Written for owners of restaurants, cafes and coffee shops, pubs and bars, takeaways and delivery kitchens, food trucks and bakeries with seating, anywhere in the UK.
The short version
- Price each dish from its plate cost.Divide the portion cost by one minus your target GP, add VAT, then round to a price point.
- Judge dishes by pounds, not percentages.The pounds a dish leaves per cover show which dishes pay the rent. A dish with a higher GP% can still leave fewer pounds.
- Count proteins, spirits and wine every week.Compare GP from the stock count with what the recipe cards say. The gap is waste, portioning, theft or recipes that have drifted.
Most menu prices get set by looking at the place down the road. The trouble is that your menu price includes VAT, your plate costs move every month, and what the recipe card says a dish costs is not what the stock count says it cost. This lesson shows you how to price from your own numbers, find where the margin leaks, and work out how busy you need to be.
Get three numbers right first
- GP (gross profit) %: net sales minus cost of sales, divided by net sales. Net sales leave out VAT, service charge and tips. Cost of sales is your purchases adjusted for opening and closing stock. Report food GP and wet (drinks) GP separately: a blended figure hides a weak bar.
- Prime cost %: cost of sales plus total staff cost, divided by net sales. Staff cost includes employer NIC, pension, holiday pay and agency staff. Tronc paid out by an independent troncmaster stays out. For example, £6,000 of cost of sales and £6,800 of staff cost on £20,000 of net sales is a 64% prime cost, leaving £7,200 for every other cost and profit. As of Oct 2026.
- Breakeven covers: weekly fixed costs divided by what each cover contributes after variable costs.
There is no universal target. A pub, a cafe, a fast casual counter and a fine dining room run different GP and staff cost mixes, so set yours from your own site's history.
Price from the cost, not from the competition
For a dish at the standard rate of VAT, the menu price is the portion cost divided by one minus your target GP, then multiplied by 1.2 to add VAT. Do the sum first, then round to a price point.
| Portion cost | £4.20 |
| Gross profit at 70% of the net price | £9.80 |
| VAT at 20% of the net price | £2.80 |
| Menu price including VAT | £16.80 |
| Net price before VAT | £14 |
£4.20 / (1 minus 0.70) = £14.00, and £14.00 x 1.2 = £16.80Cross-check: £16.80 / 1.2 = £14.00, and £14.00 x 30% = £4.20. As of Oct 2026.
Find the gap between the recipe card and the stock count
Theoretical GP is what your EPOS (till system) sales should have earned: each item sold times its recipe cost. Actual GP comes from opening stock plus purchases minus closing stock. The gap between them is waste, portioning, theft or recipes that have drifted. Count proteins, spirits and wine every week.
| Net price per pint (£5.20 including VAT / 1.2) | £4.33 |
| Cost per pint sold (an 11-gallon keg of 88 pints at an assumed £180 net, 85 pints sold) | £2.12 |
Wet GP on this keg is 51.1%, worked on unrounded figures; it would be 52.8% if all 88 pints sold. Lose 3 more pints, so 82 are sold, and it falls to 49.3%, about 1.8 points lower. As of Oct 2026.
You bank pounds, not percentages. GP% tells you about pricing and waste; contribution tells you which dishes pay the rent.
| Net spend per head | £30 |
| Less variable costs at 40% | -£12 |
| Contribution per cover | £18 |
With £14,000 of weekly fixed costs, breakeven is £14,000 / £18 = 778 covers a week (777.8 rounded up), or 1.18 turns a sitting across 60 seats and 11 sittings. As of Oct 2026.
Before you cut a quiet session or add a second sitting, work out RevPASH (revenue per available seat hour): net sales divided by seats times opening hours. For example, £20,000 of net sales at 60 seats open 70 hours is £4.76 a seat hour. Compare sessions on that, not on how busy they feel.
Asked in Greymill
Your menu price includes VAT. At the standard rate you add it by multiplying by 1.2 (As of Oct 2026).
Take off the VAT: £14 / 1.2 = £11.67
Gross profit: £11.67 minus £4.20 = £7.47, which is 64%
Price from your cost instead:
Before VAT: £4.20 / (1 minus 0.70) = £14.00
On the menu: £14.00 x 1.2 = £16.80, then round to a price point
Matching them costs you: £2.33 of gross profit a plate against £16.80, about £117 a week at 50 plates.
Then check the fish: £4.20 is the recipe card cost. Count your fish every week. Any gap between the card and the stock count is waste, portioning, theft or drifted recipes.
Send me the rest of the menu and I will rank every dish by pounds per plate.
Ask it about your own business
Paste this into Greymill with your own figures, and Data & Analytics works it through for your business.
I run a restaurant, cafe or bar in the UK. Here are my main dishes and drinks with portion costs, current menu prices and how many of each we sold last month: [list]. My target food GP is [target] and wet GP is [target]. Last month EPOS food sales were [amount] net, purchases were [amount], opening stock [amount] and closing stock [amount]. Build me a menu costing sheet with GP% and contribution per dish, flag the items to reprice, and tell me how far my actual GP is from theoretical.
More for restaurants, cafes and bars in the UK
- Getting through the rent quarter day when VAT and payroll land togetherTakings arrive every day but rent, VAT and PAYE arrive in lumps, and a rolling 13-week cash model shows the squeeze weeks before it hits.Read the lesson
- Charging the right VAT on eat-in, takeaway, meal deals and service chargeWhether food is zero-rated or standard-rated turns on where it is eaten, whether it is hot and what it is, and the wording of a service charge decides whether a sixth of it is VAT.Read the lesson
- Changing hours, running an event or losing your DPS without stopping alcohol salesWhat a licensed site can change during the year, by which route and on what notice, and what to do the day your designated premises supervisor walks out.Read the lesson
- Taking, renewing or buying a lease without losing your right to stayWhether your lease has 1954 Act protection decides whether your fit-out has a future, and the deadline in a section 25 notice or a pub tie trigger cannot be missed.Read the lesson
- Sharing tips fairly and paying casual staff without a claimHow to set up a tipping policy and tronc that stand up, what a casual hour really costs once holiday pay is added, and the rota rules that catch late-night sites.Read the lesson
- Getting more covers without falling foul of the price, review and platform rulesThe channels you control earn the most, and the rules on showing service charges, asking for reviews and signing platform deals decide what you can do to grow.Read the lesson
- An allergic reaction, a food poisoning complaint or the council closing your kitchen: the first 24 hoursWhat to keep, who to call and what not to say when something goes wrong in the kitchen, and the insurance conditions that decide whether you are covered.Read the lesson
Open the interactive lesson · Every restaurants, cafes and bars lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- secondary threshold; also api/lib-statutory-uk.js (Worked examples, gbp)
- qualifying earnings 2026/27 (Worked examples, gbp)