Every chef has a great time planning a menu and coming up with new food items. The creative side of the business is always fun. Then the rubber hits the road. You have to come up with a price for the food so that you make a profit. Keep your food costs in line by using math for menu pricing, rather than just guessing what you should charge.

What Is Your Food Cost?

To determine your menu pricing, you have to know what the food costs you. Your costs determine what your customers pay. Traditionally, food costs are about 30 to 35%. If you pay $2.00 for the food, your customer should pay around $6.67 if you shoot for 30%. You can calculate this by dividing the food price by your percentage cost. ($2.00/.30 = 6.67).

You might think you’re charging too much, but it isn’t about the food alone. You have overhead costs, the building, employees, utilities, equipment, and insurance costs, just to name a few. To make a profit in the restaurant industry, you have to earn about 20 percent more than you spend. If you spend 30% of your income on food and beverage costs, another 30% on labor, and finally, 20% on your building, taxes, and permits, you have about 20% leftover.

Consider Your Menu Carefully

When menu pricing, you know your costs per portion provided the cooks make it that way. Using an 8-ounce steak instead of a 6-ounce portion may not seem like a lot once, but over a month of dinners, it can add up. You should also think about seasonality. Apples cost much less in the fall when the harvest is fresh. Six months later, the cost might go up. You either need to adjust prices or adjust the menu. Customers are more likely to prefer a different menu than seeing their cost go up on their favorite item.

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