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Topic · 15 guides

Menu pricing & engineering

What to charge, which dishes earn their place on the menu, and how to raise a price without losing the room.

Guides in this topic

Terms these guides define

Menu mix (PMIX)
The share of total sales each menu item represents — the weights behind every menu-level average.
Contribution margin
The dollars a dish contributes to overhead and profit after its ingredient cost — menu price minus plate cost.
CPI: food away from home
The Consumer Price Index for what diners pay at restaurants and other foodservice — the national measure of menu price inflation.
Plate cost
The total ingredient cost of one served portion, garnish and sides included.
Q factor
A per-plate allowance for the small unbilled items — oil, butter, salt, bread service — that never make it onto a recipe card.
Menu price
The price a dish is sold at — set from plate cost, target margin, and what the dish is worth in the room.
Third-party commission
The percentage a delivery marketplace takes from each order — DoorDash's and Uber Eats' published delivery plans run 15–30% — charged on the order subtotal.
Cost per serving
The cost of one served unit of a batch item — a bowl of soup, a slice of pie, an ounce of sauce.
Batch recipe
A recipe produced in bulk and portioned at service — soups, sauces, braises, doughs.
Market price (MP)
MP on a restaurant menu means market price: the current price is supplied separately instead of printed as a fixed amount.
Decoy pricing
Adding a third, deliberately poor-value option to make the option you want chosen look obviously better.
Price anchoring
A price is judged against the prices next to it, not in isolation — so menu layout changes what a number means.
Charm pricing
Prices ending in 9 or 5 — a small, inconsistent effect in research, and a style convention that differs by format.
Food cost percentage
The share of a dish's menu price consumed by the ingredients on the plate.
Gross margin vs. markup
Margin is profit as a share of price; markup is profit as a share of cost. Confusing them underprices a menu by several points.
Value engineering
Reducing a dish's cost without reducing what the guest perceives they're getting.
Menu engineering
Sorting every dish by popularity and contribution margin to decide what to promote, reprice, rework, or cut.
Stars, plowhorses, puzzles, dogs
The four menu-engineering quadrants, named by popularity and contribution margin.