Food cost formula & menu pricing for restaurants
Pricing dishes by gut feel or by copying the restaurant next door is the fastest way to lose money quietly. Here is the simple formula we use at Moreno's Italiano, where food cost runs at about 28 percent.
The food cost formula
Plate cost is the cost of every ingredient on the plate at the exact quantity you use, priced at what you actually pay your supplier. Include garnishes, sauces and your share of batch recipes like stocks and dough.
Step 1: cost one dish properly
Take one pasta dish. List every ingredient, the grams used and the cost per gram. Add them up. Many owners stop at the main ingredients and forget the oil, the cheese on top, the bread on the side and the waste from trimming. Those small items are often the difference between profit and loss.
Step 2: work backwards from your target
Skip the math: use our free menu price calculator. Type your plate cost and target food cost and it gives you the price, with or without 12% VAT.
Example: if a dish costs ₱150 to make and your target food cost is 30%, your selling price is ₱150 ÷ 0.30 = ₱500.
If that price is higher than your market will pay, you have three options: reduce the plate cost, change the portion, or replace the dish. Do not simply lower the price and hope.
Step 3: check your menu every month
- Recost every quarter. Supplier prices move, especially imported cheese, cured meats and olive oil.
- Compare theory with reality. Divide what you spent on food this month by your food sales. If it is far above your theoretical food cost, look for waste, over-portioning or missing sales.
- Use menu engineering. Rank dishes by popularity and profit. Keep the stars, fix the popular but low-profit dishes, and remove the ones nobody orders.
A lesson from our own kitchen
Years ago, at one of my earlier restaurants, we priced a pizza by what felt right next to the rest of the menu. When we finally costed it properly, we were losing money on every single order of a bestseller. Today every dish at Moreno's Italiano is costed before it reaches the menu, and that discipline is one reason our revenue grew about four times after our rebrand.
Frequently asked questions
What is the formula for food cost percentage?
Food cost % = plate cost ÷ selling price × 100. For example, a dish that costs ₱150 to make and sells for ₱500 has a 30% food cost.
How do I price a dish using food cost?
Divide the plate cost by your target food cost. A ₱150 plate cost at a 30% target gives a ₱500 selling price.
How often should a restaurant recalculate food cost?
At least every quarter, and immediately when a key supplier changes prices.
Start with a Restaurant Health Check call
In one hour we go through your concept, startup costs, permits and menu costing, and you leave with clear next steps. The Restaurant Launch Blueprint ebook and the full toolkit of templates are included with your call.