The Real Cost of Your Menu: How to Price for Profit Without Upsetting Customers
- louise7691
- Oct 24
- 3 min read
You’ve designed a great menu. Guests love the food, reviews are strong, and tables are filling up. But despite all that, your profits still aren’t where they should be.
Rising supplier costs, higher wages, and inflation have made pricing trickier than ever. Raise prices, and you risk upsetting customers. Keep them the same, and you’re cutting into your margin every single day.
So how do you price for profit without alienating your guests? It starts with understanding the real cost of your menu.
1. Know Your True Costs — Not Just Food Cost Percentage
Many operators fixate on hitting a food cost target (like 30%). But focusing only on a percentage can hide the bigger picture.
Real menu costing includes:
Ingredients – including waste, trimming, and prep losses.
Labour – kitchen time, prep, plating, and service.
Overheads – utilities, packaging, cleaning, and delivery fees.
When you calculate the true total cost per dish, you can see exactly which items drive profit and which ones drain it. And don’t forget the cost of “free” items like sauces, garnishes, and bread - they add up fast!
2. Menu Engineering: Use Data to Design for Profit
Menu engineering is about analysing each dish’s profitability and popularity. Once you know that, you can position and price strategically.
Stars – High profit & high popularity (keep and promote)
Plowhorses – Low profit & high popularity (adjust recipe or price)
Puzzles – High profit & low popularity (re-market or reword)
Dogs – Low profit & low popularity (remove or replace)
This isn’t about being ruthless, it’s about balance. Highlighting Stars and tweaking others can raise profit margins without changing what customers love. Review your menu quarterly, and remember - consumer preferences and costs change fast.
3. Think Perceived Value, Not Just Price
Guests don’t only buy a plate of food, they buy the experience, the atmosphere, and the story too. The key is to increase perceived value so slightly higher prices feel justified. You can do this by:
Using quality descriptions (“hand-cut”, “locally sourced”, “house-made”)
Improving presentation and plating
Bundling items (e.g., set menus, two-course deals)
Training staff to confidently explain dishes and ingredients
People don’t mind paying more when they understand why it’s worth more.
4. Be Strategic About Price Increases
When raising prices, communication is everything. Avoid sudden across-the-board increases and instead:
Adjust high-cost, low-margin items first.
Use menu reprints or redesigns to reposition pricing visually (guests focus less on numbers when menus are well formatted).
Remove currency symbols (studies show it reduces price sensitivity.)
Example: Instead of increasing a £14.95 burger to £16.95 overnight, introduce a premium burger option at £17.50 with upgraded ingredients. It increases the perceived value while raising your average spend.
Use Profit First Thinking to Keep Prices on Track
Traditional accounting tells you if you made a profit - often months too late. Profit First helps you build profit into your prices from day one.
By using multiple accounts (Profit, VAT, Staff Pay, Owner’s Pay, Operating Expenses), you can see in real time if your menu is performing. If your “Operating Expenses” account is consistently short, it’s a clear sign your menu pricing needs adjustment. This system gives you financial clarity before you print the next batch of menus.
Smart menu pricing isn’t about charging more… It’s about charging right.
By knowing your true costs, applying menu engineering, and building perceived value, you can grow profits without pushing customers away. Combined with the Profit First system, you’ll know instantly if your pricing strategy is actually working - and not six months later when the cash runs out
Want to take control of your restaurant’s profit? Sign up today and let us help you implement the Profit First system in your restaurant.
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