GP, or gross profit, is what a dish leaves you after paying for the food on the plate. It’s the number that tells you whether a dish is pulling its weight, and it’s the one most menus are priced on.
The trouble is that a lot of owners work it out from the menu price. In the UK that price includes 20% VAT, which isn’t yours. Leave it in and every dish looks more profitable than it is.
The GP formula
A worked example: the classic burger
Your burger is £15.95 on the menu. The bun, patty, cheese, salad, sauce and fries cost £4.10 per portion.
Classic burger Costing
The VAT mistake, side by side
(£15.95 − £4.10) ÷ £15.95. Looks great, but £2.66 of it was never yours.
(£13.29 − £4.10) ÷ £13.29. This is the real GP the burger makes.
Five points doesn’t sound like much. Across a whole menu and a full year, it’s the gap between thinking you’re on target and wondering where the money went.
How to price a dish to hit your target GP
Work it backwards. Divide the food cost by what’s left after your target GP, then add VAT back on.
What the burger needs to cost to hit each target
Same £4.10 food cost, different target GP
| Target GP | Net price | Menu price |
|---|---|---|
| 65% | £11.71 | £14.06 |
| 70% | £13.67 | £16.40 |
| 75% | £16.40 | £19.68 |
Quick GP calculator
Type your own numbers. VAT is taken off for you.
What is a good GP for a restaurant, pub or takeaway?
There’s no single right number, but most UK food operators aim for roughly 65 to 70% GP on food. Dishes with expensive proteins like steak usually run lower, and that can be fine if they bring in more pounds per plate. Anything sitting under 60% is worth a closer look.
Some cold takeaway food can be zero-rated for VAT. If you sell a lot of cold takeaway items, check with your accountant which rate applies before you set prices.
How much is not knowing your GP costing you?
Slide to your weekly food takings and the GP you think you’re running at.
left on the table against a 70% GP target
Based on takings including VAT at 20%, compared with a 70% food GP. An estimate, not a forecast.
Key points
- Always take VAT off the menu price before working out GP
- GP % = (net price − food cost) ÷ net price × 100
- Price new dishes backwards from your target GP
- Recheck GP every time a supplier price changes
Common questions
Is GP the same as profit?
No. GP only covers food cost. Wages, rent, energy and everything else come out of your GP, and what’s left after that is net profit.
Is GP % the same as margin?
Yes, in hospitality GP % and gross margin mean the same thing. Food cost % is the other side of it: a 70% GP means a 30% food cost.
How often should I recalculate GP?
Whenever an ingredient price changes, and as a full menu check at least once a month.
DishProfit works out GP on every dish for you
Enter your ingredients once and DishProfit takes the VAT off, calculates GP £ and GP % on every dish, and tells you the exact price that hits your target.
- VAT handled automatically
- Target price for every dish
- Colour-coded: on target, close or below
