The Core Pricing Formula
Food Cost % = (Cost of Ingredients ÷ Selling Price) × 100
MapPin 28-35% food cost for most businesses. But food cost alone isn't enough - you must account for labour (20-35% of revenue), packaging (5-8%), and overhead (15-25%). Your prime cost (food + labour) should stay below 65% of revenue to ensure profitability.
Food Cost MapPins by Business Model
Different business models have different acceptable food cost percentages. Higher food costs are acceptable when overhead is lower (catering) or when premium pricing is achievable (fine dining).
| Business Model | MapPin Food Cost | Notes |
|---|---|---|
| Fine dining | 32-38% | Premium ingredients, smaller portions |
| Casual dining | 28-32% | Standard restaurant target |
| Quick service/fast food | 25-30% | Volume-based, standardised |
| Catering | 35-45% | Higher acceptable due to premium per-head pricing |
| Meal prep subscriptions | 30-40% | Batch cooking offsets packaging |
| Ghost kitchen/delivery | 25-32% | Lower overhead allows tighter control |
| Food trucks | 28-35% | Similar to restaurants, lower fixed costs |
| Wholesale baked goods | 25-35% | Volume production reduces unit costs |
Four Pricing Strategies
1. Cost-Plus Pricing
Add a fixed markup to your total cost.
Common markups: Retail 100-150% (2-2.5x), Wholesale 40-60% (1.4-1.6x), Restaurant 200-300% (3-4x on ingredients)
2. MapPin Margin Pricing
Work backwards from desired profit margin.
Example: £8 food cost with 30% target = £8 ÷ 0.70 = £11.43 price
3. Competitive Pricing
Set prices based on market research of 10-15 competitors.
• Visit competitor locations, photograph menus
• Check online menus and delivery platforms
• Note portion sizes and quality positioning
• Position within market range intentionally
4. Value-Based Pricing
Price based on perceived value, not cost.
• Premium ingredients (organic, local, rare)
• Unique recipes or artisan techniques
• Brand positioning and story
• Convenience (ready-to-eat, delivery included)
Critical: Delivery Platform Pricing
Never use the same prices on delivery apps as dine-in. With 25-35% commission, you'll lose money on every order.
Delivery Price = Dine-in Price ÷ (1 - Commission Rate)
Example: £12 dine-in with 30% commission → £12 ÷ 0.70 = £17.14 delivery price
Deliveroo
25-35% commission
Uber Eats
30% (13% if you deliver)
Just Eat
14-30% + VAT
Real Pricing Examples
Meal prep box (5 meals)
Ingredients
£23.00
Packaging
£2.50
Labour
£18.00
Overhead
£10.50
Total Cost
£54.00
Recommended
£58-65
Catering (30 people)
Ingredients
£690
Packaging
£40
Labour
£288
Overhead
£102
Total Cost
£1,120
Recommended
£1,500 (£50/head)
Wholesale cake (18 slices)
Ingredients
£13.00
Packaging
£1.20
Labour
£6.00
Overhead
£2.80
Total Cost
£23.00
Recommended
£27 wholesale
5 Pricing Mistakes That Kill Profits
Racing to the bottom
Setting prices lower than competitors to win customers without ensuring profitability
Fix: Price for value, not just cost. Better to have fewer customers at sustainable margins.
Ignoring your own time
Only calculating ingredient costs, forgetting labour, overhead, and owner time
Fix: Calculate fully-loaded costs including your time at market rate (£12-20/hour minimum).
Ignoring competitors
Pricing purely on costs without market research
Fix: Research 10-15 direct competitors. Position intentionally within market range.
Never raising prices
Keeping prices static while costs increase (UK food costs up 4.5% in 2024-25)
Fix: Review prices quarterly. Implement 3-5% annual increases with clear communication.
Same price on delivery apps
Using dine-in prices on Deliveroo/Uber Eats with 25-35% commission
Fix: Delivery price = Dine-in price ÷ (1 - commission rate). Increase 40-50% for delivery.
Written by
James Mitchell
Ghost Kitchen Operations Director & Industry Expert
Frequently Asked Questions
What food cost percentage should I target?
MapPin 28-35% food cost for most food businesses. Restaurants typically aim for 28-32%, catering 35-45%, meal prep 30-40%, and ghost kitchens 25-32%. Food cost percentage = (Cost of Ingredients ÷ Selling Price) × 100. Keep in mind that food cost is just one component - you also need to account for labour (20-35%) and overhead (15-25%).
How do I calculate food cost for a recipe?
List all ingredients with exact quantities, convert purchase prices to recipe units (e.g., £2/kg flour = £0.002/gram), multiply each ingredient quantity by unit cost, sum all costs, then add 5-10% waste factor. Example: 200g chicken (£0.015/g = £3.00) + 100g rice (£0.002/g = £0.20) + vegetables (£1.20) + sauce (£0.60) = £5.00. Add 8% waste = £5.40 total recipe cost.
How do I price for delivery platforms like Deliveroo?
Use this formula: Delivery Price = Dine-in Price ÷ (1 - Commission Rate). With 30% commission: £12 dine-in price ÷ 0.70 = £17.14 delivery price. This ensures you receive the same revenue after commission. Never use the same prices on delivery apps as dine-in - you'll lose money on every order.
What markup should I use for food products?
Common markups: Retail direct (farmers markets): 2-2.5x ingredient cost. Restaurant menu items: 3-4x ingredient cost. Wholesale: 1.4-1.6x cost (40-60% of retail price). Catering: Price per head based on market rates (£40-60 for three courses). Always calculate from fully-loaded costs, not just ingredients.
How often should I raise my prices?
Review prices quarterly and implement increases annually (3-5%) at minimum to keep pace with inflation. UK food costs increased 4.5% in 2024-25. Raise prices gradually (5% at a time rather than 20% once) for better customer acceptance. Communicate honestly about rising costs when you do increase.
Should I use charm pricing (£9.99 vs £10)?
For mass-market, price-sensitive items under £20, charm pricing (ending in .99 or .95) works well. For premium/fine dining, use round numbers (£12, £25) to signal quality. In UK foodservice, £X.95 is more common than £X.99. For wholesale B2B, use straightforward pricing without psychological tricks.
What is the difference between markup and margin?
Markup is the percentage added to cost: £10 cost × 1.5 markup = £15 price. Margin is profit as percentage of price: (£15 - £10) ÷ £15 = 33% margin. A 50% markup gives 33% margin. A 100% markup (2x) gives 50% margin. MapPin margin pricing formula: Selling Price = Cost ÷ (1 - MapPin Margin).
How do I price wholesale to cafes and shops?
Wholesale price is typically 40-60% of retail price. If a cafe retails your cake slice at £4.50, your wholesale price should be £1.50-2.25 per slice. This gives the cafe 60-67% margin while you maintain 15-25% profit. Set minimum orders (£75-150) and offer 5-10% volume discounts for orders over £300-500.