I had an owner tell me once that he priced his menu by looking at the restaurant across the road and adding a dollar. His pasta was $2 more than theirs, his mains were a dollar or two above everyone else on the strip, and he genuinely believed that was a pricing strategy. It isn’t. It’s just outsourcing your margin to someone else’s spreadsheet — and hoping theirs is right.
Your menu price isn’t supposed to come from the restaurant down the street. It’s supposed to come from your food cost. If you’ve already read our post on costing a recipe, you know how to find the real cost of a dish. This is the next step: turning that number into an actual price, and understanding the percentage that ties the two together.
What Food Cost Percentage Actually Tells You
Food cost percentage is just the relationship between what a dish costs you and what it sells for, expressed as a share of the sale. Add up your cost of goods sold over a period — beginning inventory plus purchases, minus what’s left at the end — and divide that by your food sales for the same period. That percentage is the single clearest signal you have of whether your menu is working for you or against you.
There’s no one “correct” number. A quick-service place can run a food cost in the mid-to-high 20s. A steakhouse, carrying expensive protein, can sit in the high 30s or beyond and still be healthy. Most full-service restaurants land somewhere in the 28–35% range. The number that matters isn’t some industry average — it’s whether your actual percentage is close to what your own menu, at your own margins, should be producing.
That’s where a second number comes in: the gap between your ideal food cost (what your recipes say you should be spending) and your actual food cost (what you really spent, once waste, over-portioning, and shrinkage are in the mix). A small gap is normal. A wide one — several percentage points — usually isn’t a pricing problem at all. It’s a kitchen discipline problem wearing a pricing costume.
Turning Cost Into Price
Once you know a dish’s real cost, the actual pricing formula is simple: plate cost divided by your target food cost percentage gives you the price. Cost a dish at $4.50 and target a 30% food cost, and the formula says $15. That’s cost-plus pricing, and it’s the most common way restaurants price a menu because it guarantees your margin on paper.
The problem is it stops there for a lot of people. A formula-only price doesn’t know that the table next to the kitchen sees your steak special before they see the menu, or that your regulars will happily pay more for the dish they order every single time, or that a price ending in $14.95 reads completely differently to a customer than $15.00 even though your margin barely moves. The formula gets you to a defensible number. It’s still your job to look at that number next to the rest of the menu and ask if it’s actually right.
The Mistake That Costs the Most
The biggest mistake I see isn’t pricing a dish wrong — it’s chasing one target food cost percentage across the entire menu and calling it a strategy. A burger with a 25% food cost and a $6 profit, and a seafood special with a 38% food cost and a $14 profit, can both be doing exactly what you need them to do. If you round-trip every item down to the same percentage, you’ll often end up cutting portions or quality on your most popular, most forgiving dishes just to hit a number — while your genuinely thin-margin items barely move.
Food cost percentage is the health check for your whole menu. The dollars each dish actually puts in your pocket — what it sells, minus what it costs — is what pays your bills. Watch both, and don’t let one number bully the other.
Make It a System, Not a Guess
Pricing isn’t a set-and-forget exercise any more than costing is. Ingredient prices move, your mix of what people actually order shifts with the seasons, and a menu priced correctly in spring can be quietly under-margined by summer. Revisit your food cost percentage the same way you revisit your recipe costs — on a schedule, not just when the bank balance looks off.
If you haven’t already, our Recipe Cost Calculator does the cost side of this for you, so pricing becomes a five-minute exercise instead of a spreadsheet project. And if you want the fuller picture — how menu pricing fits alongside staffing, service, and the rest of what actually drives profit — that’s exactly what we built Courses and the eBook to walk you through.
Price the menu like the number actually means something. Because it does.
Travis







