How to update menu prices when ingredient costs rise
A repeatable approach for when supplier prices climb: what to update, when to absorb the increase, and when to pass it through to the menu.
Update the ingredient price once, then decide dish by dish whether to absorb the increase or pass it through. Absorb it while the dish still clears your target food cost, and reprice when it does not.
When an ingredient price changes, three things happen to the dishes that use it: cost per portion goes up, food cost % goes up, gross margin % falls.
The disciplined approach
- Update the ingredient price in one place.
- Look at every affected menu item.
- For each, decide: absorb, partially absorb, or fully pass through.
- Update each affected selling price.
Worked example: chicken goes up 10%
Chicken moves from $9.50/kg to $10.45/kg. A sandwich uses 118 g of it.
Cost change per sandwich = 0.118 kg x $0.95 = $0.11
The sandwich cost per portion goes from $2.24 to $2.35. At an unchanged $9.00 price:
- Food cost % before: $2.24 divided by $9.00 = 24.9%
- Food cost % after: $2.35 divided by $9.00 = 26.1%
Against a 30% target that is still comfortable, so absorb it. Repricing a menu over 1.2 percentage points of headroom you already had costs more in printing and goodwill than it recovers.
Now run the same rise on a dish already at 31%. It lands at 32.2%, above target and moving the wrong way, and that one is worth repricing. Same ingredient, same increase, two different answers, which is exactly why the decision is per dish.
When to absorb
Absorb when the increase is a few cents per portion and the dish still clears target. Do not update menus over noise.
When to pass through
Pass through when the increase pushes a dish or a category meaningfully above target food cost. Round to a sensible menu price rather than the exact figure: $9.00 to $9.50 reads as a price, $9.14 reads as a spreadsheet.
Tell your team before the menu changes
A cook or a server who knows which ingredient moved can answer a guest without guessing. It costs nothing to say and it is the difference between a price rise that sounds considered and one that sounds opportunistic.
Frequently asked questions
- How often should I be repricing?
- Review whenever a real cost moves, and change the printed menu on a schedule rather than continuously. Constant small changes annoy regulars and cost more in menu reprints than they recover.
- What if a supplier increase turns out to be temporary?
- Absorb it if you can carry it, because taking a price back down is harder than putting it up. A seasonal spike is a different thing from a permanent reset, and only the second one belongs on the menu.
- Should delivery prices move with dine-in prices?
- Not necessarily by the same amount. A delivery price already carries commission and packaging that dine-in does not, so a cost rise lands on a thinner margin there and can justify a larger adjustment.
Update one ingredient in Dishbon and every dish that uses it moves with it.
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