Menu costing is the discipline of knowing exactly what each dish costs you to make before you decide what to charge for it. Many Indian restaurants price by looking at the competition or by gut feel, then wonder why a full house still leaves thin profit. The answer is almost always sitting in the recipe. This step-by-step method walks you through costing a dish properly, in rupees, so your menu prices rest on facts rather than hope.
Step 1: Break the dish into ingredients
Take one dish and list every ingredient that goes into a single serving, including the small ones. Cooks forget the tempering oil, the garnish, the cream swirl, and the lemon wedge, but those add up across hundreds of covers. Record the exact quantity of each, in grams or millilitres, exactly as your standard recipe plates it.
- Main ingredients: Proteins, vegetables, rice, or flour.
- Supporting ingredients: Oil, ghee, masala, dairy, and thickeners.
- Finishing touches: Garnish, sauces, and accompaniments served alongside.
Step 2: Convert purchase price to per-gram cost
You buy in kilograms and litres but you plate in grams and millilitres, so convert. If paneer costs ₹400 per kg, that is ₹0.40 per gram. If a dish uses 120 grams of paneer, that ingredient costs ₹48. Do this for every line. Keeping current purchase rates in your restaurant inventory management records makes this step fast and keeps costs live as vendor prices move.
Account for yield and wastage
Raw weight is not usable weight. A kilogram of whole chicken yields less usable meat after cleaning, and vegetables lose weight in peeling. Apply a realistic yield factor so you cost the amount you actually serve, not the amount you bought.
Step 3: Add up the plate cost
Sum every ingredient line to get the raw food cost of one serving. This single number, sometimes called the plate cost or recipe cost, is the foundation of the whole exercise. For most Indian menus this lands somewhere in a range you will quickly recognise per dish once you have costed a handful.
Step 4: Turn plate cost into a selling price
Now decide your target food cost percentage, which is plate cost divided by selling price. Many restaurants aim to keep food cost in the region of 28 to 35 percent of the dish price, though this varies by cuisine and format. To find a price, divide the plate cost by your target percentage.
- Example: A plate cost of ₹60 at a 30 percent target implies a price of ₹200 before tax.
- Round sensibly: Move to a clean menu price such as ₹199 or ₹210 based on positioning.
- Sense-check the market: Costing sets the floor; local demand shapes the final number.
Do not forget the costs beyond the plate
Food cost is not your only cost. Rent, salaries, gas, electricity, packaging for delivery, and aggregator commissions all sit on top. A dish that looks profitable at the plate can lose money once a 20 to 30 percent delivery commission is applied, so cost your delivery menu separately.
Step 5: Keep costing alive
Menu costing is not a one-time spreadsheet you build and forget. Vendor prices change with the season, and a dish that was healthy in winter can slip when tomato or oil prices spike. Recost your menu at least quarterly, and immediately when a key ingredient jumps sharply.
- Recost on price shocks: Revisit affected dishes when an ingredient moves significantly.
- Watch your stars: Protect margin on your best sellers first.
- Link to sales: A connected restaurant POS software can update live food cost as recipes and purchase prices change.
Done well, menu costing does not just protect your margin. It tells you which dishes deserve pride of place, which need a price correction, and which quietly cost you money every time they sell. That clarity is worth far more than the hour it takes to build.
Frequently asked questions
What food cost percentage should I aim for?
Many Indian restaurants keep food cost in the region of 28 to 35 percent of a dish’s selling price, though the right figure varies by cuisine and format. Treat it as a target to price against, then sense-check the result against local demand.
Do I need to include garnishes and oil in costing?
Yes. Tempering oil, garnishes, sauces, and accompaniments seem trivial per plate but add up across hundreds of covers. Leaving them out understates your true plate cost and quietly erodes the margin you thought you had.
How does yield affect menu costing?
Raw weight is not usable weight, because cleaning and peeling reduce what you can actually serve. Apply a realistic yield factor so you cost the quantity that reaches the plate rather than the quantity you purchased.
How often should I recost my menu?
At least quarterly, and immediately whenever a key ingredient’s price jumps sharply. Seasonal swings in items like tomatoes, oil, and dairy can turn a healthy dish into a thin one, so keep your costs current.
