Costing from old invoices
Last spring's chicken price is a rumor. If the invoice on top of the pile says something different than your costing sheet, the sheet is wrong — and so is every price built on it.
A working operator's guide
How to Price a Menu Item
Most menu prices are guesses that got grandfathered in — set once, borrowed from the place down the street, never questioned since. Here's the method I actually use instead.
I'm Joe — I run a restaurant, and costing and pricing menus is some of the digging I do for owners through MarginSavvy. You don't need software or a consultant for this. You need your current invoices, a kitchen scale, and about an hour. The burger in the example below is made up. The method isn't.
Questions about your own menu? joe@marginsavvy.com · Call or text (913) 489-7952
Step one
Cost the plate — all of it
Every price starts with an honest plate cost, and "honest" is where most menus quietly go wrong. The plate cost is everything that leaves the kitchen on that plate: the protein, yes — and the bun, the cheese, the produce, the sauce, the side, the garnish, the bread that lands with it. If the guest eats it, it goes in the cost.
Pull the prices off your current invoices — what you paid on the last order, not what you paid last spring. Then mind the yield: you don't serve the pound you bought. Trim, shrink, and the piece left on the cutting board all mean the edible portion costs more per ounce than the invoice math suggests. A scale and five minutes with your main proteins will tell you your real yields.
A worked example — one burger
The prices are invented so the math is easy to follow. Yours come off your invoices.
Ground beef, 8 oz patty (at $6.40/lb)$3.20
Bun$0.60
Cheddar, 1 slice$0.40
Lettuce, tomato, onion, pickles$0.50
House sauce$0.15
Fries$0.95
Plate cost$5.80
Step two
Turn the cost into a price
Now pick the food cost percentage you're aiming at. A lot of independent restaurants run food cost somewhere in the high 20s to mid 30s — where you should land depends on your concept, your labor, and your rent. There's no magic number, and anyone who hands you one without seeing your P&L is guessing.
Menu price = plate cost ÷ target food cost percentage
Run the burger through it at three different targets:
$5.80 ÷ 30%$19.33
$5.80 ÷ 32%$18.13
$5.80 ÷ 35%$16.57
The math gives you a neighborhood, not the number. $19.33 becomes $18.95 or $19.50 — a price your guests will accept for what lands in front of them, in your room, on your street. That last call is operator judgment, and it's yours.
Step three
The percent isn't the profit
Here's the part a percentage will never tell you: a percentage never paid a bill. Dollars do. What an item actually earns is its contribution — price minus plate cost — multiplied by how many you sell.
The burger at $18.95: ($18.95 − $5.80) × 180 sold a week≈ $2,367 / week
A salad at $14.00, $3.64 cost — a beautiful 26%: ($14.00 − $3.64) × 25 sold a week≈ $259 / week
The burger runs about a 31% food cost. The salad runs 26%. The "worse" percentage out-earns the "better" one nine times over.
That's why smart operators sort the whole menu by dollars and volume. Every item lands in one of four boxes: stars (sell a lot, earn a lot — protect them), workhorses (sell a lot, earn a little each — cost them carefully), puzzles (earn well but nobody orders them — find out why), and dogs (neither — and every menu has a few, taking up space). Consultants call this menu engineering. Mostly it's just knowing which box each of your items lives in.
Step four
Keep it true
Costs drift. The chicken you costed in spring costs more by fall, portions creep a half-ounce at a time, and the price printed on the menu never got the memo. Re-cost your best sellers whenever a key invoice price moves, and the whole menu a few times a year.
And count the "free" stuff while you're at it: bread service, chips and salsa, to-go containers, sauce cups, the lemon wedges. None of it is free — it all leaves on somebody's ticket, and on a busy week it adds up to real money.
Last thing: your prices are yours. The place down the street has different invoices, different rent, different labor. Copy their prices and you import their math into your P&L.
Watch for these
The four mistakes I see most
Pricing off the protein alone
The steak is the loudest cost on the plate, so it's the one that gets priced. The sides, sauces, bread, and garnish ride along uncounted — and together they're real money.
Forgetting yield
You don't serve the pound you bought. Trim, shrink, and waste mean the portion on the plate costs more per ounce than the invoice suggests. Weigh it once and you'll never un-know it.
Set it and forget it
A price set once and never revisited is just a guess with seniority. Your best sellers deserve a fresh look every time a key cost moves.
Good to know
Questions owners ask about pricing
How do you calculate the food cost percentage of a menu item?
Divide the plate cost by the menu price, then multiply by 100. A $5.80 plate cost on an $18.95 price is about a 31% food cost. The plate cost has to be honest first — every ingredient on the plate, at the prices on your current invoices — or the percentage is just a precise-looking guess.
What's a good food cost percentage for a restaurant?
There isn't one number that's right for every restaurant. A lot of independent restaurants run food cost somewhere in the high 20s to mid 30s, but the right target depends on your concept, your labor cost, and your rent — food cost is only one piece of prime cost. Chasing a percentage somebody else picked, without looking at your whole picture, is how owners end up with a great food cost and a struggling restaurant.
How often should I re-cost my menu?
Whenever a main ingredient's invoice price moves — and for most kitchens that means spot-checking your best sellers monthly and re-costing the full menu a few times a year. Costs drift quietly: a spring price on chicken makes your fall margins a fiction, and you won't see it until the P&L surprises you.
Do I need software to cost and price my menu?
No. A kitchen scale, your current invoices, and a spreadsheet (or a legal pad) will do the whole job for most menus. Software earns its keep when the menu is big, prices change constantly, or multiple locations have to stay in sync. The method matters more than the tool.
What's the difference between food cost percentage and contribution margin?
The percentage tells you what share of the price the food takes. Contribution margin tells you the actual dollars an item leaves behind — price minus plate cost — and multiplied by how many you sell, it's the number that pays the bills. A higher-percentage item that sells all week can out-earn a low-percentage item that barely moves. Watch both.
Should I just match the prices of the restaurant down the street?
Their prices are built on their costs — their rent, their labor, their invoices — none of which are yours. Match their prices and you import their math into your P&L. Price from your own plate costs, then sanity-check the result against what your guests will happily pay.
Or hand it off
You can do all of this yourself. Or you can hand me the menu.
That really is the whole method — nothing held back. Run it on your menu and you'll understand your restaurant better than most owners ever do.
If you'd rather spend that hour on your floor, that's exactly what a Menu X-Ray is: you send me your menu, I do the digging — every item costed, priced, and sorted by what it actually earns — and you get back the five moves I'd make first. $389, one time.
And if what's going on at your place isn't the menu at all — tell me about that instead.
The front door
Tell me what's happening
I'm Joe. If something at your place has been on your mind — a number that stopped making sense, a decision you're weighing, something that just feels off — tell me what's going on. I'll reply personally.
Call Joe — (913) 489-7952Rather write it out? Tell Joe what's going on →
Email joe@marginsavvy.com · DM Instagram or Facebook
You don't need to have it all figured out. That's the point.