What should I consider when costing my menu?

What should I consider when costing my menu?

22nd July 2023

What should I consider when costing my menu?

Costing a menu involves calculating the total cost of all the ingredients used to prepare the dishes on the menu. It is essential for a restaurant or food business to ensure that the prices set for the menu items cover the cost of ingredients and other associated expenses, while also factoring in a reasonable profit margin. Here’s a step-by-step guide on what I should consider when costing my menu:

1. **Recipe Standardization**: Have standardized recipes for all the dishes on your menu. These recipes should specify the exact quantities and measurements of each ingredient required to prepare the dish.

2. **Create a List of Ingredients**: Make a comprehensive list of all the ingredients used in the menu items. Include everything from main ingredients (e.g., proteins, vegetables) to garnishes and sauces.

3. **Determine Ingredient Prices**: Contact suppliers and obtain current prices for each ingredient on your list. Prices may vary, so it’s important to get the most up-to-date information.

4. **Calculate Ingredient Costs per Dish**: For each dish, multiply the quantity of each ingredient used by its unit cost. Add up the costs for all the ingredients in a particular dish to get the total ingredient cost for that dish.

5. **Consider Waste and Yield**: Take into account potential waste and yield in ingredient preparation. Some ingredients may be trimmed or discarded during the cooking process, affecting the actual cost per dish.

6. **Include Overhead Costs**: Apart from the direct cost of ingredients, consider overhead costs like labor, utilities, rent, insurance, and other operating expenses. Allocate a portion of these costs to each dish on the menu based on its complexity and cooking time.

7. **Calculate Total Cost per Dish**: Add the ingredient cost and the allocated overhead costs for each dish to arrive at the total cost of preparing that dish.

8. **Determine Selling Price**: Decide on the profit margin you want to achieve. Typically, menu items are priced at a certain percentage above the total cost to ensure profitability. The percentage markup can vary based on the type of establishment, location, and target market.

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9. **Check Competitors’ Prices**: Research the prices of similar dishes offered by competitors in your area. Your pricing should be competitive while still covering your costs.

10. **Account for Seasonal Variations**: If your menu changes seasonally or based on ingredient availability, adjust ingredient costs and pricing accordingly.

11. **Monitor and Update**: Keep track of ingredient prices and other costs regularly, and update your menu prices as needed to reflect any changes.

12. **Offer Specials and Combos**: Create specials or combo meals to utilize ingredients that may have shorter shelf lives or to promote specific items, but be sure they still contribute to overall profitability.

Remember that while it’s essential to maintain profitability, overly high prices can drive away customers. Finding the right balance between cost and value is crucial for the success of your food business.


If you need help with menu costings, or menu development get in touch for a free phone consultation 

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Lumiere Consultancy are a restaurant consultancy providing professional food and chef consultant services. Our Founder (Ben) has been in hospitality for over 25  years and is now predominantly based in London. Our key areas of expertise are full concept, property search, project management, menu design, operations and training. 

On our website you will find some really useful information in our Restaurant Strategy Projects and all our service related topics within Restaurant Consultancy.  We are an end to end solution for all of your hospitality needs. 

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