Your menu is your moneymaker, which means it plays a huge role in attracting guests to eat at your restaurant and consider it their usual haunts. Your aim with your menu is to get as many repeat customers as you can get. This means that your menu should contain items that are appetizing and affordable for the average consumer. In order for you to generate a good profit, you will have to learn how to calculate menu item costs and we show you how you can do that. Here is how to do that:

Click to see entire infographic

Step 1

List down all the ingredients that you plan to put on your menu. This includes ketchup, mayonnaise, oil, garnishes, and seasonings. Always make sure that the portion size remains the same for all the dishes.

Step 2

You need to calculate interest, return charges, delivery fees, and any other expenses related to a single ingredient such as the tomato. For instance, if a tomato costs you twenty-five cents, each one gives you eight slices, and you need to put only two slices on each dish, it will cost you six cents.

Step 3

Calculate the cost of the food by adding the total number of all the ingredients. This shouldn’t include labor costs used to prepare or serve the dish.

Step 4

In order to determine the percentage derived from the food, you need to divide the menu cost with by the cost of the food. This will help you determine if you priced the food item correctly.

Step 5

Add up all the overhead costs per meal. In your calculations, you will include rent, labor, marketing, taxes, and other expenses. With this calculation, you will be able to determine the daily overhead expense to run your restaurant. The overhead cost that you require daily needs to be divided by the number of people you think you will serve each day.

Step 6

Come up with the target food and cost percentage that you want for your menu. For instance, the food item is priced at twelve dollars; the overhead cost is eight dollars, your food shouldn’t cost more than four dollars to break even.

Step 7

Look at your menu prices to determine if they cover the food and overhead costs and return profits. You can use your target food-percentage cost to carry out this equation.

Step 8

Calculate cost percentages for different food for different items or services. For instance, if your items are priced low, you will be required to purchase items that are below 20% unless you can make up for this by hiking the price of the dinner menu.

 Step 9

Lastly, examine the sales per item to determine if your food-cost percentages will be able to support your restaurant. In the instance, you are selling items priced low, you will need to raise the prices or lower them depending on which way makes you more profit. For this, you will need take the total cost of food and divide it by the total number of sales generated to understand the cost of food.

If you don’t want to do these steps manually, you don’t have to, as there is a system that can do it on your behalf.