Menu Pricing Formula and Food Cost Percentage, Worked Through
The menu pricing formula is one line: menu price = plate cost / target food cost percentage. A plate that costs $4.80 to put out, priced at a 30% target, sells for $16.00. The food cost percentage formula is the same thing turned around: food cost % = plate cost / menu price. The arithmetic is never the hard part. The hard part is the plate cost, because the number on the invoice is not the cost of what lands on the plate - and in the worked example below, getting that wrong turns a 30% plate into a 50.6% one.
The formulas
Per plate (pricing a dish):
- Plate cost = the sum of every ingredient’s cost for the portion served
- Menu price = plate cost / target food cost %
- Food cost % = plate cost / menu price
Dividing by 30% is the same as multiplying by 3.33. The target percentage is your choice, not a law. It depends on your labor, rent, the rest of your overheads and what your guests will pay. The 30% used throughout this page is an illustrative value, and the table further down shows the price at several others.
Per period (checking what the kitchen actually ran):
- Cost of food used = beginning inventory + purchases - ending inventory
- Food cost % = cost of food used / food sales
An illustrative month: $6,000 of stock on the shelves at the start, $9,500 bought, $5,700 left at the end. That is $9,800 of food used. Against $34,000 of food sales, the period food cost percentage is 28.8%. If that number sits well above the targets you priced your dishes at, the gap is coming from somewhere - and one place it can hide is in how the plates were costed.
Worked example: one plate, costed two ways
A chicken plate with potatoes, a little salad and a sauce. The column that matters is yield: the share of what you buy that ends up edible after trimming, boning, peeling and cooking. The figures here are illustrative, not a chart to copy - yield varies by supplier, by season and by who is holding the knife, so measure your own.
| Ingredient | Invoice price | Yield | On the plate | Must buy | True cost | Raw-weight cost |
|---|---|---|---|---|---|---|
| Chicken, whole, plated boneless | $4.20/lb | 52% | 0.45 lb | 0.87 lb | $3.63 | $1.89 |
| Potatoes | $0.90/lb | 81% | 0.50 lb | 0.62 lb | $0.56 | $0.45 |
| Lettuce and garnish | $2.40/lb | 74% | 0.12 lb | 0.16 lb | $0.39 | $0.29 |
| Sauce, stock and seasoning | $1.10/lb | 100% | 0.20 lb | 0.20 lb | $0.22 | $0.22 |
| Plate | $4.80 | $2.85 |
The “raw-weight cost” column is the shortcut: plated weight times the invoice price, as if trim and cooking loss were free. The “true cost” column starts from how much you have to buy to plate that portion.
Take the chicken. To plate 0.45 lb at a 52% yield you have to buy 0.87 lb, so every edible pound really costs $8.08, not $4.20 - the invoice price times 1.92. The chicken line costs $3.63, not $1.89. Chicken alone accounts for 89% of the difference between the two plate costs.
So the plate costs $4.80, not $2.85. The shortcut understates it by $1.95, or 41% of the true cost.
What that does to the menu price
Run both costs through the same formula at a 30% target:
| Costed on raw weight | Costed on true cost | |
|---|---|---|
| Plate cost | $2.85 | $4.80 |
| Menu price at 30% | $9.49 | $16.00 |
| Food cost % you actually run | 50.6% | 30% |
The $9.49 plate was meant to run at 30% food cost. It runs at 50.6%. Nothing about the formula was wrong - the input was. The kitchen still has to buy 0.87 lb of chicken for every plate, whatever the menu assumed, so the real food cost is $4.80 against a $9.49 price.
Every plate sold that way carries $1.95 of food cost the price never covered. Over a hundred covers, that is $195 that the menu quietly gave away, and it does not show up on any single invoice. It shows up at the end of the month as a period food cost percentage that is hard to explain.
The error does not depend on your target
Here is the same plate at a range of targets:
| Target food cost | Price on true cost | Price on raw weight | Food cost you actually run |
|---|---|---|---|
| 25% | $19.20 | $11.39 | 42.1% |
| 28% | $17.14 | $10.17 | 47.2% |
| 30% | $16.00 | $9.49 | 50.6% |
| 33% | $14.54 | $8.63 | 55.6% |
| 35% | $13.71 | $8.14 | 59.0% |
Look at the last column. Whatever target you pick, pricing on raw weight overshoots it by the same factor: the true plate cost divided by the raw plate cost, 1.69 here. A lower target does not protect you. It just moves the miss to a different starting point.
That is the non-obvious part. It is tempting to treat food cost percentage as a choice of target. On this plate, the target matters less than whether yield was counted. Moving the target from 30% down to 25% raises the price by $3.20; ignoring yield moves the food cost you actually run by 20.6 percentage points.
How to price a dish without the trap
- Write the plated portion of each ingredient, by weight, as it goes on the plate - cooked, trimmed, portioned.
- Find the yield for each one. Weigh what you buy, prep it the way your kitchen does, weigh what is usable. Yield = usable weight / purchased weight. Do it a few times; it moves.
- Weight to buy = plated weight / yield. This is the step the shortcut skips.
- Ingredient cost = weight to buy x invoice price. Add them up, including sauce, oil, garnish and seasoning - small lines, but they are on every plate.
- Menu price = plate cost / your target food cost %. Round up to a price you would print, so rounding cannot push you over the target.
- Check it the other way: food cost % = plate cost / printed price.
Then recost when a supplier price changes, or when portions drift on the line - both change the plate cost without anyone touching the menu.
How these were calculated
Each ingredient’s true cost is its invoice price divided by its yield, multiplied by the plated weight; the raw-weight cost is the invoice price multiplied by the plated weight. Menu price is plate cost divided by the target food cost percentage, and “food cost you actually run” is the true plate cost divided by the raw-weight price. The period example uses beginning inventory plus purchases minus ending inventory, divided by food sales. Every figure on this page was computed twice, by the code behind the products below and by an independent implementation written for this post, and they agree to the cent. The plate, the yields, the inventory figures and the 30% target are illustrative examples, not typical or recommended values. This is not financial, tax or business advice.
If you want to run this on your own menu - your yields, your invoice prices, your target - these do exactly this arithmetic: the calculator pack as a spreadsheet you type into, the guide as a printable walk-through with a blank costing worksheet.