Key points at a glance
- Every calculation starts with a recipe card per dish listing quantities, purchase prices and trim loss. Without it, every price is a guess.
- Food cost is always measured against the net price. Many kitchens aim for around 30 percent on food: a rule of thumb, not a requirement.
- Overhead-based costing spreads labour, rent and energy across your dishes; the contribution margin in euros shows what a dish really adds to your bottom line.
- Menu engineering sorts the menu by popularity and contribution margin into stars, plowhorses, puzzles and dogs, and shows what to promote, rework or drop.
- Review prices regularly and adjust in small steps, add VAT correctly (10 percent on food in Austria, 7 percent in Germany) and update menu, price display and website at the same time.
This post is general information and does not replace legal or tax advice. Rules change and some differ between federal states: check the details with your chamber of commerce (WKO) or IHK, the competent authority or your tax adviser.
The key terms of menu costing
Before you start calculating, it pays to get the terms straight. They come up in every restaurant costing, in conversations with your tax adviser and in the reports of your POS system. One point matters above all: every percentage refers to the net price, the selling price without VAT. If you measure food cost against the gross price, you are flattering your kitchen.
| Term | Meaning | Example |
|---|---|---|
| Food cost | Net cost of all ingredients in one portion, including trim loss | €3.78 for a schnitzel with a side |
| Food cost percentage | Food cost divided by the net selling price | €3.78 ÷ €12.60 = 30% |
| Pricing factor | Multiplier from food cost to net price | A factor of 3.33 equals 30% food cost |
| Gross profit or contribution margin | Net price minus food cost | €12.60 minus €3.78 = €8.82 |
| Overheads | Staff, rent, energy, insurance, marketing, depreciation | per year, from your accounts |
| Gross price | Net price plus VAT, the price on the menu | €12.60 plus 10% = €13.86 |
If you are just starting out, the cost side of the business as a whole (investment, rent and running costs) is covered in our guides to opening a restaurant in Austria and Germany. This guide is about what a single dish needs to cost.
Recipe cards: the basis of every calculation
A recipe card, often called a costing sheet in the kitchen, records for every dish which ingredients go on the plate, in what quantity and at what cost. It is not only the basis for your numbers, it also makes sure the dish is the same size and quality every day, whoever is cooking. Without fixed portions, any calculation is worthless.
Record ingredients and quantities
Note every component in grams or pieces, including frying fat, garnish, sauce and the bread that comes with it automatically.
Enter net purchase prices
Use current prices from supplier invoices, without input VAT and in the same unit, for example euros per kilogram.
Account for trim and cooking loss
Weigh raw produce before and after trimming. If one kilo of beef fillet at €45 leaves 750 g after trimming, the usable kilo costs €60.
Add a safety margin
A surcharge of about 3 to 5 percent covers small items such as spices, breakage and price swings.
Update regularly
Recalculate your recipe cards whenever a supplier changes prices noticeably, and at least twice a year.
| Ingredient | Quantity | Net cost |
|---|---|---|
| Pork, trimmed | 180 g at €11.50/kg | €2.07 |
| Breading: flour, egg, breadcrumbs | pro rata | €0.35 |
| Frying fat | pro rata | €0.25 |
| Potato salad | 200 g | €0.60 |
| Lemon, lingonberries, garnish | pro rata | €0.33 |
| Total plus 5% safety margin | €3.78 |
Setting the price with a markup or factor
The quickest method is markup pricing based on a target food cost percentage. You decide what share of the net price the food cost should be and divide the food cost by that share. For the schnitzel with €3.78 food cost and a 30 percent target, that gives €3.78 ÷ 0.30 = €12.60 net, a pricing factor of 3.33.
Only then do you add VAT. In Austria, food served in restaurants is taxed at the reduced rate of 10 percent, so €12.60 becomes €13.86. In Germany, food in restaurants has been taxed at 7 percent permanently since 1 January 2026, so €12.60 becomes €13.48. Drinks are taxed at the standard rate of 20 or 19 percent in both countries. Always round up afterwards, for example to €13.90: rounding down costs you margin on every portion.
| Target food cost | Factor | Net price | Gross AT (10%) | Gross DE (7%) |
|---|---|---|---|---|
| 25% | 4.00 | €15.12 | €16.63 | €16.18 |
| 30% | 3.33 | €12.60 | €13.86 | €13.48 |
| 35% | 2.86 | €10.80 | €11.88 | €11.56 |
The right percentage depends on your concept. A traditional inn with affordable braised dishes can often work with low percentages, while a steakhouse with expensive meat sits higher and makes up for it in euros. Drinks are usually costed at a much lower percentage than food; how that works behind the bar is explained in our guide to the drinks menu. The quickest way to price a glass or bottle is the free drinks price calculator.
Calculate your selling price in seconds
Enter the food cost, choose a target percentage and your country: the price calculator works out net and gross price with the right VAT and rounds up.
Factoring in labour, rent and energy
Markup pricing assumes the factor covers all your other costs. Whether it really does only becomes clear with overhead-based costing using your real numbers. Take the overheads from last year's accounts or your business plan, meaning everything except food cost, and set them against your total food cost.
Work out the overhead rate
Example: €360,000 overheads per year with €180,000 food cost gives an overhead rate of 200 percent.
Calculate the full cost
Food cost of €3.78 plus 200% overheads (€7.56) gives a full cost of €11.34 per schnitzel.
Add a profit margin
With a 10 percent profit margin you arrive at €12.47 net. Profit also has to fund reserves, investment and your own income if you do not pay yourself a salary.
Add VAT
Plus 10 percent gives €13.72 in Austria, plus 7 percent gives €13.34 in Germany. Then round up as usual.
Labour is the biggest cost block in most restaurants. Calculate with the full employer cost, including payroll taxes and social contributions, bonus payments, holidays and sick leave, not with the gross wage. In Austria the basis is the collective agreement for gastronomy and hotels (Kollektivvertrag), in Germany the statutory minimum wage and, where applicable, a collective agreement. Labour-intensive dishes deserve a second look: if a dish needs four minutes of handwork and an hour of labour costs you €30, it carries €2.00 of labour on top of the food cost. Homemade ravioli can end up costing more than a steak.
Contribution margin: euros beat percentages
The food cost percentage on its own is misleading. A dish with a low percentage can earn less than one with a high percentage, because in the end it is the contribution margin in euros that pays the rent and the staff. The contribution margin is the net price minus the food cost: the amount left from each portion sold to cover all other costs and profit. How many guests you need per day for these margins to cover rent, staff and all other fixed costs is shown by the break-even calculator for restaurants.
| Dish | Food cost | Net price | Percentage | Contribution margin |
|---|---|---|---|---|
| Schnitzel with potato salad | €3.78 | €12.60 | 30% | €8.82 |
| Beef goulash with dumpling | €2.90 | €11.80 | 25% | €8.90 |
| Zwiebelrostbraten (onion roast beef) | €7.20 | €21.80 | 33% | €14.60 |
| Käsespätzle (cheese noodles) | €1.60 | €10.50 | 15% | €8.90 |
The Zwiebelrostbraten has the worst percentage but brings in a good one and a half times as much contribution margin per plate as the Käsespätzle. If you raised its price or took it off the menu because of the percentage, you would lose your strongest earner. The Käsespätzle, on the other hand, are only as good as their sales figures despite a dream percentage. That is why costing always needs a look at volumes too, and that is exactly what menu engineering does.
Menu engineering: stars, plowhorses, puzzles and dogs
Menu engineering places every dish in a category based on how often it sells and how high its contribution margin is. Your POS system supplies the sales figures, ideally for at least a month and separately for categories such as starters, mains and desserts. The benchmark is the average of each category: a dish that is above average on both volume and contribution margin is a star.
| Category | Popularity | Contribution margin | What to do |
|---|---|---|---|
| Stars | high | high | Keep quality steady, give it a prominent spot, test the price carefully |
| Plowhorses | high | low | Lower the food cost, adjust the side, raise the price slightly |
| Puzzles | low | high | Describe it better, highlight it on the menu, have staff recommend it |
| Dogs | low | low | Rework the recipe or drop it, unless it has a clear purpose |
Placement on the menu matters: guests read the top positions of a category first, and dishes that stand out visually. A small frame, a short line about the origin or a photo can turn a puzzle into a star. On a digital menu you can change the order and highlights at any time and test them without reprinting.
How to get it right
- Place dishes with a high contribution margin at the top of the category
- Write descriptions with origin, preparation and flavour
- Shrink the menu deliberately after every analysis
- Tell your front-of-house team about stars and puzzles
Better not
- Line prices up in one column, which invites price comparison
- Keep dogs on the menu for years out of habit
- Look only at the food cost percentage
- Run a menu with 60 dishes the kitchen has to stock for
Raising prices without losing guests
Rising purchase prices, higher wages and energy costs make price increases unavoidable. If you wait too long, you have to raise prices sharply in one go, and regulars notice. Small, regular steps based on up-to-date recipe cards work better. Also look at alternatives to a plain price rise: a different side, a seasonal ingredient, a slightly adjusted portion or a new dish with a better contribution margin. Lunch menus follow their own rules, see our guide to the lunch menu. What this looks like for a cappuccino in a café is shown in the guide raising coffee prices.
Keep price display rules in mind with every change: on the menu, on the display outside and online, final prices including VAT must be shown and must match. What exactly applies is explained in our price display guides for Austria and Germany.
Price review checklist
- Recipe cards of the ten best-selling dishes recalculated with current purchase prices
- Contribution margins and sales volumes from the POS analysed
- Plowhorses and dogs reworked before prices go up
- New prices calculated with the correct VAT and rounded up
- Menu, price display, POS system and website switched on the same day
- Front-of-house team briefed so they can answer guests' questions calmly
- Next review scheduled in three to six months
Your menu, always up to date online
With your own website you change prices and dishes in minutes, without reprinting. See in the free preview how your venue could look online.
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