Whether you are creating your first menu, or just updating your menu to add new options, or changing out seasonal dishes, you always need to do the food cost analysis on the dish before determining the menu price. How do you go about doing that? Let's talk about it!
First, determine every ingredient that will be in the new dish. When I say everything, I mean everything.
In this steak entree, we have a 8 ounce round steak, 1 scoop of grilled vegetables, a scoop of roasted potatoes and a sprig of rosemary for garnish.
What we might not be thinking about:
- Any seasoning we used on the steak, vegetables or potatoes
- What's the mix of zucchini, squash and red pepper (these each have different costs)
- How many ounces/cups of vegetables and potatoes are included? How do you keep it consistent from chef to chef.
Next, determine your measurements for the sides so it will be consistent on your recipe card. Will you have 8 roasted potato quarters? If you use a ratio of 8 cups of zucchini, 8 cups of squash, 2 cups of red pepper and 2 cups of red onion to make a pan of vegetables. Then determine how many scoops you can get per pan (how many plates you can serve). This will help you determine the price per scoop of vegetables, and potatoes.
If your steaks come from the distributor as a certain weight (e.g., you order a 6 ounce tenderloin) you will know the average price per item. If you order a large piece of meat and cut your own, it's vital that you are ensuring each piece is the accurate size. Meat is expensive and if you are selling and pricing an 8 ounce piece of steak, but your chef cuts it at 9 ounces or 10 ounces - that will have a significant impact on your food costs.
Determine plate cost. Add up all of your ingredient costs for the menu item. Once you know this price you can calculate your menu price. If you are targeting a 30% food cost, you will want to divide the ingredient costs by your target food cost.
Now you can determine if $31.40 is a good menu price. Is this a price that your customers will be willing to pay?
If not, adjust accordingly. It's OK to drop this to a $24.95 entree cost, if you feel that's a price that your customers will consider a good value. Just know that this menu item will run approximately a 37.5% food cost and every time you sell it, it will bring up your overall food costs.
If you have a couple menu items that run over 30% just make sure your menu is balanced with items that are under 30% (and your sales mix brings you closer to 30%). You may have a side salad that only has $0.83 food cost, but you charge $5.95 (13.9% food cost) so you might want to encourage your servers to upsell a side salad with every steak. That will bring your food cost on that customer down to 33.1% ($10.25 cost / $30.90 revenue).
Price menu items individually, but always look at the big picture, regularly.
You can have some great items on your menu that are super stars on food cost, such as a meatloaf at 19% food cost, but it never, ever sells. So is that super star really a super star?
Look at every item on your menu every year, and look at each menu item's food cost every year. Prices from your food suppliers go up. A flood in Mexico causes your tomato prices to skyrocket. Are you taking that into consideration with your menu price, or are you just seeping out profit?
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