What To Know About Restaurant Menu Prices

Eating out can be incredibly costly if you do it often. Every person should have a healthy meal in the evening. While fast food may be acceptable for lunch, supper must be a healthy balanced diet that will keep your stomach full until you have your breakfast. Meal prices usually differ greatly depending on what you eat. You cannot expect to pay the same price for steak and lobster or shrimp. The latter is much more expensive for obvious reasons. If you are having an all-you-can-eat buffet dinner, and the two protein sources have been provided, however, you will pay the same price because buffet meals usually come at a fixed price. Read on to learn more about restaurant menu prices.

Cost Components of Restaurant Food Prices

When you look at the menu provided at any decent restaurant, you will see that different types of meals have been put in different categories. There is the beverages section, main meals, snacks, vegetarian foods and soups among other categories. The prices are obviously not the same for a number of reasons. The following are some of the cost components included in the pricing of these meals:

i) Cost of Raw Materials

If you are having fried chicken, mashed potatoes and some vegetables, the cost of buying that chicken, potatoes and the veges, as well as cooking oil, salt, spices and cooking gas must all be factored in the pricing. Costly raw materials, will obviously increase menu prices and vice versa.

ii) Labor

The number of staff working at the restaurant, from the valet, security, waiters, receptionist,cashier, cooks, managers and any other member of staff must be included in the pricing. After all, people must get paid for the work they do, and the only revenue source in the restaurant is the food they sell, so the prices must incorporate labor costs.

iii) Overhead Costs

Rent, electricity, water bills, garbage collection, permits and delivery service are all important for any restaurant business. Therefore, restaurant menu prices must incorporate overhead costs.

vi) Profit Margin

The main goal of going into business is to make a profit, so the desired profit margin must be included in the pricing to ensure the owner gets a decent return on their investment, say 10-20%. While some restaurant owners have a low or reasonable profit margin, others have wide profit margins. That is why you will find that some restaurants sell meals at a premium just to meet the owner’s huge profit appetite. However, this can be detrimental to the business as consumers are usually looking for places where they will get value for their money.

v) Taxes

Every business must pay a number of taxes. Payroll tax and income tax are just two of the most common taxes. However, these are usually not included in the menu prices. What must be included is the sales tax. After costing has been done, the sales tax is calculated for every meal and added to the menu price. This is what is usually indicated on the menu.

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