How to price a menu item so it actually makes money

1Start from the plate cost, not the competition

What the restaurant next door charges tells you about their costs, not yours. Their rent, their volume, their supplier deals — none of it is your P&L. Before you look outward, look at the plate: every ingredient, in the exact quantity the dish uses, at what you actually paid on your last invoice. That number is the floor everything else is built on.

Do this: cost the dish line by line — protein, starch, sauce, garnish, the oil it's cooked in. If you don't know a plate's true cost, you're not pricing, you're guessing.

2Work backward from your target food cost %

Once you have the plate cost, pricing is arithmetic. Pick a target food-cost percentage for the dish — many kitchens aim around 28–32%, though it varies by category — and divide. A plate that costs $3.00 at a 30% target should be priced near $10.00 ($3.00 ÷ 0.30). That's your starting price, not your final one — but now the starting point is grounded in your numbers.

3Don't price everything the same — engineer the menu

A flat target across the whole menu leaves money on the table. Some dishes can carry a lower food-cost % because customers don't price-shop them (cocktails, sides, desserts); others are anchors where a fair price drives traffic. The goal isn't a perfect percentage on every plate — it's a healthy blended cost across what actually sells.

Do this: let your stars (high-margin, high-volume) subsidize a generous anchor or two, and re-work the dogs (low-margin, low-volume) rather than propping them up.

4Count the whole plate, including the parts nobody costs

The leaks hide in the small stuff: the drizzle of finishing oil, the garnish, the ramekin of sauce, the bread that comes free. Individually they're pennies; across a few hundred covers they're a line on the P&L. A price built only on the "main" ingredients is a price that's quietly too low.

5Re-price on a schedule, not in a crisis

A price that was right in spring can be wrong by fall, because ingredient costs moved and the price didn't (this is how a 30% dish becomes a 42% dish without anyone touching the menu). Waiting until the P&L scares you means months of lost margin first.

Do this: re-cost the menu against current prices on a regular cadence — monthly is plenty — flag the handful of dishes that drifted over target, and adjust just those.

Here's the payoff: a kitchen that re-prices its five most-drifted dishes usually recovers a point or two of overall food cost without touching quality or portion. On $50,000/month in food, a single point is $500 a month — from doing the arithmetic on the plates you already sell.