The Most Common Pricing Mistakes Restaurants Make

If you’re not sure where your menu is leaking money, you’re not alone. Many restaurants repeat the same costly patterns: pricing based on competitors, ignoring prep time, undercharging for add-ons, or keeping dead items too long. This page helps you audit your menu quickly and fix the highest-impact issues first — without needing complex spreadsheets.

Before you “fix pricing,” make sure you’re not solving the wrong problem. Start with the basics: Food Cost Percentage Explained (and what to aim for), then align your menu logic with How to Price a Dish: Cost + Margin + Psychology. NetSuite’s overview of restaurant pricing strategies reinforces that menu pricing isn’t a hunch — it’s cost math plus market awareness and psychology. NetSuite

Copying the place next door feels safe, but it’s often the fastest way to lock in bad margins. Your food cost, rent, labor, and portioning are not identical to theirs. Even if you match their price, you might be losing money where they’re making it.

Instead, build prices from your plate cost and your contribution margin target — then sanity-check against the market. A practical reference for the “start from costs, then refine with strategy” approach is NetSuite’s restaurant menu pricing strategies. NetSuite

Some dishes aren’t expensive in ingredients — they’re expensive in time. If a dish requires high-skill prep, many steps, or slows the line, it must earn that complexity through price or margin. Otherwise you get the worst combo: stress + slower service + low profit.

If you want a simple framework: stop thinking only in percentages and start thinking in “what’s left after food cost.” Menu engineering guidance often ties profitability to contribution margin (price minus cost) and popularity, which is the foundation for making better decisions about what to feature and what to fix. A good explainer is Lightspeed’s menu engineering guide. Lightspeed

This links directly to your winners: Engineering Your “Star” Items (high profit + high sales).

“Extra cheese,” “add chicken,” “double sauce,” “gluten-free bread,” “side salad upgrade” — these are profit opportunities only if the pricing is aligned to cost and effort. Many restaurants price add-ons too low because they feel small, but small add-ons scale fast when they’re popular.

A quick fix:

List your top 10 modifiers by frequency.

Cost them properly (including portion).

Price them to preserve your margin, not to “feel nice.”

If portion drift is part of the problem, fix the system first with Portion Control: The Hidden Key to Better Profit — because “extra” becomes chaos when portions aren’t standardized.

Restaurants often raise prices to “fix profitability,” but the bigger wins come from consistency. Extra fries, heavier scoops, generous pours — they feel harmless in the moment and become massive over a month.

If you suspect drift, don’t argue with staff. Audit the system:

Are tools available at the station?

Are portions defined in grams/ml?

Are you doing quick spot checks weekly?

For industry-backed guidance on why portion control matters for food cost control, this restaurant association food cost control PDF explicitly highlights monitoring portion control and training as essential. Restaurant Association

Discounts feel like an easy sales lever, but they can quietly train customers to wait for deals — while your margin collapses. The biggest danger is a deal that sells a lot and still loses money.

If you run bundles, build them with margin rules first:

Choose items with controlled portions.

Protect contribution margin.

Keep “upgrade” options paid, not free.

That’s why this page pairs with How to Build a Profitable Combo / Meal Deal — combos should raise average order value without sacrificing profit.

Every menu has items that used to sell. The mistake is leaving them there out of habit, nostalgia, or fear of upsetting a few regulars. Dead items create hidden costs:

waste and spoilage,

extra prep tasks,

slower training,

messy inventory and purchasing.

Menu engineering solves this with a simple idea: classify items by popularity and profitability, then remove or redesign low-value items. Lightspeed describes menu engineering as categorizing items based on popularity and profitability to guide what to feature and how to price. Lightspeed

If you’re not ready to delete items, you can “rescue” them:

rename and reposition,

adjust portion,

adjust price,

or convert them into limited-time specials.

Supplier prices move constantly, and if you don’t update your recipe costing, your menu becomes outdated in slow motion. This is how restaurants wake up and realize a best-seller is “busy but unprofitable.”

A realistic rhythm:

weekly: update costs for top 10 ingredients,

monthly: review top and bottom items,

quarterly: re-engineer the menu.

If you want an operator-friendly walkthrough of pricing basics and what to watch for, Toast’s guide on how to price food to sell is a solid external reference. Toast POS

Even if your pricing is correct, your menu can still fail if it doesn’t guide attention toward high-margin items. That’s why “Star” items need more than good numbers — they need:

better placement,

better naming,

better photos (when appropriate),

and a clearer “good/better/best” structure.

That’s exactly what you do in Engineering Your “Star” Items (high profit + high sales), and it builds on the psychology you learned in How to Price a Dish: Cost + Margin + Psychology.

Pick your top 10 sellers and bottom 10 sellers (by volume).

For each top seller, write two numbers: plate cost and menu price.

Mark anything that is:

popular but low margin (needs portion/price/recipe adjustment),

high margin but low popularity (needs positioning/promotion),

low popularity and low margin (candidate to remove).

Fix one variable at a time (price or portion or placement), then review results after 2–4 weeks.

If you need the foundation numbers to make this audit accurate, go back to Food Cost Percentage Explained (and what to aim for).