Menu Costing

Determining the Food Cost of each item on your menu is essential in setting prices for your menu items that will give you a reasonable profit without driving away your customers. Menu pricing is based on the Food Cost percentage of the underlying menu items. Costing your Menu is the only way you can be sure that the Prices of the items on your Menu are achieving your overall Food Cost objective. Menu Costing is accomplished in the following manner:

Each menu item is broken down into its various components,
Food cost of each component is calculated, based on current market prices of the ingredients,
Sales mix (number of each item sold in a typical sales period, such as week or month) is determined from a sales period, and used to calculate the Theoretical Food Cost Percentage for the period.
Theoretical Food Cost Percentage is compared to your goal to ensure your menu pricing achieves your overall Food Cost objective,
Menu prices are adjusted as necessary until the Theoretical Food Cost is in line with your objective.

As food prices change, your menu costing needs to be updated to reflect current costs. This should be done at least annually, preferably every six months. If you do not go through this exercise in setting your menu prices, you are kidding yourself when you think your menu prices will allow you to reach your Food Cost goals. If you need help in costing your menu, I can provide it in the following manner:

Cost your menu by breaking down each menu item into its components and calculating what each component costs you, based on your actual purchases,
Determining the Menu Mix for your Operation (how many of each item you sell in a typical sales period) from your Point of Sales system,
Calculating the Theoretical Cost of your Menu and comparing it to your Food Cost Percentage Goal,
Working with you to adjust your Menu Prices so you achieve your Food Cost Percentage Goal, but do not drive away your Customers
Show you how to Cost your Menu going forward so can do it yourself the next time you add new items to your menu.
Show you how to best update your costs as prices fluctuate.

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