Restaurant Menu Pricing: Food Cost Percentage, Prime Cost, and Setting Prices
October 29, 2026
Restaurants live on thin margins, so pricing each dish correctly is essential. The basic method is to cost the ingredients in a portion, choose a target food cost percentage, and divide: menu price = plate cost ÷ target food cost percentage. For a dish with $4.50 of ingredients and a target food cost of 30%, the price is 4.50 ÷ 0.30 = $15.00. The gross profit on each sale is $10.50.
Typical food cost targets are 28% to 35% of menu price for full-service restaurants, though they vary by cuisine: steak houses may run higher, pizzerias lower. Food cost alone is not enough, since labor and overhead must also be covered.
Skip the math and get your answer instantly:
Open the Margin & Markup Calculator →Costing a Plate
Add up the cost of every ingredient in one portion, using the usable (edible portion) cost, which accounts for trim and cooking loss. If chicken costs $4.00 per pound and has a 75% yield after trimming and cooking, the cost per usable pound is 4.00 ÷ 0.75 = $5.33. A 6-ounce portion (0.375 lb) costs $2.00. Add sides, sauce, garnish, oil, and a small allowance for spices and waste (often 2% to 5%). For a plate with chicken $2.00, rice $0.40, vegetables $0.80, sauce $0.50, and garnish and extras $0.30, the plate cost is $4.00; a 30% food cost gives a price of $13.33, and 28% gives $14.29. Round to attractive menu prices such as $13.95 or $14.00.
| Plate cost | Target 28% | Target 30% | Target 33% | Gross profit at 30% |
|---|---|---|---|---|
| $3.00 | $10.71 | $10.00 | $9.09 | $7.00 |
| $4.50 | $16.07 | $15.00 | $13.64 | $10.50 |
| $6.00 | $21.43 | $20.00 | $18.18 | $14.00 |
| $9.00 | $32.14 | $30.00 | $27.27 | $21.00 |
Prime Cost
Prime cost = cost of goods sold (food and beverage) + labor (wages, payroll taxes, and benefits). It is the largest expense and the number most closely watched; a common target is 55% to 65% of sales. If monthly sales are $80,000, food cost is $24,000 (30%), and labor is $26,400 (33%), prime cost is $50,400, or 63%. That leaves 37% ($29,600) for rent, utilities, marketing, insurance, and profit. If prime cost rises to 70%, only 30% remains, and many restaurants would lose money. Track it weekly and compare with the budget.
Menu Engineering
Classify each dish by popularity (units sold) and profitability (gross profit per item). Stars are popular and profitable: promote them. Plowhorses are popular but less profitable: raise prices or reduce portion cost. Puzzles are profitable but unpopular: reposition or rename them. Dogs are neither: consider removing them. Design the menu so that high-margin items stand out, and offer a few anchor items at high prices. Test price changes of 3% to 5% on low-sensitivity items; customers focus more on value and experience than on small increases.
Controlling Costs
Standardize recipes and portion sizes, use scales and portion tools, monitor waste, negotiate with suppliers, count inventory regularly, and compare actual with theoretical food cost. A gap of more than 2 to 3 percentage points signals waste, theft, over-portioning, or recording errors. Beverages carry lower cost percentages (20% to 25% for many bar items), improving overall margins.
Frequently Asked Questions
How do I calculate menu price from food cost?
Divide the plate cost by the target food cost percentage.
What is a good food cost percentage?
Roughly 28% to 35% for most restaurants.
What is prime cost?
Food and beverage cost plus labor cost, ideally 55% to 65% of sales.
What is menu engineering?
Analyzing dishes by popularity and profitability to optimize the menu.
How do I account for trim and cooking loss?
Divide the purchase cost by the yield percentage to get the usable cost.