UK NLW + Employer NI Menu Pricing Playbook (2026): A Practical Reset for Small Restaurants

If you are waiting for April to “see what happens,” you are already late.

UK small restaurants heading into 2026 have two major payroll shifts to price in: higher minimum wage rates and changed employer NI settings. If those are not in your menu math now, your margin plan is fiction.

Quick Summary

• UK National Living Wage (21+) is set at GBP 12.71 from April 2026
• Employer Class 1 secondary NIC shows 15% for the 2026-27 tax year with updated thresholds
• ONS December 2025 release shows restaurants and hotels +3.8% YoY
• The safe workflow is: labour reset -> net price model -> VAT-inclusive publication

What changed (and why pricing drifts fast)

For independent operators, payroll changes hit contribution faster than broad CPI headlines. Most teams underestimate this because they still cost dishes with old prep-time assumptions and old loaded hourly rates.

Use this order:

1. Update statutory wage assumptions by role
2. Update employer NI assumption
3. Re-time top-selling dishes
4. Rebuild required net prices

The practical formula

For each menu item:

Required net price =
  (Food cost + Labour cost + Other variable costs)
  / (1 - Target contribution margin)

Then publish:

Guest-facing price (incl VAT) = Required net price x 1.20

This keeps cost logic and customer display logic separate.

Worked example (small high-street cafe)

Assumptions:

• Food and packaging cost per dish: GBP 5.10
• Labour time per dish: 11 minutes
• Updated loaded labour cost: GBP 16.20/hour
• Target contribution margin: 40%

Labour per dish:

16.20 x (11/60) = GBP 2.97

Required net price:

(5.10 + 2.97) / (1 - 0.40) = 8.07 / 0.60 = GBP 13.45

VAT-inclusive menu price:

13.45 x 1.20 = GBP 16.14

Practical menu point: GBP 16.20 or GBP 16.25

How to roll this out without guest shock

1. Protect 3 to 5 value anchors
2. Apply larger increases to labour-heavy items
3. Keep one effective date across POS, website, and delivery channels
4. Train staff on one short explanation script

Suggested script: “We updated selected prices to reflect wage and operating cost changes for 2026 while keeping core value items as stable as possible.”

14-day post-launch scorecard

• Item mix change
• Average check
• Contribution pounds by top 20 items
• Guest complaints mentioning price

If mix is stable and contribution improves, hold. If one item drops sharply, rework portion/bundle before another increase.

Checklist

• April 2026 wage assumptions updated
• Employer NI assumptions updated
• Top 20 items re-timed and re-costed
• Net-to-VAT price conversion checked
• 14-day scorecard active

Related Guides

• UK Restaurant Menu Pricing Guide
• UK Restaurant Labour Cost Calculator
• UK Restaurant VAT Pricing Guide
• UK Menu Price Review Checklist

Sources (checked on 2026-02-14)

• GOV.UK - Minimum wage rates for 2026
• GOV.UK - Rates and thresholds for employers 2026 to 2027
• ONS - Consumer price inflation, UK: December 2025
• GOV.UK - VAT rates
• Reddit - r/restaurantowners: Menu price increases and customer response