As a new business or restaurant opens and begins to assemble its menu, there are two types of methods to determine the price of items on the menu: desired food cost percentage and factor pricing. Pricing your items on a menu is a crucial part of a business because the prices you set create your ability or inability to cover costs, sell, and generate desired profit.
Both of these are closely related in two ways:
Desired food cost percentage is selected based on costs, ability to sell, and return of profit. There are many factors that affect the desired food cost percentage in relation to menu pricing.
The formula below shows how to use the desired product cost percent to calculate the selling price for the menu.
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