Menu Pricing & Recipe Costing

This use case describes how to cost recipes and set menu prices for hospitality venues using Model Reef.

Rather than relying on static spreadsheets, you will:

• Maintain an ingredient library with costs per unit.

• Define recipe cost per portion.

• Link those costs to menu prices and sales volumes.

• See the effect on venue-level COGS and gross margin.

Model Reef does not replace a specialist stock system. Instead, it provides a planning-level recipe costing model that feeds into your P&L and margin analysis.

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When to use this pattern

Use this pattern when:

• You want a clear view of food and beverage margins by menu item or category.

• You need to test the impact of price changes or recipe changes on margin.

• You care about prime cost and contribution of key items.

If you run complex inventory or recipe management operationally, treat Model Reef as the forecasting and planning layer, not as the live operational system.

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Architecture overview

You will build:

1. Ingredient library

   • Ingredient cost per unit (for example per kilogram or per litre).

   • Units and conversion factors.

2. Recipe cost drivers

   • Quantities of each ingredient per serve.

   • Cost per portion for each menu item.

3. Menu pricing and volume drivers

   • Menu prices per item.

   • Forecast sales volumes and mix.

4. Revenue and COGS variables

   • Revenue per item or category.

   • COGS per item or category.

   • Aggregated venue-level COGS and margins.

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Step 1: Build an ingredient cost library

In the Data Library, create entries for each ingredient you care about at planning level, for example:

• Ingredient - Chicken Breast - Cost per kg.

• Ingredient - Olive Oil - Cost per litre.

• Ingredient - Flour - Cost per kg.

• Ingredient - House Wine - Cost per litre.

For each ingredient, specify:

• Units (for example kilograms, litres).

• Cost per unit.

• Tags indicating whether this is food or beverage.

Update these costs periodically to reflect supplier price changes.

If you already maintain ingredient costs in another system, you can export them and import into Model Reef as CSV series.

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Step 2: Define recipe quantities and yields per serve

For each menu item you want to cost, create drivers that represent recipe quantities per serving, for example:

• Recipe - Chicken Burger - Chicken Breast grams.

• Recipe - Chicken Burger - Bun units.

• Recipe - Chicken Burger - Sauce grams.

You can either:

• Maintain these directly in Model Reef as Modifier-style drivers, or

• Maintain them in a spreadsheet and import as a single cost-per-serve driver per menu item.

If you maintain them directly, make sure you document:

• Quantity per serve.

• Yield or wastage assumptions (for example trimmings, cooking loss).

This will make it easier to update recipes later.

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Step 3: Calculate cost per portion

Next, compute cost per serve for each menu item.

There are two implementation options:

• Inside Model Reef

  • Use formula-style variables or drivers to calculate:

    • Cost per Serve = Sum of (Ingredient Quantity per Serve × Ingredient Cost per Unit × Conversion Factor).

  • Store the resulting series as a driver such as Cost per Serve - Chicken Burger.

• Outside Model Reef

  • Perform the above calculation in a recipe cost spreadsheet or specialist system.

  • Import the resulting Cost per Serve series for each menu item into the Data Library.

In both cases, you end up with a time-series for cost per portion for each dish or drink that may change over time as ingredient prices change.

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Step 4: Set menu prices and sales volume drivers

In the Data Library, create drivers for:

• Menu price per item, for example:

  • Menu Price - Chicken Burger.

  • Menu Price - House Red Wine Glass.

• Sales volumes per period, for example:

  • Covers choosing Chicken Burger.

  • Glasses of House Red Wine sold.

Sales volumes can be derived from:

• Overall covers and mix percentages (for example 20 percent of mains are Chicken Burgers).

• Direct forecasts or historical POS data imported as CSV.

Menu prices can be stepped over time to reflect planned price increases.

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Step 5: Create revenue and COGS variables by menu item or category

For each menu item or category, create Revenue and COGS variables in the relevant venue branch, for example:

• Revenue - Chicken Burger - Venue City Centre.

• COGS - Chicken Burger - Venue City Centre.

Define formulas such as:

• Revenue - Item = Volume × Menu Price.

• COGS - Item = Volume × Cost per Serve.

You can also aggregate multiple items into category-level variables (for example Burgers, Salads, Starters) if you do not need item-level visibility everywhere.

Because COGS variables are typed as COGS, they will flow into gross margin correctly.

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Step 6: Analyse margins and test pricing scenarios

With recipe costs and menu prices wired into revenue and COGS, you can:

• Compute margin per item: Margin per Serve = Menu Price minus Cost per Serve.

• Compute percentage margin per item: Margin Percentage = Margin per Serve divided by Menu Price.

• Examine category-level margins by aggregating items.

Use dashboards to show:

• Top items by revenue.

• Top items by margin.

• Items with good revenue but weak margin.

• Items with high margin but low volume.

To test pricing or recipe changes:

• Adjust menu price or recipe cost drivers.

• Recalculate the model.

• Observe the effect on venue and group level P&L and Cash Waterfall.

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Step 7: Connect to venue-level planning

Finally, ensure that menu-level costing links back into your wider venue model:

• Sum menu COGS into the same COGS categories used in Venue-Level Cost and Margin Modelling.

• Align menu revenue with venue revenue variables where you need consistency.

• Use the same branches for venues so reports can show menu impact per venue.

You can also use recipe cost outputs to inform inventory and purchase planning at a higher level.

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Check your work

• Ingredient costs are realistic and updated for recent supplier changes.

• Recipe quantities and yields are representative of how dishes are actually prepared.

• Menu prices and volumes align with past performance or realistic plans.

• Venue-level margins reconcile to menu-level margins when aggregated.

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Troubleshooting

Recipe costing becomes too detailed to maintain

Focus on key items that matter most to cost and margin and group the rest into approximate categories.

Margins look off compared to historic performance

Compare modelled cost per serve with actual food cost percentages from the P&L and adjust recipes or shrinkage assumptions accordingly.

Too many menu items clutter the model

Use categories for day-to-day planning and reserve item-level detail for analysis in a separate view or exported data set.

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Related guides

• Build a Pricing Model

• Build a Machine Readable Model for Automation

• COA Import

• Editing Bounds