Many menus are priced by looking at the café down the street. That's a useful sanity check, but it doesn't tell you whether your dish makes money. Food-cost pricing starts from what each plate actually costs you, then works up to a selling price you can defend.
Step 1: Cost the recipe, not the ingredient
List every ingredient in one serving and convert purchase prices into the unit you actually use. Don't forget the small things: oil, garlic, sauces, garnish and packaging for takeaway.
| Ingredient | Used per serving | Cost |
|---|---|---|
| Chicken thigh (₱260/kg) | 180 g | ₱46.80 |
| Rice (₱55/kg, cooked yield ~2.5×) | 200 g cooked (80 g raw) | ₱4.40 |
| Soy sauce, vinegar, garlic, bay leaf, oil | — | ₱8.00 |
| Egg | 1 pc | ₱9.00 |
| Bowl and lid (takeaway) | 1 set | ₱7.00 |
| Plate cost | ₱75.20 | |
Step 2: Account for yield and waste
Raw weight isn't usable weight. Chicken loses weight when trimmed and cooked, vegetables lose peel and ends, and some food is simply wasted. If you trim 10% from a whole ingredient, divide its cost by 0.9 to get the true cost of what you use. Doing this for your top ten dishes is enough to see the pattern.
Step 3: Set a target food-cost percentage
Food-cost percentage is plate cost divided by the selling price before VAT. Many casual restaurants and cafés aim for roughly 28–35%, but the right number depends on your rent, labor and concept. Choose a target, then work backwards.
- Plate cost ₱75.20 at a 32% target: ₱75.20 ÷ 0.32 = ₱235.00 before VAT
- Add 12% VAT for a VAT-registered business: ₱235 × 1.12 = ₱263.20
- Round to a clean menu price: ₱265
If you're not VAT-registered, your price is the VAT-exclusive figure plus any other applicable tax, so check your registration with your accountant.
Step 4: Sort your menu into four groups
Pull a month of sales from your POS and compare each item's popularity with its profit per plate (price before VAT minus plate cost).
| High profit | Low profit | |
|---|---|---|
| Sells a lot | Stars: protect quality, feature them. | Workhorses: popular but thin. Re-cost, adjust portion or price gently. |
| Sells little | Puzzles: profitable but unnoticed. Move up the menu, train staff to suggest them. | Drags: remove or redesign. |
Step 5: Re-check prices every quarter
Ingredient prices in the Philippines can move quickly. Rice, onions, sugar and cooking oil have all seen sharp swings in recent years. Update your recipe costs whenever a supplier changes a price, and review your menu at least every three months. A POS that tracks ingredient-level inventory makes this much faster, because the cost per plate updates as purchases come in.
Key takeaway: price from your plate cost up, not from your competitor's menu down. Then let your sales data tell you which dishes deserve the spotlight.
Sources and further reading
This article is general information for business owners in the Philippines, not legal, tax or financial advice. Rules and rates change, so confirm the details that apply to your business with the relevant agency or a qualified professional. Figures in worked examples are illustrative. Last reviewed October 2026.
