Menu Costing: How to Price a Dish So It Actually Makes Money

Most menus are priced by looking at what the shop next door charges and landing somewhere near it. That works only if your costs match theirs exactly, which they never do — different suppliers, different portion sizes, different waste, different rent.

The result is a menu where a few items carry the business and a few quietly drain it, and the owner cannot tell which is which. Worse, the loss-makers are often the popular ones, so every busy night makes the problem bigger.

Take your bestseller and write down every single thing that goes into it, by weight or by unit. Not roughly — actually weigh it once. Most owners are surprised by how far the real portion is from the intended one.

1. 1List every ingredient in the dish, including oil, spices and sauces
2. 2Weigh or measure the actual portion used, once, on a scale
3. 3Convert each supplier price down to a per-gram or per-unit cost
4. 4Multiply by the portion to get the cost of each ingredient in the dish
5. 5Add packaging: box, bag, lid, napkin, cutlery, delivery sleeve
6. 6Add a waste allowance — trim, spoilage and mistakes are real cost
7. 7Total it. That is your true plate cost

The standard approach is food cost percentage: divide the plate cost by the selling price. Most food businesses aim for 25 to 35 percent, meaning a dish costing 10 QAR sells somewhere between roughly 29 and 40 QAR.

Do not apply one percentage to the whole menu. Drinks usually carry a much lower food cost and can subsidise a signature dish you want to keep affordable. The target is the blend across everything you sell, not every line item.

Once every dish has a real cost, rank the menu two ways: by how many you sell, and by how much margin each one earns. Cross those two lists and every item falls into one of four groups.

• Sells a lot, good margin — your stars. Protect these; never let quality or portion drift
• Sells a lot, poor margin — fix these first. Reprice, re-portion or renegotiate the supplier
• Sells little, good margin — promote these. Move them up the menu, train staff to suggest them
• Sells little, poor margin — cut these. They complicate your kitchen and tie up stock for nothing

The second group is where the money is. These are the dishes your shop is famous for and busiest with, and a small correction on a high-volume item is worth more than any change to something you sell twice a week.

Costing once and filing it away is barely better than not doing it. Supplier prices move, portions drift as staff change, and a dish that launched at 65 percent margin can be at 45 percent a year later without anyone touching the menu price.

This is the part worth automating. When recipes are attached to products in your POS, every sale prices itself against current ingredient costs, stock deducts automatically, and margin reports stay accurate without a monthly spreadsheet session. Outale does this with a bill of materials per product, ingredient usage reporting, and a profit view that ranks items by margin.