Markup vs. Margin — The Key Difference
Markup is calculated on cost. A 230% markup on a $8.50 dish = $8.50 × 2.30 = $19.55 added = $28.05 price.
Margin is calculated on selling price. A 30% food cost = 70% margin. The same $8.50 dish at 30% food cost = $8.50 ÷ 0.30 = $28.33 selling price.
Confusing the two is a common and costly mistake. Always manage your food cost in terms of margin (cost as % of selling price), not markup.
| Food Cost % | Margin % | Markup % |
|---|---|---|
| 25% | 75% | 300% |
| 28% | 72% | 257% |
| 30% | 70% | 233% |
| 33% | 67% | 203% |
| 38% | 62% | 163% |
Start with the Right Cost
Better menu margins start with lower ingredient costs. FrillPick compares your distributor prices so your recipe cost baseline is as low as possible.
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Frequently Asked Questions
Is markup or margin more useful for restaurant pricing?
Margin. Restaurants track performance as food cost percentage (cost ÷ revenue), which is a margin calculation. Use margin to price your menu and benchmark your performance. Markup percentages are more common in retail and wholesale — if a distributor quotes you a markup, convert it to margin using this calculator.
Why do high markup percentages look different from food cost %?
Because they are calculated on different bases. A 233% markup and a 30% food cost are the same thing — $8.50 cost on a $28.33 menu price. The markup looks large because it is relative to cost. The food cost % is smaller because it is relative to selling price.