UK menu prices are VAT-inclusive, but your food cost targets should be calculated on net (ex-VAT) sales.
This calculator gives you a two-step formula, a copyable workflow, and local operating checks you can apply quickly.
Quick Summary
- Step 1: Calculate the net ex-VAT price from food cost target.
- Step 2: Add VAT to get the menu price.
- Round only after VAT so margin stays on target.
Inputs You Need
- Food cost per portion (net of VAT)
- Target food cost % for the item
- VAT rate (standard rate is 20%)
- A price ladder you want to keep consistent
The UK Menu Pricing Formula (Two-Step)
Net price (ex VAT) = Food cost / Target food cost %
VAT-inclusive price = Net price x 1.20Step-by-Step Calculator
- Confirm your food cost per portion.
- Set the target food cost % for the item.
- Calculate the net price (ex-VAT).
- Add VAT to get the customer price.
- Round to your ladder ending.
- Back-check net margin after rounding.
Example 1 (Main Dish)
- Food cost: GBP 4.10
- Target food cost: 30%
Net price = 4.10 / 0.30 = GBP 13.67
VAT-inclusive price = 13.67 x 1.20 = GBP 16.40If your ladder supports it, test GBP 16.95 and recalculate net margin before rollout.
Example 2 (Drink)
- Food cost: GBP 0.80
- Target food cost: 20%
Net price = 0.80 / 0.20 = GBP 4.00
VAT-inclusive price = 4.00 x 1.20 = GBP 4.80You might list GBP 4.90 if drinks use .90 endings.
Local Scenario: Central London vs Leeds Suburban Site
| Trading context | Typical pressure | Practical move |
|---|---|---|
| Central London weekday lunch-heavy operation | Labour and occupancy pressure in short peaks | Protect margin on fast movers first, then adjust low-volume items |
| Leeds suburban neighbourhood operation | Value sensitivity with steadier daypart mix | Use bundle architecture and section-based ladders before full-menu increases |
Quick Pricing Table (Copy to Sheet)
| Item | Food cost | Target % | Net price (ex VAT) | VAT-inclusive price |
|---|---|---|---|---|
| Burger | GBP 3.80 | 30% | GBP 12.67 | GBP 15.20 |
| Pasta | GBP 4.50 | 30% | GBP 15.00 | GBP 18.00 |
| Latte | GBP 0.80 | 20% | GBP 4.00 | GBP 4.80 |
Sensitivity Check (5% Cost Increase)
If an ingredient rises 5%, estimate the impact immediately:
New food cost = Old food cost x 1.05
New net price = New food cost / Target %Use this to decide whether to reprice, adjust portioning, or change prep workflow.
Net vs Gross in the POS
- Costing and margin checks should use net ex-VAT sales.
- Menus and receipts show VAT-inclusive prices.
- If POS stores VAT-inclusive price only, keep a net-price column in your control sheet.
Price Ladder Planning (Simple Example)
| Section | Example ladder endings |
|---|---|
| Mains | .95 and .50 endings |
| Sides | .50 and .00 endings |
| Drinks | .90 endings |
| Desserts | .95 endings |
After rounding, back-check net margin with the same formula.
Before You Publish New Prices
- Update VAT settings in POS if needed.
- Recalculate top 10 sellers first.
- Check delivery menus separately.
- Confirm staff scripts for customer questions.
- Schedule one effective date across channels.
A Simple Monthly Trigger
ONS CPIH for December 2025 (released 2026-01-21) reported restaurants and hotels at 3.8%, above headline CPIH. When restaurant inflation stays above headline inflation, monthly reprice checks are safer than annual updates.
Common Mistakes
- Pricing from VAT-inclusive numbers and forgetting net margin.
- Rounding before VAT.
- Repricing once a year while costs move monthly.
- Using one food cost target for every section.
Related Guides
- UK Restaurant Menu Pricing Guide
- UK Menu Price Review Checklist
- UK Menu Price Rounding Guide
- UK Restaurant VAT Pricing Guide
- UK Restaurant Labour Cost Calculator
- UK Restaurant Prime Cost Calculator
Want This Done Automatically?
KitchenCost recalculates recipe costs, food cost %, and price targets as ingredient prices change.
If you want a faster way to protect margin, try KitchenCost.