The menu pricing formula turns your food cost into a selling price. Here is how it works, how to adjust it for delivery, and how to avoid the most common mistakes.
The core formula
Selling Price = Food Cost ÷ Target Food Cost %
Food Cost
$4.50
ingredients per portion
Target FC%
30%
÷ 0.30
Selling Price
$15.00
minimum price
You will use both versions regularly:
Version 1 — Find the selling price
Selling Price = Food Cost ÷ Target FC% Use when: pricing a new dish or repricing after cost changes
Version 2 — Check your current food cost %
Food Cost % = (Food Cost ÷ Selling Price) × 100 Use when: auditing existing menu prices
| Dish | Food Cost | Target FC% | Min Price | Rounded Price |
|---|---|---|---|---|
| Margherita Pizza | $2.80 | 30% | $9.33 | $9.95 |
| Grilled Salmon | $6.60 | 32% | $20.63 | $22.00 |
| Caesar Salad | $2.20 | 28% | $7.86 | $8.95 |
| Beef Burger | $4.10 | 30% | $13.67 | $14.95 |
| Chocolate Lava Cake | $1.60 | 25% | $6.40 | $7.50 |
Rounded prices use charm pricing (.95/.99) for casual dining. Fine dining would use whole numbers.
The denominator in the formula directly controls your price. Use the target that matches your restaurant type:
| Segment | Target FC% | Price multiplier |
|---|---|---|
| Fast food / QSR | 25–28% | 3.6× – 4.0× cost |
| Fast casual | 28–32% | 3.1× – 3.6× cost |
| Casual dining | 30–35% | 2.9× – 3.3× cost |
| Fine dining | 32–38% | 2.6× – 3.1× cost |
| Bakery / café | 28–35% | 2.9× – 3.6× cost |
| Bar food | 25–30% | 3.3× – 4.0× cost |
The price multiplier is a shortcut: multiply your food cost by 3.3× and you get roughly a 30% food cost target.
Delivery apps (DoorDash, Uber Eats, Grubhub) charge 15–30% commission on every order. If you use the same price as dine-in, your effective food cost skyrockets.
Delivery Price = Food Cost ÷ (Target FC% × (1 − Commission%))
Example (25% commission, 30% target):
Delivery Price = $4.50 ÷ (0.30 × (1 − 0.25))
= $4.50 ÷ (0.30 × 0.75)
= $4.50 ÷ 0.225
= $20.00 (vs. $15.00 dine-in)A 25% platform commission requires a ~33% delivery price premium to maintain the same food cost percentage as dine-in.
These two formulas look similar but produce different results:
Food Cost Formula (margin-based)
Price = Cost ÷ FC% $4.50 ÷ 0.30 = $15.00 Margin = 70%
Restaurant standard. FC% is a share of price.
Markup Formula (cost-based)
Price = Cost × (1 + Markup%) $4.50 × 3.33 = $14.99 Markup = 233%
Retail standard. Less common in restaurants.
Restaurants use the margin-based formula because food cost percentage is how restaurant P&Ls are structured.
Not accounting for yield/waste
Raw ingredient cost ≠ usable cost. Divide by yield percentage before applying the formula.
Using retail ingredient prices
Always use your wholesale invoice prices. Retail prices will make you underprice.
Setting the same FC% for all dishes
High-margin categories (desserts, drinks) can target 20–25%. Low-margin proteins may need 35%. Mix intentionally.
Never updating the formula inputs
Supplier prices change. Recalculate every 3–6 months, or when a major ingredient cost shifts by more than 10%.
What is the menu pricing formula?
Selling Price = Food Cost ÷ Target Food Cost %. Divide the ingredient cost per portion by your target food cost percentage (as a decimal) to get the minimum selling price.
How do you calculate menu price from food cost?
Calculate total ingredient cost for one portion, then divide by your target food cost % (e.g. 0.30 for 30%). Round the result up to a psychologically appealing price.
What target food cost percentage should I use?
28–35% for most restaurants. Fast casual 25–30%. Fine dining 30–38%. The formula gives your floor price — you can price higher if your market allows.
How do you adjust for delivery platform commissions?
Use: Delivery Price = Food Cost ÷ (Target FC% × (1 − Commission %)). A 25% commission requires roughly a 33% price increase over dine-in to maintain the same margin.
Enter your ingredients and target food cost % — MenuPricer runs the formula and adds AI-powered pricing analysis for your market.
Try the Pricing Calculator