Quick answer: Work out the cost per plate (ingredients + packaging + wastage), then divide by your target food cost % (usually 28–35%) to get the selling price. Example: a dish costing ₹42 at a 30% target should sell for about ₹140. Then check that your monthly sales cover rent, salaries and gas: that’s your break-even.
Many food businesses are busy and still lose money. The usual cause is pricing by guesswork (“the stall next door charges ₹60”). Here is a simple method that works for any food business.
Step 1: Write the recipe for one batch
List every ingredient with the quantity used and its purchase price. Use a kitchen scale; guessing is where costing goes wrong.
Example: Paneer butter masala, batch for 10 portions
| Ingredient | Quantity | Price | Cost |
|---|---|---|---|
| Paneer | 1 kg | ₹380/kg | ₹380 |
| Butter | 150 g | ₹560/kg | ₹84 |
| Tomatoes | 1.5 kg | ₹40/kg | ₹60 |
| Onions | 500 g | ₹35/kg | ₹17.50 |
| Cream | 200 ml | ₹220/L | ₹44 |
| Cashews | 80 g | ₹900/kg | ₹72 |
| Spices, ginger-garlic, oil | ₹40 | ||
| Batch cost | ₹697.50 |
Cost per portion: ₹697.50 ÷ 10 = ₹69.75
Step 2: Add packaging and wastage
- Packaging: container, lid, bag, spoon, napkin. For delivery this is often ₹8–15 per order.
- Wastage: trimming, spoilage, spills, staff meals and portions that come out bigger than planned. Add 5–10% of ingredient cost.
Paneer butter masala, delivery portion: ₹69.75 + ₹12 packaging + ₹5 wastage (7%) = ₹86.75 per plate.
Step 3: Choose a target food cost %
Food cost % = cost per plate ÷ selling price.
| Business type | Typical target food cost % |
|---|---|
| Street stall (momos, chaat, tea) | 20–30% |
| Cloud kitchen | 28–35% |
| Casual restaurant | 30–35% |
| Tiffin service | 40–50% (lower overheads compensate) |
Step 4: Calculate the price
Selling price = cost per plate ÷ target food cost %
₹86.75 ÷ 0.32 = ₹271. Round to a “menu-friendly” price: ₹269 or ₹279.
For Swiggy and Zomato, remember the platform takes a commission (often 18–30% plus GST on it). A dish that earns a healthy margin at ₹269 direct may need to be listed at ₹299–₹329 on the apps. Many restaurants keep separate app prices for this reason.
Step 5: Check break-even
Food cost isn’t the whole story. Monthly fixed costs must be covered too.
| Monthly fixed costs (example cloud kitchen) | |
|---|---|
| Rent | ₹25,000 |
| Salaries (cook + helper) | ₹35,000 |
| Gas and electricity | ₹12,000 |
| Software, internet, misc. | ₹5,000 |
| Total | ₹77,000 |
If your average order is ₹350 and the average food + packaging + commission cost is ₹210, each order contributes ₹140. Break-even = ₹77,000 ÷ ₹140 = 550 orders a month, or about 19 a day. Everything above that is profit.
Common pricing mistakes
- Ignoring gas and electricity. Include them in fixed costs or add ₹1–3 per plate.
- Not re-costing when prices change. Tomato and onion prices swing wildly. Re-cost your top 10 dishes every quarter.
- Forgetting your own salary. If you work in the business, pay yourself in the break-even sheet.
- Giving discounts on low-margin items. Run offers on dishes with low food cost %, not high.
- Inconsistent portions. Use ladles and scales of fixed size so the costed portion is the served portion.
Money tip
FAQ
What is a good food cost percentage? 28–35% for most restaurants and cloud kitchens; lower for street food, higher for tiffin services.
How do I calculate food cost per plate? Total the cost of all ingredients in a batch, divide by portions, then add packaging and a 5–10% wastage allowance.
How much should I add for Swiggy and Zomato commission? Work out your effective commission (commission + GST on it + ad spend) as a % of order value and price app menus 15–25% above your direct menu.
How often should I update menu prices? Re-cost every quarter and change prices once or twice a year; frequent changes annoy regular customers.
Want a ready-made costing sheet? It’s part of the Food Business Startup Kit (coming soon). Meanwhile, get the free Startup Checklist.
Related: How to start a momo stall · Cloud kitchen setup cost