The formula and its limit
Menu price = recipe cost ÷ target food cost %. It is the right starting point and the wrong stopping point: a 30% target on a $1.20 side gives $4, which may be too low for your concept, while a $12 recipe cost gives $40, which your guests may not pay. Price the item, then check the contribution margin in dollars — that is what pays rent.
Target food cost by concept
Full-service restaurants run 28–35% food cost (MarginEdge, 2026); bars run 18–24% beverage cost (Backbar Academy, 2019); cafes run 20–25% on coffee (Zest Specialty Coffee Roasters, 2025). A single item can sit far from the average as long as the menu mix lands on target — which is what the Toolkit's Menu Pricing sheet computes across 20 items.
Recipe cost done right
Cost every ingredient at the price you actually pay per unit, include garnish, bread, oil and packaging, and add a waste factor (3–5% is common). Recost quarterly: suppliers move prices more often than menus do.
Read the guide: How to Price a Menu Item Based on Food Cost.