Knowing how to cost out a recipe will give you an idea about where to set the price of your menu items. The problem is, this leaves out an important part of the equation: your customer.
Take a cheeseburger for example. What is a cheeseburger on your menu worth?
There are a lot of possible answers here. You could talk about the size, and the quality of meat that goes into the burger. You could focus on the food cost. While these are important factors, they don’t answer the question of what any item on your menu is worth.
The answer is, a cheeseburger is only worth what your customers are willing to pay for it. You could use the finest ingredients, and pay top dollar for a chef to prepare your cheeseburger, but if your customers are not willing to pay the price you set, your burger will not sell.
When you cost out your menu you need to keep your customer in mind. If they are not going to be willing to spend above a certain point, you need to adjust your recipes or your menu mix in order to keep the prices at a level they are comfortable with.