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Guides / Running a restaurant

How to price a restaurant menu

Written by the Forkrado team, DenverUpdated

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To price a dish, divide its plate cost by your target food cost percentage. A dish that costs $4.20 to make, at a 30% target, should sell for about $14. Then check what the dish contributes in dollars, compare with nearby restaurants, and make sure any mandatory fee is shown clearly, as Colorado requires.

  • Price = plate cost ÷ target food cost %.
  • Cost every ingredient, including garnish and sides.
  • Judge dishes by dollars earned, not just percentage.
  • Recost the menu whenever supplier prices move.
  • In Colorado, show mandatory fees, don't hide them.
Core formulaPlate cost ÷ target %
Example$4.20 ÷ 30% = $14
RecostWhen supplier prices change
Colorado feesMust be disclosed

The food cost formula

Menu price = plate cost ÷ target food cost percentage
Food cost % = plate cost ÷ menu price × 100

Your target depends on your concept, labor and rent. Pick a target from your own numbers rather than a rule of thumb.

Worked example: birria tacos

IngredientCost per plate
Braised beef, 5 oz$2.60
Tortillas, 3$0.36
Cheese, onion, cilantro$0.54
Consomé$0.45
Lime, salsa, packaging$0.25
Plate cost$4.20

At a 30% target: $4.20 ÷ 0.30 = $14.00. At 28%: $15.00. Example costs only; use your own invoices.

Look at dollars, not just percentages

A $26 steak at 38% food cost earns $16.12 per plate. A $9 side at 20% earns $7.20. The steak has the worse percentage but earns more per sale. Rank dishes by how much they earn and how often they sell.

 Sells a lotSells little
Earns a lotStars: keep and featurePuzzles: promote or reposition
Earns littleWorkhorses: raise price or trim costDogs: remove or rework

Price checks before you print

  • Compare with similar restaurants within a few miles.
  • Round to clean prices guests read easily.
  • Keep online prices the same as in store, or say clearly if they differ.
  • If you add a mandatory service fee, show it on the menu and at checkout. See Colorado's service fee law.

Questions owners ask

What is a good food cost percentage?

It depends on your concept, rent and labor. Set your target from your own costs and margins.

How often should I reprice my menu?

Recost whenever key ingredient prices change, and review prices at least a few times a year.

Should online prices be higher?

You can, but say so clearly. Many restaurants keep prices the same and disclose any online fee instead.

Can I add a service fee instead of raising prices?

In Colorado, yes, if the fee is clearly disclosed. Many owners find a price increase simpler for guests.

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Sources

  1. Colorado General Assembly: HB25-1090 Protections Against Deceptive Pricing Practices
Related guidesColorado service fee lawBest POS for small restaurantsCommission-free online ordering