I don’t suggest to anyone to divide by a budgeted cost percentage to get their sales prices regardless. This method of pricing doesn’t do well to include every cost of doing business. If you are only considering your food cost when you set your price, you have no way of guaranteeing your labor cost, rent, and every other expense will be within your budget. You could end up underpricing, or worse, over-pricing for your market also. Here is an article I wrote on pricing food that gives you a more comprehensive method for pricing that can nearly “guarantee” profit while preventing you from overpricing: http://blog.bodellconsulting.com/2008/06/26/pricing-food-why-youre-doing-it-wrong-and-how-to-fix-it/.

If you take a recipe sheet with all the ingredients needed to make a “batch” of smoked brisket (i.e. raw brisket, rub or marinade, etc), and add up the cost of all the ingredients in that batch, you only then have to calculate how many portions of sliced brisket is yielded from that batch to have a recipe cost for sliced brisket. Then, the trimmings that are left over will already have been costed into a recipe and will not have to be costed out again in your chopped brisket recipe.

Multiply your recipe costs x the items sold for each item, add the cost of selling each item together to get a total ideal food cost. This is what your food should have cost you to sell.

Once you know what your food should have cost you to sell, you can compare it to your actual food cost to see if there is a variance. If your actual costs are over your ideal costs, then your food cost is too high. If they are within 1.5% of each other, your food cost is not out of line, however, your prices may still be too low if your food costs are in line but you are not making money. Of course, there are many things in a restaurant that can make you lose money. For a good “rule of thumb”, add your food cost percentage and your labor cost percentage. It should be below 65% in most cases.