How to price menu items: food cost percentage formula and examples (AU)
Updated 2026-10-27
Pricing by gut feel or by copying the shop down the road is how margins disappear. Costing each dish takes an afternoon and tells you which items make money. This guide covers the formula, a worked example and Australian specifics such as GST. For pricing on delivery apps versus your own page, see direct vs app menu pricing.
Step 1: Cost the plate
List every ingredient in one serve, using the as-purchased price and the quantity used. Include the oil, garnish, sauce and packaging for takeaway. Allow for waste and trim. If 1 kg of whole fish gives 600 g of usable fillet, the usable cost is the price ÷ 0.6.
Step 2: Apply the food cost percentage formula
Food cost % = plate cost ÷ selling price (ex GST) × 100
Turn it around to set a price: selling price (ex GST) = plate cost ÷ target food cost %.
Worked example (illustrative numbers)
| Item | Cost per serve |
|---|---|
| Chicken thigh, 200 g | A$2.40 |
| Rice | A$0.35 |
| Sauce and garnish | A$0.60 |
| Takeaway container and bag | A$0.55 |
| Plate cost | A$3.90 |
At a 30% target: A$3.90 ÷ 0.30 = A$13.00 ex GST. Add 10% GST and the menu price is A$14.30. Round to a price that suits your menu, such as A$14.50. These are example figures. Use your own supplier invoices.
Step 3: Check against the market and your costs
Food cost is only one cost. Wages, rent and utilities need covering too. Look at what nearby venues charge for similar dishes, and work out whether a price customers will accept leaves you a profit. If not, change the recipe, portion or supplier rather than just cutting the margin.
Step 4: Price for each channel
A dish that makes money at the counter can lose money on an app charging 30% commission. Many venues set higher app prices and keep the lower price on their own ordering page. Use the commission calculator to see what the apps take. Our commission report lists each app's published Australian rate, with links.
Step 5: Engineer the menu
Once every dish is costed, compare profit with popularity to decide what to promote, reprice or remove. See the menu engineering matrix.
Common mistakes
- Forgetting packaging, sauces and sides.
- Costing once and never updating it.
- Calculating food cost on GST-inclusive prices.
- Using the same price on apps that take 30%.
Your channel affects the margin: Uber Eats and DoorDash take up to 30%. A low-cost ordering page keeps your costed margin intact.
More guides
- GloriaFood migration guide for Australian restaurants (2026–27)
- Menulog has closed: a guide for Australian restaurants a year on
- How to move your regulars off Uber Eats and DoorDash (without losing them)
- Running your own delivery drivers in Australia: a practical guide
- GST and online orders: what Australian takeaways should know
- Public holiday surcharges and online orders in Australia
- Food safety for takeaway and delivery orders in Australia
- Pricing your menu for delivery apps vs your own ordering page
- Restaurant marketing ideas for Australian venues (2026)
- Menu engineering matrix: stars, plowhorses, puzzles and dogs (with a worked example)
- Restaurant loyalty programs in Australia: types, ideas and examples
- How to start a takeaway business in Australia: a step-by-step checklist
- Restaurant POS systems in Australia: Chefzi POS vs Square, Lightspeed and others
- Cloud kitchens in Australia: how they work, costs and rules
- Restaurant booking systems in Australia: Chefzi reservations vs the alternatives
- Restaurant software in Australia: the tech stack a venue actually needs
- Food supplier ordering systems for Australian restaurants and cafés
- GloriaFood is shutting down: what Australian restaurants need to do
- How to add an order button to your Google Business Profile in Australia
Frequently asked questions
What is the food cost percentage formula?
Food cost percentage = cost of the ingredients in a dish ÷ the selling price (excluding GST) × 100. For the whole venue, use cost of goods sold for a period divided by food sales for that period.
What is a good food cost percentage?
It varies by cuisine and format. Many operators aim for roughly 28–35%, but your target should come from your own rent, wages and profit goals, not a rule of thumb.
Should I include GST in menu prices?
Australian consumer law requires the price you display to customers to be the total price, including GST. Do your costing on ex-GST figures, then add GST for the menu price.
How often should I review menu prices?
Recheck costs whenever a major supplier price changes, and review the full menu at least every few months.
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