Strategy02/15/2026

Menu Pricing

The art of pricing for profit

28-32% Target Food Cost+15-25% Combos Boost Revenue$12-18 Price Sweet Spot

COGS ÷ 0.30

Base Price

Ingredient cost / target food cost %. E.g.: COGS $4.50 ÷ 0.30 = $15 menu price.

Price - COGS

Contribution Margin

How much each item contributes toward fixed costs. Prioritize high-margin items.

$X.99

Psychological Pricing

$14.99 instead of $15. $9.99 instead of $10. The "feels cheaper" effect is significant.

+15-25%

Upsell / Cross-sell

"Add guacamole for $2?" or "Combo deal saves $3" increases average order value.

>Menu Engineering: Classify items as Stars (high sales, high margin), Puzzles (high margin, low sales), Plowhorses (high sales, low margin), Dogs (low sales, low margin). Eliminate Dogs, promote Stars.
>Anchor pricing: Place the most expensive item at the top of the menu so everything else seems more affordable. E.g.: Wagyu steak $65 first → USDA Prime ribeye $38 feels "reasonable."
>Combo strategy: Bundle 2-3 items at a 10-15% discount vs. buying separately. Customers feel they're getting a deal, you increase order value by 20-30%.
>Size-based pricing: S/M/L with small ingredient cost differences but large price differences. Customers choose M (80% of the time) = optimal margin.
>Seasonal pricing: Raise prices 5-10% during peak seasons (holidays, Super Bowl weekend, Valentine's Day), reduce slightly in low season. Don't keep rigid pricing year-round.

Undercutting competitors to "attract" customers

Competing on price alone is a race to the bottom. Someone will always be cheaper. Compete on value and experience instead.

Not accounting for all costs in pricing

Many owners only factor in COGS, forgetting labor, rent, utilities, and depreciation. Your price must cover ALL costs plus desired profit.

Sudden price changes

Raising prices more than 10% at once will drive customers away. Instead, raise 5% every 3-6 months, or pair increases with quality improvements.

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