Costing a dish means turning food cost into a selling price that carries the target margin and that the market accepts. The calculation is short: food cost, target food cost, net price, VAT, rounding. Two points decide the margin, and both are often skipped, namely the honest look beyond the markup factor and the correct VAT markup. The basis is the food cost; how to work it out, along with the food cost percentage, is in the article calculating the food cost percentage. VAT figures as of 2026.
How do you calculate the selling price for a dish?
In four steps: work out the food cost, scale it up to the net price with a target food cost, add VAT, then round and check against the market.
- Food cost per portion from quantity × purchase price of every ingredient, including sides and sauce (the calculation is in the food cost article).
- Net price via the target food cost: food cost ÷ the food cost share you are aiming for.
- Gross price by adding value added tax.
- Round and position on a sensible price point, with a cross-check.
Steps 2 to 4 in detail, worked through on the rib-eye steak from the food cost article.
How does the factor or target-cost method work?
You divide the food cost by the food cost share you are aiming for. The rib-eye has a food cost of CHF 12.30 (derivation in the food cost article). At a target food cost of 30 percent:
Net price = CHF 12.30 ÷ 0.30 = CHF 41.00
The “markup factor” that many people talk about is exactly the same calculation, only the other way round: the factor is the reciprocal of the target food cost.
| Target food cost | Factor (× food cost, net) |
|---|---|
| 25% | 4.0 |
| 30% | 3.33 |
| 33% | 3.03 |
| 35% | 2.86 |
So with the factor 3.33: CHF 12.30 × 3.33 = CHF 40.96, the same roughly CHF 41.00 (the small difference is only rounding). Factor and division are interchangeable; what matters is that both give you the net price, not the price on the menu. Our free food cost calculator runs this step in both directions: the percentage for a price you already have, and the price a target percentage would need, net and gross.
Is the markup factor enough on its own?
No. The factor only takes the food cost into account, not the labour time and not the fixed costs. Two dishes with the same food cost would get the same price, even if one is turned by hand and braised while the other is on the plate in two minutes.
That is why the factor is the starting value, not the last word. Anyone who wants to calculate more cleanly thinks in contribution margins: what is left after deducting the food cost to cover staff, rent and energy? A labour-intensive dish needs a higher markup than the factor suggests, a simple one can carry a lower one. In practice that means:
- Price labour-intensive dishes above the factor, or simplify the work they take.
- Ingredients with a very high purchase price (meat, fish) tip the factor over: a rigid ×3 makes them unsellable. Here you deliberately calculate with a lower food cost but a solid franc amount per plate.
- Easy sellers with a low food cost (pasta, soups) carry the margin that the expensive plates cannot deliver.
The factor sorts the menu roughly into shape; the fine work comes from looking at effort and contribution margin.
How do you add VAT correctly?
The net price from the costing is not yet the menu price: what goes on the menu is the gross price including value added tax. Which rate applies depends on how the food is handed over.
- Consumption on the premises is a restaurant supply and is subject to the standard rate of 8.1% (as of 2026).
- For take-away or delivery the reduced rate of 2.6% applies, but only if “suitable organisational measures are taken to differentiate these supplies from restaurant supplies; if this is not the case, the standard rate applies” (Art. 25 para. 3 VAT Act). One such measure is a separate till button with its own receipt.
- Alcoholic beverages are excluded from the reduced rate and are always taxed at the standard rate of 8.1%, whether consumed on the premises or taken away.
For the rib-eye (consumption on the premises, 8.1%):
Gross price = CHF 41.00 × 1.081 = CHF 44.32
This section explains costing and is not tax advice; what is authoritative is the Swiss VAT Act (Mehrwertsteuergesetz, SR 641.20) and guidance from the Federal Tax Administration (FTA). English is not an official Swiss language: the English text of the Act on fedlex is a translation for information only, the German, French and Italian versions are binding.
How do you round the price, and what will the market bear?
The calculated gross price of CHF 44.32 is an intermediate step, not a menu price. You round to a round or psychologically effective point, for example CHF 44.00, CHF 44.50 or CHF 45.00. Because rounding shifts the food cost slightly, a cross-check belongs with it:
- Menu price CHF 44.00: net CHF 44.00 ÷ 1.081 = CHF 40.70, food cost CHF 12.30 ÷ 40.70 = 30.2%.
- Menu price CHF 45.00: net CHF 41.63, food cost = 29.5%.
Both are close to the target; choosing between them is a question of positioning, not of arithmetic. And this is where the market comes in: the calculated price is the floor that secures the margin, not automatically the right price. What comparable businesses nearby charge for a rib-eye has a say in whether the plate sits at CHF 44.00 or CHF 52.00. A cleanly calculated price that is above the market does not sell; one below it gives away margin. In the end the price is both, calculated and positioned.
How do you keep the costing current when prices change?
Only with a costing that tracks purchase prices, otherwise the menu carries a price based on yesterday’s costs. If the rib-eye purchase price rises from CHF 55 to CHF 60 per kilo, the food cost moves from CHF 12.30 to CHF 13.20, and at the same menu price the food cost jumps from 30.2 to a good 32 percent. With a handful of dishes that is manageable; across a whole menu with shared sub-recipes it becomes painstaking work that hardly anyone does consistently.
Simply converting the portion size changes nothing about the food cost percentage; for that our free recipe scaler is enough. The costing itself is the bigger job.
That is exactly what we are building Trolevo for: recipes with nested sub-recipes whose food cost rolls up automatically, from all ingredients, into one amount per dish, along with the food cost at a given price. Change a purchase price and you see immediately which dishes fall out of the target corridor. This helps keep the costing current; the pricing decision stays with the business. Trolevo is in development – get early access.
Sources
- VAT Act – Federal Act on Value Added Tax, SR 641.20, Art. 25 (German original; the English text is a translation for information only and has no legal force)
- FTA – VAT rates (standard rate 8.1%, reduced rate 2.6%)
The figures in the examples are illustrative and not an industry statistic. This article explains costing and is not tax advice.