US Restaurant Utility Cost Guide: Electricity, Gas, and Water

Utilities are not overhead “somewhere else.” They are a real ingredient in every long-simmer, oven-baked, or freezer-heavy menu.

If you are not allocating electricity, gas, and water into your menu costs, your pricing looks healthier than your P&L.

This guide shows a simple way to add utility cost into item pricing without turning into an energy analyst.

Quick Summary

• Utilities should be treated as per-batch costs for heat-heavy menus
• Use cost per operating hour to build a repeatable utility baseline
• Energy prices moved materially in 2025, so utility drift is real
• Reprice utility-heavy items quarterly or faster

Why Utilities Matter More in 2026

In the 2025 CPI review, the U.S. Bureau of Labor Statistics reported:

• Electricity up 6.7% from Dec 2024 to Dec 2025
• Utility (piped) gas service up 10.8% in the same period
• Food away from home up 4.1%

Energy inflation moves faster than menu pricing, which means your utility-heavy items leak margin first.

USDA’s Food Price Outlook also forecasts food-away-from-home prices rising around 3.1% in 2026, so cost pressure continues even if you slow menu price changes.

Step 1: Build a Monthly Utility Ledger

Track only three numbers first:

• Electricity
• Gas (or propane)
• Water + sewer

Use your last 6 months of bills and calculate the average monthly utility cost.

Step 2: Convert to Cost per Operating Hour

This is the simplest allocation method:

Utility cost per hour = Monthly utilities ÷ Monthly operating hours

Example:

• Monthly utilities: $2,400
• Monthly operating hours: 300

$2,400 ÷ 300 = $8/hour

Now you can assign utility cost per batch or per menu item.

Step 3: Allocate by Batch or Cook Time

Use this formula for heat-heavy prep:

Utility cost per batch = Utility cost per hour × Batch cook hours
Utility cost per item = Utility cost per batch ÷ Portions per batch

Example:

• Utility cost per hour: $8
• Broth batch: 5 hours
• Portions: 40 bowls

Utility per batch = $8 × 5 = $40
Utility per bowl = $40 ÷ 40 = $1.00

That $1.00 is real cost and needs to be in your item margin.

Utility-Heavy Menu Types

These categories should always include utility cost in item pricing:

• Long-simmer broths and stocks
• Smoked or slow-roasted meats
• Deep-fry heavy menus (oil + heat time)
• Ice cream and frozen desserts (freezer load)
• Bakery items with long bake cycles
• Dishwasher-heavy service models

Practical Tracking Shortcuts

If you do not want to calculate per item, use these shortcuts:

• Add $0.30–$1.00 per bowl for long-simmer soups
• Add $0.15–$0.40 per baked item for oven-heavy items
• Add $0.10–$0.25 per dessert for freezer-intensive items

Mark them as utility add-ons and update quarterly.

Pricing Decisions That Protect Margin

• Price utility-heavy items one tier higher than they look on ingredients alone
• Build a utility buffer into delivery or catering items with long cook times
• Keep a monthly utility variance note in your menu costing file

Quick Checklist

• Utility ledger updated (last 6 months)
• Cost per operating hour calculated
• Utility add-ons applied to slow-cook items
• Quarterly reprice scheduled
• Utility-heavy items flagged in the menu

Do This Now

• Weigh and record 3 portions of your main ingredient
• Calculate the cost per portion using your supplier invoice
• Set a portion standard and train your team
• Review your current menu price against 28-35% food cost target
• Update your pricing if food cost is above 35%
• Schedule a monthly cost review with your team

Related Guides

• Recipe Costing Guide
• Food Cost Ratio Guide
• Prime Cost Guide
• US Ramen Restaurant Cost Guide
• Menu Engineering Guide

Want This Automated?

KitchenCost tracks ingredient costs, yields, and utility-heavy batches so you can reprice faster.

Start at the KitchenCost landing page.

Sources

• BLS: Consumer Price Index 2025 in Review
• USDA ERS: Food Price Outlook (Summary Findings)