Foodpreneur: The Simple Way to Scale Your Food Business

Admin
August 7, 2025
Profit & Growth

Food Costing 101: The Simple Formula to Price Your Menu for Profit

Learn the simple formula to calculate your food costs and price your menu for maximum profitability. Download our free food costing calculator spreadsheet.
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Tired of guessing your prices? Download our free, pre-built Food Costing Calculator (Google Sheet) to automatically calculate your costs and ideal menu prices. Enter your email below to get it instantly!

As a food business owner, your passion is creating delicious food. But to run a successful business, your most important job is to make a profit. The single biggest key to profitability is understanding your food cost.

Pricing your menu based on a "feeling" or just copying your competitors is a quick way to lose money.

The good news is, you don't need to be a math genius to figure this out. We've created a simple, 3-step formula that will give you the confidence that every dish you sell is making you money.

Step 1: Calculate the Cost of Each Ingredient

The first step is to know exactly how much each component of your dish costs.

Let's use a simple example: a single serving of Filipino-style Spaghetti. Assume your recipe calls for:

100g Pasta
120g Tomato Sauce
50g Ground Beef
50g Sliced Hotdog

You need to find the cost per gram. If you buy a 1kg (1000g) pack of pasta for ₱150, the calculation is: ₱150 / 1000g = ₱0.15 per gram.

Pasta Cost: 100g x ₱0.15/g = ₱15.00
Sauce Cost: 120g x ₱0.10/g = ₱12.00
Beef Cost: 50g x ₱0.35/g = ₱17.50
Hotdog Cost: 50g x ₱0.35/g = ₱17.50

Step 2: Calculate Your Total Cost Per Serving

Now, simply add up the cost of all the ingredients for one serving.

Total Cost Per Serving: ₱15.00 (Pasta) + ₱12.00 (Sauce) + ₱17.50 (Beef) + ₱17.50 (Hotdog) = ₱62.00

This ₱62.00 is your Cost of Goods Sold (COGS) for one plate of spaghetti. This is the absolute minimum you need to cover just to make the dish.

Step 3: Price Your Menu Using Your Target Food Cost Percentage

Now for the final step: setting the price. In the restaurant industry, a healthy food cost percentage is typically between 25% and 35%. Think of it this way: if you aim for a 30% food cost, it means the cost of your ingredients is only 30% of your final menu price. The rest covers your other expenses (rent, salaries, marketing) and, most importantly, your profit!

Let's aim for a 30% food cost. The formula is:

Menu Price = (Cost Per Serving / Your Target Food Cost Percentage)