When and how to update your menu prices

Update your menu when a dish's cost has risen enough that it no longer leaves you what it used to. Do not wait for January or for the place down the street to move first. Recost a dish whenever a main ingredient changes, raise first the dishes that are losing you the most money each month, and raise at least enough to get back the dollars per plate you had before.

The signals that it is time

There are three, and it helps to check them in this order.

1. A main ingredient changed on your invoice. Beef, chicken, cheese, frying oil, coffee beans. When one of these moves, recost that dish the same day. The guide on how often to update your costs has a simple routine so it does not slip.
2. The monthly margin dropped. You sold about the same, but kept less. Something went up and you did not catch it dish by dish.
3. Your fixed costs went up. Rent, wages, energy. This does not change what each dish costs, but it changes how much each dish has to leave to cover the month.

Set your own threshold. For example: "if a dish loses more than $0.50 of contribution, I review it." That way you are not chasing every cent, and you are not letting it pile up for six months either.

Recost the dish first

Before you touch the price, get the dish's real cost at today's prices: each ingredient by its weight in the recipe, with the trim you measure when you prep it. If you do not have that yet, start with how to cost a plate for your menu.

Then compare the dish with your own food cost target, the share of the pre-tax price you want going on ingredients. You choose that number for your restaurant and your menu; the guide on food cost percentage explains how to read it.

How much to raise: the floor and the target

Two prices guide the decision:

• The floor: the price that gives you back the same dollars per plate as before. Price before tax = new cost + old contribution.
• The target: the price that gives you back your food cost percentage. Price before tax = new cost ÷ target.

The floor is the minimum. Below it, every plate you sell leaves you less than before. The target is usually higher, because keeping the percentage means raising the dollars too. You pick a clean menu price between the two. The plate price tool does this sum quickly.

Worked example: the house burger

Your house burger uses a 180 g beef patty. Ground beef used to cost you $10.00 a kilo; on your last invoice it was $13.00. The cheddar slice went from $0.30 to $0.40. Everything else (bun, lettuce, tomato, sauce, fries) is $2.10 and has not changed. The burger sells for $15.00 before tax.

Before:

• Beef: 0.180 × 10.00 = $1.80
• Plate cost: 1.80 + 0.30 + 2.10 = $4.20
• Contribution: 15.00 − 4.20 = $10.80
• Food cost: 4.20 ÷ 15.00 = 28.0%

Now, same price:

• Beef: 0.180 × 13.00 = $2.34
• Plate cost: 2.34 + 0.40 + 2.10 = $4.84
• Contribution: 15.00 − 4.84 = $10.16
• Food cost: 4.84 ÷ 15.00 = 32.3%

You lose $0.64 per burger.

The floor: 4.84 + 10.80 = $15.64. Round it to $16.00.

The target (28%): 4.84 ÷ 0.28 = $17.29.

Going from $15 to $17.29 in one move is a jump your regulars will feel. You go to $16.00, which already leaves more than before: contribution of 16.00 − 4.84 = $11.16, food cost of 4.84 ÷ 16.00 = 30.3%. The rest of the gap you look at in the next menu change, or by working on the recipe and how you buy the beef.

Which dishes to move first

Dishes do not all lose the same. Multiply the cost increase by how many you sell a month:

The burger accounts for most of it. That goes first. The pizza can wait for the full menu review.

Look at what each dish does on the menu too. A dish that sells a lot and earns well can take a small rise. One that hardly anyone orders and has also lost margin may not need a new price so much as a new recipe or a spot off the menu. That is what menu engineering is for.

Lunch specials and set menus are their own case: people buy them for the round price and compare it every day. There it usually makes more sense to adjust what goes on the plate before moving the price. See how to price a set lunch.

How to tell your regulars

• Short, no long apology. One line on the menu or the board is enough: "We have updated some prices after beef costs rose."
• Your team says the same thing. If a regular asks, the server gives the same answer as the board.
• Keep one familiar price. If the burger goes up, keep the lunch special where it is.
• Do not hide the rise in the portion. If you change the recipe, change the menu description too.
• Do not raise everything on the same day. Move the biggest losers first. The rest at the next review.

The guide on how to raise prices without losing customers has more ways to do it.

Do it with the calculator

In the food cost calculator you change the price of the ingredient that went up and see straight away the new cost of every dish that uses it, with the pre-tax price you need to keep your margin.