How to price menu items for profit

Most menu prices get set one of two ways: copy the place down the street, or take last year's price and add whatever the latest supplier invoice went up by. Both feel safe. Both quietly leave some dishes losing money every time they sell, while others are priced so high that almost nobody orders them.

This guide gives you three pricing methods that work together. Cost-plus sets the floor, a competitor check sets the ceiling, and perceived value decides where between the two a dish belongs. Then it shows how to use your own sales figures to tell whether a price change actually worked.

Every EGP figure below is an illustration. Your supplier prices, rent and portions are different, so plug in your own numbers and keep the formulas.

1Step zero: know what the plate really costs

Every pricing method starts from plate cost, and most owners underestimate it because they cost the protein and forget everything around it. Cost the dish as it leaves the pass: frying oil, the bread, the garlic sauce in its little cup, the pickles, the garnish, and for delivery, the box, the sauce pots and the bag.

Here is an illustrative chicken shawarma plate, costed line by line:

Component	Quantity	Cost (EGP)
Chicken thigh, raw weight	280 g at EGP 160/kg	44.80
Marinade, spices, cooking oil	allowance	6.00
Rice (cooked portion)	about 60 g raw	2.70
Fries	120 g	6.00
Garlic sauce	40 g	4.00
Pickles and salad	side	5.00
Bread	1 piece	3.00
Plate cost		71.50, call it 72

Note the raw weight on the chicken. If your recipe says "200 g chicken" but that is the cooked weight, you are paying for the water and fat that cooked off, and your cost is too low before you have priced anything.

2Method 1: cost-plus from a target food cost

The formula is simple: net menu price = plate cost ÷ target food cost ratio. Most full-service restaurants aim for food cost somewhere around 28 to 35% of food sales, with cafés and pizza places often lower and grills or seafood often higher. Treat that as a starting range, not a rule.

For the shawarma plate at a target of 0.30: 72 ÷ 0.30 = EGP 240 net.

Price net of VAT, then add it back

Egypt charges VAT on restaurant bills, currently 14 percent. If your menu prices include VAT, the money you keep is the menu price divided by 1.14. Put the shawarma on the menu at EGP 240 including VAT and you actually receive about EGP 210, which pushes food cost to 34 percent instead of the 30 you planned.

So the VAT-inclusive menu price should be 240 × 1.14 = 273.60, rounded to EGP 275. If you add a service charge on top, keep it out of this calculation as well. It is not food revenue.

Cost-plus has one weakness: it tells you the minimum you should charge, not what guests will pay. That is what the next two methods are for.

3Method 2: the competitor check

Pick five places your guests would realistically choose instead of you: same area, same occasion, similar seating. Delivery-app listings are the fastest way to see current prices, but remember app prices are often marked up above dine-in, so check the dine-in menu where you can.

Say the five comparable shawarma plates cost EGP 190, 220, 235, 250 and 285. Your cost-plus price of 275 sits near the top. You now have three honest choices:

• Justify it. A visibly bigger portion, better bread, house-made pickles. Guests pay the top of the band when they can see why.
• Re-engineer the plate. If most guests leave half the fries, cutting the portion from 120 g to 80 g saves money nobody will miss.
• Accept a thinner margin on purpose. If this is the dish people come for, price it mid-band and make the margin back on drinks and sides.

4Method 3: perceived value and contribution margin

Percentages mislead when you compare dishes. You pay rent with pounds, not percentages, so the number that matters per plate is contribution margin: net price minus plate cost. That is what each sale leaves to cover wages, rent and profit.

Dish	Plate cost (EGP)	Net price (EGP)	Food cost (percent)	Margin per plate (EGP)
Chicken shawarma plate	72	240	30	168
Grilled sea bass	190	450	42	260
Penne arrabbiata	38	170	22	132
Beef burger	110	290	38	180
Fresh lemon mint	12	85	14	73

The sea bass looks like the worst item on the list by percentage, yet every plate earns EGP 260, more than anything else. The pasta has a beautiful percentage and earns half as much. If you raised the fish price just to hit 30 percent, you would likely sell fewer plates and earn less in total.

Use perceived value to decide where each dish sits in its band:

• Signature and high-ticket dishes can carry a higher food cost when they earn more pounds per plate.
• Low-cost staples such as pasta, rice dishes, ful, tea and fresh juices should carry a low food cost. Guests judge them on taste and portion, not on what the ingredients cost you.
• Items guests can price-check in their heads (canned soft drinks, bottled water, a plain espresso) need to sit close to market. Anything unique to you has more room.

5Pricing for delivery apps

The app's commission comes out of your revenue, so a price that works in the dining room can lose money on delivery. Work it backwards:

Required app net price = (plate cost + packaging) ÷ target food cost ÷ (1 − commission rate)

Illustration: packaging adds EGP 12, so the delivery plate costs 84. At a 0.30 target that is 280. If the app keeps a quarter of the order value, divide by 0.75 and you need about EGP 373 net, before VAT. That gap is why many restaurants run a separate, higher app price list or a slightly smaller delivery portion. Check your contract for price-parity terms before you do either.

The cleaner long-term answer is moving regulars to ordering from you directly, which we cover in building direct ordering alongside the apps.

6Using sales data to test a price change

Any new price is a guess until your sales confirm it. A price rise is worth it as long as you keep more total margin than before, and you can calculate in advance how many sales you are allowed to lose.

Break-even volume = old margin per plate ÷ new margin per plate

Take the burger: margin EGP 180. Raise the net price by EGP 20 and the margin becomes 200. 180 ÷ 200 = 0.9, so you can lose one burger in ten and still earn the same. If you sold 400 burgers a month, you need at least 360 at the new price. Anything above that is extra profit.

1. Record the baseline: weekly units of the dish over the last four weeks, and the total for its category.
2. Change one price at a time, and avoid starting a test in Ramadan, Eid or a holiday week, when demand is not normal.
3. Write down the break-even volume before the change, so you are not tempted to explain away a bad result.
4. After four weeks, compare units and margin against the baseline.
5. Check for trading down. If burgers fell but chicken sandwiches rose, guests swapped within the category, so judge the whole category's margin, not just the burger.

The numbers come from your POS item sales report. If you run Menyo on the Professional plan, the sales reports show top and bottom sellers, category performance and period-over-period comparison, and export to CSV for the break-even sums. Changing a price on a digital menu also means no reprint, which makes small, frequent adjustments practical (see updating your menu in real time).

7How often to review prices

• Monthly: check the invoice prices of your ten biggest ingredients against the numbers in your recipe costs.
• Whenever a main ingredient moves noticeably: recost every dish that uses it.
• Quarterly: recost the full menu and run the competitor check again.
• After every change: compare the four weeks after against the four weeks before.

When costs are climbing, many operators find two modest increases easier on regulars than one large jump, but watch your own feedback and sales rather than assuming. Our guide to menu pricing under inflation goes deeper on timing and communication.

8Frequently asked questions

What food cost percentage should I target?

Start with a range of roughly 28 to 35 percent of food sales for a full-service restaurant, then adjust by dish. Low-cost staples and drinks should sit well below it, and premium proteins can sit above it if they earn more pounds per plate. Your blended average across the whole menu is what has to land in range.

Should my menu prices include VAT?

Whichever way you display them, do your costing on the net price. If prices include VAT, divide by 1.14 before calculating food cost. If they exclude it, say so clearly on the menu, because a bill that is noticeably higher than the menu suggested is a common source of complaints.

How much higher should delivery-app prices be than dine-in?

There is no fixed markup. Calculate it from your plate cost, packaging and the commission in your contract using the formula above, then check whether the result is still competitive on the app. If it is not, change the delivery portion or packaging rather than accepting a loss on every order.

How do I raise prices without losing regulars?

Raise the dishes whose costs moved, not everything at once. Keep one or two well-known items stable, improve something visible when you raise a price, and measure the result against your break-even volume instead of reacting to the first quiet night.

9Put the three methods together

Cost-plus gives each dish a floor, competitors give it a ceiling, and perceived value decides where it lands. Then your sales figures tell you whether you were right. Run that loop every quarter and your menu stops being a list of guesses and starts paying its way, dish by dish.

If you want a menu you can reprice in minutes and sales reports that show what each change did, start a Menyo trial. Paid plans start at $19 a month.