How to Price Menu Items for Profit

Your menu is leaking money. Here’s how to plug it before it’s too late.

Most restaurants price by instinct: ‘This looks like a £10 dish’ or ‘We’ll match the café down the road’. Neither works. A £10 dish might cost you £8 to make, leaving you with a £2 profit after staff, rent, and overheads. The café down the road might be losing money on every order, but you won’t know until you check.

Pricing by instinct means you’re either leaving cash on the table or pricing yourself out of business. The fix is simple: base every price on your actual costs, not guesswork. But the maths isn’t just about food cost. It’s about how customers behave, how delivery eats into margins, and how to adjust when suppliers raise prices—without sparking complaints or walkouts.

This is how to do it.

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Step 1: Work out your real food cost—it’s not what you think

You know your food cost percentage: the ratio of ingredient cost to menu price. But if you’re using last month’s average, you’re already behind. Suppliers change prices. Portion sizes drift. Staff steal or waste. What you think your food cost is rarely what it is.

Here’s how to get the number right:

1. Pick a week—not a busy one, not a slow one, but a normal one. Track every ingredient used, not just what’s invoiced. If you’re using 100g of chicken per burger but the invoice says 90g, use 100g. Waste is cost.
2. Add up the cost of all ingredients for that week. Include labour tied to prep (e.g., peeling potatoes), but exclude staff wages for service or cooking. That’s a separate cost.
3. Divide by revenue from food sales (not total revenue). If you spent £1,200 on ingredients and made £4,000 from food, your food cost is 30%.

Now ask: Is this sustainable? If your rent, wages, and other overheads eat up 50% of revenue, a 30% food cost leaves you with 20% profit—before tax, before equipment failures, before the health inspector’s visit. That’s not a business; it’s a hobby.

The fix: If your food cost is creeping above 35%, you have three options:

• Raise prices (but only on the right items—see below).
• Cut waste (e.g., weigh portions daily, train staff on trimming).
• Switch suppliers (but check if their ‘discount’ is offset by poorer quality or higher delivery costs).

Berryin’s Menu Manager lets you update ingredient costs and recipes in one place, so every menu, POS, and digital board stays in sync. No more hunting for the latest price sheet.

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Step 2: Price for actual profit, not ‘fair’ prices

A £12 burger with £4 of ingredients leaves you £8 before overheads. Sounds good—until you realise half your customers order fries (another £3 cost), a drink (£1.50), and a side salad (£2.50). Now your real profit per order is £0.50. That’s not a business; it’s a charity.

Here’s how to price for real profit:

1. Calculate your total cost per dish, including:

   • Ingredients (use the numbers from Step 1).
   • Packaging (if delivery or takeaway).
   • Labour (not just cooking, but service time—e.g., a £20 steak takes twice as long to serve as a £10 burger).
   • Overheads (rent, utilities, marketing) allocated per dish. If rent is £3,000/month and you sell 1,000 meals, that’s £3 per dish.

2. Add your desired profit margin. If you want 20% profit on food sales, multiply the total cost by 1.25. If the total cost is £6, the menu price should be £7.50.

3. Round up. Customers perceive £8 as ‘cheap’ and £7.99 as ‘expensive’. If your maths says £7.40, price at £8.

Example:

Item	Ingredient Cost	Packaging	Labour	Overheads	Total Cost	Menu Price (20% margin)
Burger	£3.50	£0.30	£1.20	£1.00	£6.00	£7.50 → £8
Steak	£8.00	£0.50	£2.50	£1.50	£12.50	£15.63 → £16
Side Salad	£1.20	£0.20	£0.50	£0.50	£2.40	£3 → £3

Notice the salad? It’s priced at cost. That’s fine if it’s a loss leader (e.g., to sell burgers), but if it’s a staple, you’re subsidising every order. Either raise the price or drop it.

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Step 3: Delivery eats margins. Here’s how to stop it.

Delivery isn’t just a channel—it’s a profit killer. Marketplace fees (say 25%), rider tips, and packaging costs turn a £10 dish into a £7 loss before you’ve paid for gas. Even your own riders cost money: wages, bikes, insurance, and the fact that they’ll take longer to deliver than a dine-in customer.

Here’s how to price for delivery without scaring customers:

1. Calculate the extra cost of delivery per order. Include:

   • Marketplace commission (if using them).
   • Packaging (eco-friendly boxes cost more than plastic).
   • Labour (if you’re paying staff to pack).
   • Fuel/transport (if you’re delivering yourself).
   • Shrinkage (spills, missing items, customer complaints).

   Example: A £12 burger costs £4 to make. Add £2 for packaging, £1 for labour, and £3 marketplace fee = £10 extra cost. Your break-even price is now £20—before profit.

2. Adjust prices in one of three ways:

   • Add a ‘delivery surcharge’ (e.g., +£3 per order). Transparent and avoids pricing shock.
   • Raise delivery-only items (e.g., burgers +£2, salads +£1). Customers expect some items to be pricier for delivery.
   • Offer a ‘dine-in discount’ (e.g., 10% off for counter orders). Encourages higher-margin seating.

3. Drop low-margin delivery items. If a £5 pasta dish costs £4 to deliver, you’re losing £3 per order. Either:

   • Remove it from delivery menus (keep it for dine-in).
   • Raise the price to £10 (and risk losing sales).
   • Replace it with a higher-margin item (e.g., a £8 pasta with truffle oil).

Pro tip: Use Berryin’s Digital Menu Boards to show different prices for dine-in vs. delivery. No more staff confusion or customer complaints about ‘wrong’ prices.

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Step 4: Modifiers, combos, and the psychology of upsells

A customer orders a burger for £8. You make £2 profit. But if you upsell fries (£3 cost, £5 sell) and a drink (£1 cost, £3 sell), that £8 order just turned into a £18 order with £8 profit—before overheads.

Here’s how to design modifiers and combos that sell:

The 80/20 Rule for Modifiers

• 80% of your modifiers should add profit, not just volume.
  • Bad: ‘Add cheese for £1’ (cheese costs £0.80, profit = £0.20).
  • Good: ‘Add truffle oil for £2’ (oil costs £0.50, profit = £1.50).
• 20% can be loss leaders (e.g., free garlic bread with pasta orders) if they sell more expensive items.

Combo Design: The ‘Anchor’ Trick

Customers perceive the first price as the ‘normal’ one. So:

• Lead with a mid-range combo (e.g., ‘Burger + Fries + Drink for £12’).
• Upsell a premium combo (e.g., ‘Add truffle fries for £2 more’).
• Offer a ‘budget’ option (e.g., ‘Burger + Salad for £9’) to avoid pricing out budget customers.

Example: | Combo | Ingredient Cost | Sell Price | Profit | | Burger + Fries | £5.50 | £10 | £4.50 | | Burger + Fries + Drink | £6.50 | £12 | £5.50 | | Burger + Truffle Fries + Drink | £8.50 | £15 | £6.50 |

The truffle combo makes more profit and feels like a premium upgrade.

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Step 5: When suppliers raise prices, don’t just absorb it

Your chicken supplier just hiked prices by 15%. Your food cost jumps from 30% to 35%. If you don’t adjust, your profit vanishes. But raising prices risks losing customers—especially if competitors don’t.

Here’s how to handle it without a walkout:

1. Audit which dishes are hit hardest.

   • A £10 chicken curry with £3.50 chicken cost now costs £4.00. That’s a £0.50 hit per dish.
   • A £5 chicken wrap with £2.50 chicken cost now costs £2.88. That’s a £0.38 hit per dish.

2. Adjust prices in stages.

   • Option 1: Raise the curry by £1 (new price: £11). Customers expect curries to be pricier.
   • Option 2: Raise the wrap by 50p (new price: £5.50). Smaller increments feel less painful.
   • Option 3: Drop the item if the margin is gone. A £5.50 wrap with £2.88 cost leaves you with £2.62—after labour and overheads, that’s £0 profit.

3. Communicate the change.

   • Bad: ‘Prices have gone up’ (sounds like greed).
   • Good: ‘Due to rising ingredient costs, we’ve adjusted a few prices to keep your favourite dishes affordable’ (sounds like care).
   • Better: Offer a ‘loyalty discount’ (e.g., 5% off for regulars) to soften the blow.

Pro tip: Use Berryin’s Menu Manager to update prices across all channels at once. No more sticky notes on the counter or outdated menus.

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Step 6: Test, measure, and kill the losers

You’ve priced everything ‘correctly’. Now watch the numbers.

Track these three metrics weekly:

1. Food cost percentage (should stay within 2% of your target). If it’s creeping up, check portion sizes or supplier invoices.
2. Average order value (AOV). If it’s dropping, your modifiers aren’t working. If it’s rising, you’re either upselling well or pricing too high.
3. Item popularity vs. profit. A £20 steak that sells 5 times a week is great. A £8 salad that sells 50 times a week? That’s a money pit.

Example: | Item | Sell Price | Cost | Profit | Sales/Week | Weekly Profit | | Steak | £20 | £8 | £12 | 5 | £60 | | Side Salad | £3 | £1.20 | £1.80 | 50 | £90 |

The salad makes more profit—but it’s a volume profit. If you drop it, you might lose 20 burger sales (£80 profit). If you keep it, you’re tying up kitchen time on low-margin items.

The fix:

• Raise the salad to £4 (now £2.80 profit × 50 = £140/week).
• *Or replace it with a £5 ‘gourmet salad’ (higher margin, justifies the price).
• Or limit portions (e.g., ‘One per order’) to reduce waste.

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Frequently asked questions

How often should I update my menu prices?

At least quarterly, or whenever a key supplier changes prices. But don’t overdo it—customers notice too many hikes. If costs rise by 10% in six months, adjust once with a clear explanation (e.g., ‘Supporting local farmers’). Use Berryin’s Menu Manager to update prices across all channels in minutes.

What if my customers complain about price rises?

They will. The key is framing:

• Bad: ‘We had to raise prices because costs went up.’ (Sounds like an excuse.)
• Good: ‘To keep serving you the same quality, we’re adjusting a few prices—here’s 10% off your next order.’ (Sounds like a reward.)
• Best: Offer a ‘grandfathered’ price for regulars (e.g., ‘Your usual £8 burger stays £8 for the next month’). This buys time to adjust.

Should I price delivery orders higher than dine-in?

Yes—but strategically. A flat 20% surcharge feels arbitrary. Instead:

• Add £2-£3 per delivery order (covers packaging, labour, and marketplace fees).
• Raise high-cost items (e.g., burgers +£1, salads +50p) to avoid pricing out budget customers.
• Drop low-margin delivery items (e.g., if a £5 pasta costs £4 to deliver, it’s not worth offering).

How do I know if a menu item is really profitable?

Profit isn’t just the menu price minus ingredient cost. Track the full cost:

• Ingredient cost (from your supplier invoices).
• Labour cost (time to prep/cook/serve).
• Overheads (rent, utilities, marketing allocated per dish).
• Waste (spoilage, customer returns).

Example: A £10 pizza might cost £3 in ingredients, but if it takes 15 minutes to make and your labour cost is £12/hour, that’s £3 extra. Add £1 for packaging and £2 for overheads—suddenly your real cost is £9, leaving you with £1 profit.

What’s the best way to test price changes?

A/B test in stages:

1. Raise one item by 10% (e.g., steak from £20 to £22).
2. Monitor sales for two weeks. If volume drops by >15%, revert or adjust further.
3. Roll out to other high-cost items if the first test works.
4. Use digital menu boards to change prices instantly without reprinting menus.

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Next step: Pick one item on your menu and run the numbers. Use Berryin’s Menu Manager to update prices, then track sales for two weeks. If profit doesn’t improve, go back to the maths—you’re missing something.

See Berryin’s pricing plans to choose the right tools for your menu.