Use actual inputs
Cost the ingredients and quantities used in the dish from the pack price you actually pay. Use the food cost calculator for the arithmetic.
Menu pricing guide · UK kitchens
How to price a restaurant menu
Build the correct portion cost, apply a target on the ex-VAT sales basis, then test the number against demand, labour, waste and menu context. This page explains the method; the separate calculator runs the real number.
The pricing formula
Start with the cost of the portion you actually serve. A target percentage is an assumption to inspect, not a guarantee of profit.
selling price (ex VAT) = portion cost ÷ target food-cost percentageExample: £3.60 ÷ 0.30 = £12.00 ex VAT. At 20% VAT that is £14.40 inc VAT; gross profit is 70% of the £12.00 net sale.
Build the correct portion cost first
Check usable yield
Trim, peel and cooking loss change what reaches the plate. Measure it with the yield calculator before setting a price.
Then run the price
Use the separate GP/menu price calculator to test either direction from a target.
Use the method for a dish, review or quote
Add the inputs
Use the food cost calculator for ingredients, pack sizes and portions; caterers can match the yield to the quote.
Check the assumption
Review the usable yield, portion cost and target percentage. If the result looks wrong, inspect the yield or serving size before changing the price.
Make the decision
Test the result against labour, overheads, VAT treatment, demand and menu position, then re-cost when inputs change.
A worked example, start to finish
Chicken schnitzel with fries. Every number below is arithmetic you can check.
1. Cost the usable ingredient, not the pack
A 2.5 kg pack of chicken breast at £16.50 looks like £6.60 per kilo. After trimming, 2.2 kg is usable — a yield of 88%. The cost of what you can actually serve is £16.50 ÷ 2.2 = £7.50 per usable kilo. A 180 g portion is 0.18 × £7.50 = £1.35.
2. Add everything else on the plate
Flour, egg and crumb £0.22. Lemon and herb butter £0.31. Fries at 250 g from a 2.5 kg bag costing £4.20, so £1.68 per kilo, giving £0.42. Salad garnish and dressing £0.28.
Portion cost = £1.35 + £0.22 + £0.31 + £0.42 + £0.28 = £2.58.
3. Divide by the target, on an ex-VAT basis
At a 30% target food cost: £2.58 ÷ 0.30 = £8.60 excluding VAT. Restaurant food eaten in is standard-rated, so the menu price is £8.60 × 1.2 = £10.32 including VAT.
4. Round, then check what you actually achieved
Put it on the menu at £10.50. That is £10.50 ÷ 1.2 = £8.75 ex-VAT, so the achieved food cost is £2.58 ÷ £8.75 = 29.5%. Rounding up bought you half a point. Rounding down would have cost you one — which is exactly why the check is worth doing rather than assuming.
Do you price with or without VAT?
Use net sales (ex VAT where VAT applies) for GP and food-cost calculations, then apply the actual VAT liability and rate of the supply to reach the customer-facing price.
This is the single most common way a UK menu price goes wrong, because both halves of the sum feel like they are in the same currency and they are not. Most food bought into a kitchen is zero-rated, so the supplier invoice is already a net figure. Food eaten on the premises is standard-rated at 20%, so the menu price is a gross figure. Divide one by the other and the answer is meaningless.
Take the schnitzel. Against the £8.75 that actually belongs to the business, £2.58 of ingredients is a 29.5% food cost. Against the £10.50 the guest hands over, the same £2.58 reads as 24.6%. The dish did not get cheaper — you just measured it against money that belongs to HMRC. Do that across a menu and you will believe you have five points of margin that do not exist.
For the dine-in example above, multiply the ex-VAT price by 1.2 at the end. Other supplies, including some takeaway situations, can have different VAT treatment, so check the actual liability rather than applying 20% universally.
What target percentage should you use?
A 30–35% food-cost range can be an illustrative planning input, equivalent to 65–70% GP on ex-VAT sales; validate it against your own economics and the current benchmark context.
The linked benchmark guide provides context, but any percentage is a planning starting range rather than a universal rule. Set a target that reflects your labour, overhead, waste, demand and menu mix.
A dish can sit outside your starting range deliberately: a loss-leading roast that fills a quiet Sunday, a steak held to a local price ceiling, or a pasta that subsidises another dish. What matters is that the menu lands where you need it and that you know which dishes are carrying which.
Under 25%
Usually a portion that is too small for the price, or a cost input that is stale. Check the yield before you celebrate.
30–35%
An illustrative starting range only; validate it against your own labour, overhead, waste, demand and menu mix.
Over 40%
Either a deliberate footfall dish or a pricing problem. Both are fine; not knowing which is not.
Check the number before it reaches the menu
Food cost % and GP % are complements on the same ex-VAT sales basis: a 30% food cost means 70% gross profit before labour and overhead. A target-price result is planning arithmetic, not net profit.
Test the price against labour, rent and other overhead, realistic waste, demand, competitor context, contribution per cover and the rest of the menu mix. Re-cost whenever a supplier price, recipe yield, portion size or VAT treatment changes.
Decision checklist
- Is the portion cost based on usable yield and the actual garnish, sauce and sides?
- Are target, cost and selling price all on the same ex-VAT basis?
- Will the price work with labour, overhead, waste and expected volume?
- Does it make sense beside neighbouring dishes and the intended menu mix?
Five mistakes that break a menu price
Costing the pack, not the yield
Trim, bone, peel and cooking loss all happen between the invoice and the plate. A 62% yield on beef shin means the usable kilo costs more than half as much again as the labelled one.
Forgetting the plate furniture
Garnish, dressing, butter, oil, the bread that arrives with it. Individually pennies, collectively the difference between a 30% dish and a 34% one.
Mixing VAT bases
Net ingredients divided by a gross selling price. Covered above, and worth checking on every dish you inherited rather than priced yourself.
Pricing once and never again
A price set against last autumn's invoice is a historical record. When a major ingredient moves, the dishes that share it move too — including the ones that use it inside a sauce or a stock.
Treating the percentage as the profit
Food cost is one line. Labour and overheads take the rest, and a 28% dish sold four times a week earns less than a 34% dish sold forty times.
Common questions about the guide
What is the menu-pricing formula?
Portion cost ÷ target food-cost percentage = selling price on the same ex-VAT basis. Use the GP/menu price calculator to run the number.
How should VAT be handled?
Use net sales (ex VAT where VAT applies), then apply the actual VAT liability and rate of the supply. The £14.40 example assumes 20% VAT for dine-in.
What target should I plan with?
Choose a starting range that reflects labour, overhead, waste, demand and menu mix, then test it against benchmark context.
How do I build the portion cost?
Use the food cost calculator for pack price and recipe quantities, and the yield calculator when trim or cooking loss affects usable quantity.
Does the formula guarantee a profitable menu price?
No. It is planning arithmetic. Labour, overheads, VAT, demand and contribution still need judgement.
How do I compare a full menu?
Use the whole-menu Menu Profit Matrix or Food Cost & Menu Pricing template.
Keep reading
- How to price a menu to a target food cost percentage — the formula on its own, with three worked targets.
- Food cost per portion — pack price, usable yield and the numbers underneath a plate.
- UK food-cost and GP benchmarks — context for choosing a starting target.
- Gross profit on food in the UK, with VAT explained — the same sum from the margin side.
- Menu engineering for small restaurants — what to do once you know which dishes are carrying the list.
- Prime cost for a UK restaurant — food and labour together, and why the denominator has to be ex-VAT.
One dish is free. A whole menu needs a system.
Run the GP/menu price calculator for a dish. If you need to compare several dishes, flag low-margin recipes and keep the decisions together with the Food Cost & Menu Pricing template or Menu Profit Matrix.