Start from the target, not an automatic multiplier
If the target margin is 75%, ingredient cost may represent at most 25% of the excluding-tax menu price.
Maximum cost share = 100% − target margin
Minimum price = ingredient cost ÷ maximum cost share
A minimum price must stay up to date
While directing two food courts and managing margins across more than fifty restaurants in total, Alexandre Colas encountered the same problem in different forms: a one-off calculation quickly becomes obsolete. A reference becomes unavailable, a supplier changes a price, a serving is adjusted or the menu evolves.
Toby’s minimum price is therefore not a figure frozen in a report. It is recalculated from the composition and the purchase prices currently entered. When a base value changes, the affected recipes follow without a team having to find and repair a spreadsheet formula.
Example verified with the Toby engine
For a recipe costing €3.20 per serving and a 75% target margin:
€3.20 ÷ 25% = €12.80 excluding tax
At €12, the recipe leaves €8.80 before other costs and reaches 73.3%, so it remains below target. At €12.80, it leaves €9.60 and reaches exactly 75%.
The Toby engine places no arbitrary ceiling on price. It calculates a reference, while the operator keeps the final decision based on market, menu and perceived value.
Why one multiplier is not enough
Applying the same multiplier to every recipe is convenient, but it hides the important question: how much of the selling price must remain after ingredients? Two businesses can reasonably choose different targets because their costs and positioning differ.
The calculation must also be refreshed when an ingredient price, portion or waste rate changes. A minimum price based on an old cost may no longer reach the target.
Test several prices
For every price under consideration, read these figures together:
- margin before other costs;
- margin percentage on sales;
- food cost percentage;
- distance from the target.
A commercial price point may sit slightly above or below the mathematical suggestion. Toby shows the consequence of that decision instead of claiming there is one mandatory price.
Limit of a minimum price
Reaching a margin target does not prove overall profitability. The final price must still reflect applicable taxes, all other costs, the market and the experience actually sold.