Define a complete variable cost floor
Use usable ingredient cost, direct labor, packaging, and relevant order costs. In a fictional example these total $5.40 before percentage fees. Record which costs are excluded so the resulting contribution is not mistaken for net profit. Give dine-in, takeaway, and delivery their own assumptions where the economics differ.
Compare a target with realistic menu prices
At a 3% fee and a 30% target contribution margin, target net price is $5.40 ÷ (1 − 0.03 − 0.30) = $8.0597, about $8.06. At a rounded $8 price, contribution is $8 × 0.97 − $5.40 = $2.36, or 29.5%. At $8.50 it is $2.845, or about 33.47%. Use net revenue consistently when a displayed price includes collected tax.
Test volume rather than assuming it holds steady
At 100 sales at $8, total contribution is $236. At 80 sales at $8.50, it is $227.60. The higher contribution per order does not guarantee a higher total. These figures are scenarios, not demand forecasts. Compare likely volume, preparation capacity, waste, and nearby alternatives before changing the menu.
Review the decision with actual service data
After a change, track units sold, net revenue, discounts, waste, and contribution by channel over comparable periods. Mark unusual promotions or closures. Revisit supplier price and yield assumptions before blaming demand alone. A pricing model supports judgment; it does not determine what customers will buy or ensure the business covers its fixed costs.
Use your own operating data
Supplier prices, yields, labor rates, and channel fees change. KitchenMargin treats them as editable inputs rather than universal facts.