How to price a menu item for a restaurant

To price a menu item, add up what every ingredient on the plate costs you, then divide that by the share of the price you want food to take. Most restaurants aim for food to be 28% to 35% of the price, so a dish that costs you $3.60 to make sells for about $12 at a 30% target ($3.60 ÷ 0.30).

That number is a starting point, not the answer. You then check it against what places near you charge, what the dish earns in dollars, and what you lose on delivery apps and card fees. This guide walks through each step with worked numbers you can copy.

The menu pricing formula

There are two ways to write the same idea:

• Price = plate cost ÷ target food cost %. Plate cost $4.00, target 28%: $4.00 ÷ 0.28 = $14.29.
• Price = plate cost ÷ (1 − target gross margin). Plate cost $4.00, target margin 70%: $4.00 ÷ 0.30 = $13.33.

A 30% food cost and a 70% gross margin are the same thing seen from two sides. Pick one way and use it on every item, so your prices stay consistent.

If dividing by a percentage feels awkward, multiply instead. Each target food cost has a multiplier:

The multiplier is 1 ÷ the target. Keep this table next to your recipe sheets.

Step 1: cost out the menu item (plate cost)

Plate cost is what one portion costs you in ingredients, exactly as it leaves the kitchen. It's the step most owners rush, and the one that decides whether the price is right.

1. Write the recipe for one portion. Every ingredient, in the unit you portion it in: ounces of beef, slices of cheese, grams of fries, the bun, the sauce, the pickle, the oil in the fryer.
2. Find the cost per unit from your last invoice. A 10 lb case of ground beef at $45 is $4.50 a pound, or $0.28 an ounce. Use what you actually paid last time, not last year's price.
3. Adjust for yield. You pay for the whole onion, the whole brisket, the whole head of lettuce, but trim, peel, bones and cooking loss mean you serve less than you buy. Divide the purchase cost by the yield: if a brisket loses 40% to trim and cooking, its usable yield is 60%, and every usable pound costs 1 ÷ 0.60 = 1.67 times the price per raw pound.
4. Add the small things. Oil, salt, sauce cups, garnish, the to-go box and napkins for takeout. Each is a few cents; together they're often 5% to 10% of a plate.
5. Add it up. That total is the plate cost.

Here is a worked example for a burger and fries. The prices are an example to show the math, not what you'll pay: use your own invoices.

At a 30% target, $3.20 × 3.33 = $10.66. At 33%, $9.70. That's your range before you look at the market.

Do this once per item in a spreadsheet with one row per ingredient and the invoice price in its own column. When a supplier's price changes, you change one cell and every dish that uses it updates.

Step 2: pick your target food cost percentage

The usual targets, as published by restaurant software firms that see many restaurants' books:

These are averages across a whole menu, not a rule for each dish. You don't need every item at 30%. Some items naturally run cheap (pasta, rice bowls, fries, coffee, soda) and some expensive (steak, seafood). What matters is the blend across what you actually sell.

How to choose yours:

• Start from your rent and labor. If rent and wages already eat a large share of sales, food has to take less. A place with a small team and low rent can run a higher food cost and still make money.
• Look at your real food cost (the full method, with a spreadsheet, is in how to calculate food cost percentage). Take last month's food purchases, adjust for what's left on the shelves (opening stock + purchases − closing stock), and divide by food sales. If that's 38% and you thought you were at 30%, the prices or the portions are off.
• Set one target for the menu, and allow ranges per section. For example: mains 30% to 35%, starters and sides 20% to 25%, drinks lower. The cheap sections carry the expensive ones.

Step 3: check the price against the market

The formula tells you what the dish has to earn. The street tells you what people will pay. Before you print a price:

1. Look up 3 to 5 places your customers would choose instead of you. Same kind of food, same area, similar feel. Their online menus, Google listings and delivery app pages show their prices.
2. Write their price for the closest dish next to yours. If yours is $10.66 and theirs are $11 to $14, you have room. If theirs are $8 to $9, ask why: smaller portions, cheaper ingredients, or a different kind of place.
3. Decide where you sit. Priced under rivals works when you sell on value and volume. Priced over works when the dish is clearly better or the place is a treat. Both are fine; being priced above rivals without a reason a customer can see is not.

If the market price is lower than the formula price, don't just accept a thinner margin. Change the dish: a 5 oz patty instead of 6, a cheaper cheese, fries as a paid side. Or keep it as a draw item and make sure the sides and drinks around it earn more.

Step 4: round to a price that reads well

$10.66 isn't a menu price. Round to a number that looks deliberate:

• Round up, not down, unless you're above every rival. Rounding $10.66 to $10.50 throws away 16¢ on every plate you ever sell.
• Pick one style and keep it. Whole dollars ($11), halves ($10.50) or a single ending ($10.95). Mixing styles makes the menu look unplanned.
• Leave the dollar sign off on a sit-down menu if it suits your place. A Cornell University study at a restaurant of the Culinary Institute of America found lunch guests spent more when prices were plain numerals (14) than with a dollar sign ($14.00) or written in words [4]. The authors themselves say it may hold only for lunch at that one restaurant, so treat it as an idea to try, not a promise.

What the research says about dollar signs, price endings, anchors and the menu "sweet spot" is set out in menu pricing psychology.

Food cost percentage or dollars earned: which matters more?

Food cost percentage tells you if a price is reasonable. Dollars earned per plate tells you what pays the rent. They can point in different directions:

The steak has the worst percentage and the best dollars. If the kitchen can turn out as many steaks as pastas, every steak sold leaves more money. That's why many guides also use contribution margin: price minus food cost minus other costs that rise with each sale (packaging, card fees, delivery commission) [2][3]. Use the percentage to set prices; use the dollars to decide which dishes to push on the menu and which to drop.

A simple way to sort your menu: list each item with how many sold last month and dollars left per plate. Items high on both are your best sellers: put them where eyes land first. Items low on both are candidates to rework or remove. The full method, with its two cutoffs and a worksheet, is menu engineering.

What about labor?

The food cost formula ignores the time a dish takes. A slow-braised short rib that needs hours of prep and a burger that takes four minutes can have the same plate cost and the same price, but very different labor.

Two ways to account for it without a full cost accounting system:

• Use a lower target for labor-heavy dishes. If a dish takes much more hands-on time than the rest, price it at 25% food cost instead of 30%.
• Watch prime cost. Prime cost is food plus labor, as a share of sales. Lightspeed lists it among the costs to weigh when setting prices [2]. If food cost looks fine but prime cost keeps climbing, the menu has too many dishes that take too long for what they sell for.

How to price menu items for delivery apps and online orders

A price that works in the dining room can lose money on a delivery app, because the app takes a cut of the food total. DoorDash's published commission for delivery is 15%, 25% or 30% depending on the plan you choose, and 6% on pickup orders placed in its app [5]. More on what each plan costs in our guide to the DoorDash commission fee for restaurants.

To keep the same money per plate on an app, divide your in-house price by (1 − commission):

A few things to know before you raise app prices:

• Check the app's terms on price parity. Read your agreement for any rule about matching in-store prices before you set different ones.
• Customers notice. People who compare see that the app costs more. Many restaurants say so openly and point regulars to their own ordering page, where the price is the in-house price.
• Card fees apply on your own site too. Stripe's standard US rate is 2.9% + 30¢ per card payment [6]. On a $12 order that's 65¢, a lot less than a commission, but worth building in. Orders paid at the counter carry your usual counter card rate instead.

If a lot of your orders come through apps, moving regulars to your own ordering page often matters more than any price change. Our guide to commission-free online ordering compares the options and what each one really costs per month.

How to price add-ons, sizes and combos

• Add-ons (extra cheese, avocado, a second patty): cost the add-on alone, then use the same multiplier as the menu. A 60¢ portion of avocado at a 30% target is $2.00. Underpriced add-ons are one of the quietest ways a menu loses money.
• Sizes: cost each size on its own. A large pizza is not twice a small: dough, cheese and toppings scale with the area, and a 14-inch pizza has about 1.8 times the area of a 10-inch. Price each size from its own plate cost and check the jump looks fair.
• Combos and meals: add the plate costs of every part, price at your target, then take off a small discount so the combo is clearly better than buying separately. Make sure the combo still earns more dollars than the main alone, or it only moves money from you to the customer.
• Specials: cost them like any other dish before they go on the board. Specials are often where leftover stock goes, so they can carry a lower food cost.

When to re-cost and raise prices

Ingredient prices move all year, and menu prices across the US have been rising every year; the USDA tracks restaurant price inflation in its Food Price Outlook [7]. A price that was right in spring can be wrong by fall.

When you do raise prices:

• Raise a few items at a time rather than the whole menu at once, starting with the ones furthest over target.
• Change the price everywhere the same day: printed menu, website, Google listing, delivery apps, and the QR menu. A customer charged more than the menu online said will remember it.
• Pair a raise with a reason the customer can see where you can: a bigger portion, a better ingredient, a new side.

A menu kept as text on a web page is the easiest to keep current, because you edit one place and every link and QR code shows the new price. Our guide to creating a restaurant menu online for free covers the options. If you want that done from the menu you already have, send us a photo of it and we'll build your menu site free, with pickup ordering that rings your phone.

Common menu pricing mistakes

• Copying a rival's prices without costing your own dish. Their portions, suppliers and rent are not yours.
• Costing from memory. "The burger costs about $2" is usually wrong by the oil, the sauce, the box and the trim.
• Forgetting yield. Priced on raw weight, a brisket or a whole fish looks far cheaper than it is.
• Free extras that aren't free. Bread baskets, chips and salsa, refills: cost them and spread them into the dishes they come with.
• Never re-costing. A menu priced two years ago is priced on two-year-old invoices.
• Same prices on delivery apps without checking the math. At 30% commission, a dish at a 30% food cost leaves 40% for everything else before card fees and packaging.
• Portions that drift. The right price fails if the cook adds an extra ounce. Weigh portions, and put the weight on the recipe card.

Questions

What is the formula for pricing a menu item?

Menu price = plate cost ÷ target food cost percentage. A $4.00 plate cost at a 30% target is $4.00 ÷ 0.30 = $13.33, which you'd round to $13.50 or $13.95.

What is a good food cost percentage for a restaurant?

Published guides put most restaurants at 28% to 35%, full service at 25% to 35%, and quick service at 20% to 25% [1][3]. It's an average across the menu; some items run lower and some higher.

How do I calculate the cost of a menu item?

List every ingredient in one portion, take each one's cost per unit from your latest invoice, divide by its yield where you trim or cook it down, add the small things (oil, sauce, packaging), and total it.

Should delivery app prices be higher than in-store?

Many restaurants set them higher to cover the commission. To keep the same money per plate, divide the in-store price by (1 − commission): $12 at 25% becomes $16. Check your app agreement before you do.

How often should I update menu prices?

Update the cost of an ingredient whenever its invoice price changes, check your real food cost monthly, and re-cost the whole menu every three months or before you reprint.

Your menu prices are only useful if customers can find them. Build your menu site free from a photo of your menu, and change a price from your phone whenever your costs move. More plain answers for restaurant owners are in all our guides.

Sources

1. How to price a menu, Restaurant365, read Nov 2, 2026.
2. Restaurant menu pricing: how to set prices and turn a profit, Lightspeed, read Nov 2, 2026.
3. Restaurant menu pricing: how to price menu items, Cuboh, read Nov 2, 2026.
4. Yang, Kimes and Sessarego, "$ or dollars: effects of menu-price formats on restaurant checks", Cornell Center for Hospitality Research, 2009.
5. DoorDash commission rates and pricing, DoorDash, read Nov 1, 2026 (as listed in search; the page blocks direct reading).
6. Stripe pricing, Stripe, read Oct 22, 2026.
7. Food Price Outlook: summary findings, USDA Economic Research Service, read Nov 2, 2026.