The first thing to do is price the dish correctly, and the first step is building a BMO.

Start from the Roots

The BMO is the collection of raw materials for each dish and their prices. This also includes costs you might not have thought of, like sauces, the half-lemon served with the schnitzel, or the oregano on top of the pizza. Every small addition multiplied by hundreds of dishes adds up to money you don't want to lose. 

That's why a BMO is the basis for everything, and it's so important that we even wrote an entire article about it. 

Moving on to Food Costs

You have your BMO, but your costs don't stop at the price of raw materials. You have to get them somehow and store them somewhere. In short, you need to add delivery and storage costs, as well as costs nobody wants but nobody can really avoid—like waste from unused raw materials or expired goods. 

Reaching the Bottom Line

All your work eventually boils down to one thing: the price. How much do you want to earn from each dish? What is a reasonable price? Is there a dish you can afford to lose money on? Every restaurant has its own considerations, and every dish has a profit margin you determine. But it’s important to do this with data and control in mind, while also considering the restaurant's overall picture.

This is where the food cost calculation comes in. Simply put: the ratio between the cost of the food and its sale price. 

Most of the market prices food costs at around 30% of the dish price. 

This is a key rule of thumb, but there are exceptions. Handmade pasta is very cheap in terms of raw materials, but the labor process is long and involves many stages, which should also be factored into the price. 

The Bottom Line 

Accurate Pricing = Food Cost Calculation + Desired Profit. Enter your food cost, mix together, and get the price that suits you best.