How do you price a menu item?

Divide the plate cost (ingredients per serving) by your target food cost percentage. A $4.50 plate at a 30% target is $15.00; at 35% it's $12.86. Then adjust for what the market will bear, what the item is worth to the guest, and how it sits next to the rest of the menu. Textbooks express the same thing as a markup factor: 1 ÷ 0.30 = 3.33 times the plate cost.

What is a good markup for restaurant food?

Roughly 2.9–3.6 times the ingredient cost, which corresponds to a 28–35% food cost. The National Restaurant Association's 2024 median food cost of 32% is a 3.1× markup. Pizza, pasta, salads and drinks carry higher markups; steak, seafood and anything protein-heavy carry lower ones.

Should menu prices end in .95 or .99?

Research on hospitality managers' beliefs finds just-below endings (.95, .99) signal value and round numbers signal quality; upscale operators avoid .99 because it reads as discount. A separate Cornell field study found guests spent more when prices were shown as plain numerals (14) than with a dollar sign ($14.00) or spelled out. Pick the ending that matches your positioning and drop the dollar signs.

Is contribution margin more important than food cost percentage?

For profit, yes. Contribution margin is menu price minus plate cost, the dollars left to pay for everything else. A 38% food cost steak that contributes $22 beats a 25% food cost salad that contributes $9. Use food cost percentage to set the ladder and contribution margin to decide what to promote.

Menu Pricing Calculator — Price a Dish From Plate Cost and Target Food Cost % (Free)

Cost-plus pricing, and where it stops

The textbook formula is menu price = plate cost ÷ target food cost %, or equivalently plate cost × a markup of 1 ÷ target. At the NRA's 2024 median of 32%, that's a 3.1× markup; at 28% it's 3.6×; at 35% it's 2.9×. It's the right starting point because it ties every price to a number you can verify on an invoice.

It's a bad finishing point. Cost-plus prices a $1.20 bowl of pasta at $4 and a $14 ribeye at $47, and neither is right: guests have a reference price for pasta that's well above $4, and the ribeye at $47 might not sell. So the working method is: cost-plus sets the floor, contribution margin (price − plate cost, the dollars that pay rent and labor) sets the priority, and the market sets the ceiling. High-cost items get a lower percentage and a higher margin; low-cost items get the reverse. Your menu average lands at the target, not every line.

Reading the ladder

The calculator prints the same plate at 22% through 40% so you can see the trade. Moving a $4.50 plate from a 35% target to 28% raises the price from $12.86 to $16.07, and the contribution margin from $8.36 to $11.57. Whether that's worth it depends on how many fewer you'd sell; the menu engineering calculator answers that with your sales mix.

Price endings and dollar signs

Two pieces of research are worth knowing. A study of hospitality managers' price-ending beliefs (Schindler, Parsa and Naipaul, Cornell Hospitality Quarterly, 2011) found the industry consensus: just-below endings like .95 and .99 signal value; round numbers signal quality. Operators who avoid .99 say it works against an upscale image and can read as not quite straightforward. Casual and delivery menus lean .95/.99; white-tablecloth menus print 34, not $33.99.

The second is a Cornell field experiment (Yang, Kimes and Sessarego, 2009) that showed the same menu with prices as plain numerals (14), with dollar signs ($14.00), or spelled out (fourteen dollars). Guests given the numeral-only menu spent significantly more. The authors cautioned it was one restaurant at lunch, but the practice has since become standard: drop the currency symbol, keep the number.

Practical rule: pick one ending style and use it everywhere. A menu with $12.95 next to $13 next to 14.50 signals that nobody's minding the store.

Repricing without losing guests

Move the high-margin, low-visibility items first. Sides, add-ons, desserts, drinks. Guests anchor on entrée prices.
Small, frequent moves beat one big one. Fifty cents twice a year is invisible; $2 once is a conversation.
Reprice the outliers, not the menu. After re-costing, most items will be within a couple of points of target. Fix the five that aren't.
Watch the price gap within a category. If your cheapest and dearest pizza are $6 apart, the middle one sells; widen it and the cheap one does.
Check the anchor. One premium item at the top of a category makes everything under it look reasonable.

Don't know the plate cost yet? Cost the recipe →

Frequently asked questions

How do I price a menu item?

Plate cost ÷ target food cost %. $4.50 ÷ 0.30 = $15.00. Then sanity-check against the market and the rest of the menu.

What markup should I use?

About 2.9–3.6× ingredients (35%–28% food cost). The NRA median of 32% is 3.1×.

.95 or .99?

Both read as "value"; whole numbers read as "quality". Match your positioning and be consistent.

Should I show dollar signs?

Cornell's field study found guests spent more with plain numerals. Most menus now drop the $.

Is food cost % or contribution margin more important?

Margin pays the bills. Use percentage to set the ladder, margin to decide what to push.

Should to-go prices be higher?

They should at least cover packaging (often $0.50–1.50 per order) and any third-party commission. Enter packaging in the calculator.

Menu Pricing Calculator

Price a dish