Restaurant Menu Costing
Builds a menu price from the ingredient cost by adding a wastage allowance, VAT and a service charge.
Recent
Formula
How the calculation works
The tool starts from the raw ingredient cost of one plate and raises it by the wastage percentage, since some food is always lost to trimming and spoilage.
VAT and the service charge are then calculated on that adjusted cost and added, so the final figure is what the customer pays on the menu.
For a 150 taka plate with 10 percent wastage, 5 percent VAT and 10 percent service the adjusted cost is 165 taka and the menu price comes to 189.75 taka.
Common mistakes
- Applying VAT to the raw ingredient cost instead of the wastage-adjusted cost understates the tax and leaves the restaurant out of pocket.
- Treating the menu price as the profit figure confuses revenue with margin, because VAT normally has to be passed on to the government.
When to use it
- Use it when printing a new menu so each dish price already covers ingredient waste, VAT and the service charge.
- Use it to reprice dishes after an ingredient cost rises and see how much the menu price must move to keep the same margin.
Worked example
With an ingredient cost of 150 taka, 10 percent wastage, 5 percent VAT and 10 percent service, the menu price is 189.75 taka.
Common questions
Is the menu price the same as my profit?
No. The menu price includes VAT and the service charge, so profit is what remains after subtracting ingredients and operating costs from the amount you actually keep.
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