How to Calculate Profit Margin per Menu Item in a Restaurant

To calculate the profit margin of a restaurant dish, subtract its cost from its selling price, divide the result by the selling price, and multiply by 100. For example, a dish sold for 50 with direct and variable costs of 30 generates a contribution of 20 and a contribution margin of 40%.

Include ingredients, waste, packaging, and relevant variable costs. Use revenue excluding taxes collected on behalf of tax authorities, and account for fixed operating expenses when evaluating net profitability. Try Cash Cloud for free to explore purchasing, inventory, and sales management tools.