Menu pricing: from food cost to menu price

German rules, for people working in Germany. €4.20 food cost multiplied by 3.5 gives €14.70 before VAT and €15.73 at 7%. Gross margin must still cover staff and operating costs.

Calculate one dish or one drink

Calculation

Food cost before reserve (€)Normally net purchase cost. Non-deductible purchase VAT is part of costs under the § 19 scenario.

Cost reserve (%) – not yield loss

Pricing factor

Target food-cost ratio (%)

Existing selling price including VAT (€)

Sales scenario

Forward calculation: round selling price up

Only § 19: non-deductible purchase VAT

Only § 19: the entered food cost already includes purchase VAT

Example using the displayed inputs

Model calculation for Germany, subject to the assumptions below.

Calculated costs including reserve: €4.20
Selling price excluding separately charged VAT: €14.70
Selling price for the guest: €15.73
Actual food-cost ratio: 28.6 %
Actual factor: 3.5
Gross margin, explicitly not profit: €10.50

Gross margin is not profit. Staff and operating costs still need to be covered.

From food cost to selling price

A cost reserve increases purchase costs by the selected percentage. The price before VAT is then costs × factor or costs divided by the target ratio. Costs and prices are rounded to cents. An optional price step rounds the guest price up; ratio, factor and gross margin are then recalculated from that price.

Is the cost reserve the same as yield loss?

No. A 10% reserve on €4.20 gives €4.62. A real 10% quantity loss would require dividing costs by 0.9. The reserve is a planning amount, not a yield calculation.

Which VAT rate applies?

The scenarios use 7% for food and 19% for drinks under German rules. Combined food-and-drink packages must be split. Special VAT cases are not assessed.

What changes under the small-business exemption?

Eligibility under German § 19 UStG is not assessed. If it applies, non-deductible purchase VAT is part of costs. €4.20 net plus 7% purchase VAT gives €4.49 costs and, at factor 3.5, €15.72 without separately charged VAT. This is not described as a zero VAT rate.

Is gross margin my profit?

No. Gross margin is the selling price before VAT less calculated purchase costs. Staff, rent, energy and other operating costs still need to be covered. A €21.40 guest price with 7% VAT and €7.49 costs leaves €12.51 gross margin.

Sources and review date

Sources reviewed: 20 October 2026; incomplete full-text checks are marked.

§ 12 UStG: VAT rates (J17) · 2026-01-01 · 2026-10-20
§ 19 UStG: small business rule (J18) · 2025-01-01 · 2026-10-20

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General information, not tax or legal advice and not a payroll calculation. We calculate carefully using the stated German rules, but we cannot rule out errors. Your case may differ. Ask your payroll office, a tax adviser or your health insurer. Your entries stay in your browser; we do not store or send them.

Drafted with AI assistance.