How much should I charge for a dish?
The quickest way to price a dish is: menu price (ex-VAT) = ingredient cost ÷ target food cost %. If a dish costs €4.20 to make and your target food cost is 30%, the price should be €4.20 ÷ 0.30 = €14.00 ex-VAT. Add VAT back (13.5% in Ireland for food) and you'd list it at roughly €15.90 on the menu.
That formula gets you a defensible starting price in seconds — but it's a floor, not a finished answer. The final number should also account for what competitors charge for a similar dish and what customers perceive the dish to be worth (a hand-dived scallop starter and a bowl of chips can both cost €1.50 to make, but nobody expects to pay the same price for them).
The menu pricing formula, step by step
- Cost the recipe properly first. Include every ingredient at current supplier price, the correct yield (trimmed/cooked weight, not raw weight), and a small allowance for waste — usually 5–10% on fresh produce and proteins. Get this wrong and every price built on top of it is wrong too.
- Pick a target food cost % for the dish type (see table below — it varies more than most menus admit).
- Divide ingredient cost by that target % to get the ex-VAT price.
- Add VAT back, then sense-check against competitors and round to a price that reads well (€14.95 sells better than €14.87).
- Re-run the calculation whenever supplier prices move — a price set in January on a supplier quote from last autumn is often 5–10% too low by summer.
What food cost % should you actually target?
Food cost percentage varies a lot by segment — a single "30% for everything" rule quietly wrecks margins on some sections of the menu and overprices others.
| Operation type | Target food cost % | Equivalent GP% |
|---|---|---|
| Fine dining | 35–40% | 60–65% |
| Casual dining / gastropub | 30–35% | 65–70% |
| Café / bakery | 25–30% | 70–75% |
| Catering / events | 28–35% | 65–72% |
| Grab-and-go retail | 25–30% | 70–75% |
| Quick service | 20–25% | 75–80% |
Drinks skew the averages: a well-run bar runs 70–85% GP (18–24% pour cost), well above most food sections, which is why many venues use blended pricing — slightly tighter margins on signature food dishes, wider margins on drinks and sides, to land on a healthy overall GP.
Where cost-plus pricing goes wrong on its own
Dividing cost by a target percentage is necessary but not sufficient. Three mistakes show up constantly:
- Pricing on VAT-inclusive cost or ignoring VAT entirely, which either understates true margin or produces a menu price that doesn't match what actually lands in the bank.
- Ignoring what the dish is worth to the customer. A formula-only approach underprices signature or high-skill dishes (people will pay more for them) and overprices simple ones relative to what a customer expects to pay for, say, a side salad.
- Setting the price once and leaving it. Ingredient costs move constantly — in our own catering business (€3.5m turnover, 1,000 recipes) we found we were overspending €76,000 a year simply because dozens of recipe costs had crept up while the menu prices they were built on stood still.
Keep it accurate, not just correct on day one
The formula is simple; keeping every dish on the menu re-priced as ingredient costs shift is the actual work. That's the same problem behind gross profit margin slipping without anyone noticing, and the reason recipe costing has to be an ongoing habit rather than a one-off exercise. A free recipe costing template is a fine place to start; kitchens that hold their margins are the ones that re-cost continuously — either by hand or with something like Prepsheets updating every recipe automatically as supplier prices change.