Rounding is where UK menu margin quietly leaks. Because customer menus are VAT-inclusive, the sequence matters: calculate ex-VAT target first, add VAT, then choose your ending.
When teams round too early, net margin and monthly reporting drift apart.
Quick Takeaways
- Set target price on ex-VAT numbers.
- Convert to VAT-inclusive menu price.
- Round after VAT, then back-check food cost %.
- Keep one ladder policy per section, not one policy for the whole menu.
The Correct UK Order
Net target price (ex VAT) = Food cost / Target food cost %
VAT-inclusive price = Net target price x 1.20
Rounded menu price = Selected ladder endingAfter rounding, convert back to net and verify that food cost % still meets your threshold.
Worked Example: One Item, Three Endings
Assumptions:
- Food cost: GBP 3.90
- Target food cost: 30%
Net target price = 3.90 / 0.30 = GBP 13.00
VAT-inclusive base = 13.00 x 1.20 = GBP 15.60Possible rounded endings:
| Rounded price | Net price (ex VAT) | Food cost % |
|---|---|---|
| GBP 15.50 | GBP 12.92 | 30.2% |
| GBP 15.60 | GBP 13.00 | 30.0% |
| GBP 15.95 | GBP 13.29 | 29.4% |
A small ending change can shift margin enough to matter on high-volume lines.
Local Operating Scenarios
Central London weekday lunch operation
Peak windows are short and labour pressure is high. The usual play is protecting margin on top sellers first, then adjusting low-volume items in the next cycle.
Leeds suburban neighbourhood restaurant
Guest value perception is more sensitive across the full basket.
Many teams keep tighter steps (for example .50 and .95) and rely on bundle design before broad headline increases.
Section-Based Ladder Example
- Mains:
12.95,13.95,14.95,15.95 - Sides:
3.50,4.00,4.50 - Desserts:
6.50,6.95,7.50 - Drinks:
3.50,3.95,4.50
The point is consistency inside each section, not forcing one ending everywhere.
60-Second Rounding Check
- Calculate net target from food cost.
- Add VAT for display price.
- Choose section ladder ending.
- Convert rounded price back to net.
- Recalculate food cost % and lock only if within threshold.
Monthly Rounding Checklist
- Verify VAT settings in POS.
- Recheck top 10 sellers first.
- Review delivery ladder separately from dine-in.
- Remove odd single-use endings.
- Document one effective date across all channels.
Why Timing Matters in 2026
ONS reported in the release published on 2026-01-21 (for December 2025 data) that UK restaurant and hotel inflation remained elevated. In this environment, monthly ladder checks are usually safer than annual updates.
Related Guides
- UK Restaurant Menu Pricing Guide
- UK Menu Pricing Calculator
- UK Menu Price Review Checklist
- UK Restaurant VAT Pricing Guide
- UK Restaurant Labour Cost Calculator
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