LTOs create buzz, but they also create hidden costs. If you don’t price them correctly, they are the fastest way to leak profit.
Quick Summary
- LTOs cost more because of small-batch buying and training
- Price with a built-in waste buffer (5-10%)
- Decide early: test (small batch, high price) or boost (big batch, lower price)
- Track LTO profit separately from the core menu
The LTO Cost Trap
Most LTOs have:
- Higher ingredient costs (small orders)
- Extra packaging or garnishes
- Training time and slower line speed
Those costs must be inside the price, not absorbed by your margins.
LTO Pricing Formula
LTO price = (Food + Packaging + Waste buffer + Training buffer) / Target food cost %Use a waste buffer of 5-10% if demand is uncertain.
Example: Seasonal Sandwich
- Food cost: $2.40
- Packaging: $0.30
- Waste buffer (7%): $0.19
- Training buffer: $0.15
- Total cost: $3.04
- Target food cost: 30%
$3.04 / 0.30 = $10.13Round to $10.50 or bundle for a higher ticket.
Decide Early: Test or Boost
Test LTO
- Smaller batch
- Higher price
- Focus on learning
Boost LTO
- Bigger batch
- Lower price
- Focus on volume
Don’t mix the two goals.
When to Keep It
Promote an LTO only if:
- It hits margin target for 4+ weeks
- Prep time is stable
- It doesn’t slow core menu items
Do This Now
- Decide: is this LTO a test or a volume boost?
- Calculate the cost of the LTO including small-batch premiums
- Add a 5-10% waste buffer for uncertain demand
- Divide LTO cost by 0.30 to find your menu price at 30% food cost
- Set a 4-week trial period and track margin weekly
- Decide keep/kill based on margin and prep time consistency
LTOs are powerful, but only when the price reflects the true cost.
KitchenCost lets you test LTOs without breaking your core menu margins.