CA$11.89. Food cost percentage does not show this, because the ingredients cost the same.
Some restaurants charge more on delivery apps to cover the commission; others accept a lower margin there for the extra orders. Either way, decide on purpose: work out what each dish earns after the commission.
Things that should make you re-price
- A key ingredient’s price moves: cheese, meat, oil, flour.
- You change a recipe or a portion.
- A dish sells well but sits at the top of your food cost list.
- A delivery app changes its commission.
How Mezbano helps
Mezbano’s Menu costs page lists every dish and size with its cost to make, its menu price, its recipe food cost % and what it earns, with the highest food cost first and the dishes above your target marked. Menu prices are before tax, one price serves every channel, and a store can set its own price for a dish when it differs from the brand’s. Give each sales channel its commission rate once and Mezbano adds the fee to expenses every time you record the day’s sales, so the monthly profit and loss shows what delivery really costs.
Questions owners ask
What is the formula for menu pricing?
Menu price = food cost ÷ target food cost percentage. At a 28% target, a CA$4.10 dish should sell for about CA$14.64 before tax; round to a price that fits your menu.
What is contribution margin on a menu item?
It is the menu price minus the food cost: the dollars a dish leaves to pay for labour, rent and profit. A CA$15.99 pizza with CA$4.10 of ingredients contributes CA$11.89.
How should I price different pizza sizes?
Cost each size from its own recipe, then set each price from that cost. Because larger pizzas use more ingredients than their price step suggests, pricing sizes a fixed amount apart often leaves the largest size with the highest food cost.
How do delivery app fees affect menu prices?
A delivery app’s commission comes out of the price after the sale, so a dish can meet its food cost target and still earn little on delivery. Work out what a dish contributes after the commission before deciding on delivery prices.