The markup factor in restaurants
The markup factor lets you go from ingredient cost to selling price. It's a handy shortcut for pricing a menu quickly.
Definition
Markup factor = pre-tax selling price ÷ ingredient cost. A factor of 3.5 means you sell a dish at 3.5 times its ingredient cost.
It's directly linked to food cost: factor = 1 ÷ food cost. A 30% food cost matches a factor of 3.33.
Which factor should you apply?
Drinks support high factors (4 to 6), while dishes with a high ingredient value (meat, fish) often sit around 3. The key is to balance the menu: some low-margin "loss-leader" dishes draw customers in, others make up for it.
Generate your food cost & recipe costing in Excel, for free.
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