How to price a menu when food costs keep rising: a Canadian owner's method

In Restaurants Canada's 2026 operator survey, food costs were the most cited pressure on the business. Prices at the till have risen too: Statistics Canada reported that food purchased from restaurants was up 3.2 percent over the year in March 2026, after early-year figures that were distorted by the tax holiday of the year before. If your menu has not changed in a year, it is probably out of date.

Why not raise every price by the same amount?

Because a flat increase treats every dish as if it had the same cost and the same price sensitivity. It does not. A pasta that uses few ingredients may still have a healthy margin after a cost rise, while a dish built on beef or cheese may have lost most of its margin. A flat rise also risks pushing guests over a mental limit on the dishes they order most.

Step 1: How do you cost a dish properly?

Take every ingredient, at the price on your latest invoice, and add up what goes on one plate. Include the garnish, the oil you cook in, the bread that comes to the table and a small allowance for waste. Use the invoice price per unit, divided by the yield after trimming. Do this for every dish that sells regularly. A spreadsheet is enough.

Step 2: Which dishes should you look at first?

Sort the menu by two columns: how many you sell, and what each leaves after food cost. The dishes that sell the most and leave the least are your priority. The dishes that sell little and leave little are candidates for removal. The dishes that sell the most and leave the most are your protected stars, so do not change them without cause.

Step 3: How do you decide what to change?

You have five levers, from gentlest to hardest:

1. Change the recipe, not the dish. A different cut, a different garnish, a small swap in the side.
2. Change the portion slightly. Only where guests will not notice, and never on the dish you are known for.
3. Change the price on low-sensitivity items. Sides, drinks, desserts and add-ons.
4. Change the price on a few mains. Raise by small steps, and avoid round numbers that jump a bracket.
5. Remove a dish. If it costs too much to make well, take it off.

Step 4: How do you present a price change?

Print a new menu, don't cross out old prices. Keep the layout the same, and remove dollar signs if your style allows, because guests read a bare number as softer than a price with a symbol. Train your team to answer a question about a price in one sentence: "Ingredient costs went up, and we want to keep the quality."

Step 5: How do you watch the effect?

Track sales per dish for four weeks after a change. If the number sold drops sharply on one dish, look at the price, the menu position or whether the item is out of stock. A small drop on a dish whose price you raised is normal and acceptable if the margin per plate is higher.

Which Canadian rules affect menu prices?

Menu prices in Canada are shown before sales tax, which is added at payment. In British Columbia and some other provinces, alcohol and food are taxed differently. Cost your drinks and your food separately. Check your province's rules on how a mandatory service charge or a delivery surcharge must be disclosed, and read the guidance on card surcharges before you add one.

What if a competitor drops prices?

You do not have to follow. A competitor that cuts prices to fill seats may be burning margin it cannot afford for long. Your regulars come for the food, the welcome and the room, and a small price gap rarely outweighs those. If you want to respond, do it with value, such as a set menu at an attractive price, rather than a cut across the whole menu. Check your own numbers first. If you can see that a lunch special lifts covers without losing money, run it. If not, hold your position.

Do you want the dishes you price well to bring the right guests in?

A fair price on a dish people rave about is the best marketing you have. Mosey is a food discovery app where diners search by dish and rate what they ate, so a plate that is worth its price gets noticed by the people looking for it. Nobody can pay to outrank you there, because Mosey Gold is earned from ratings alone.

More guides for your business:

• Ottawa's return-to-office rules and downtown restaurants: what changes for lunch and after-work trade
• Privacy law for restaurant guest data in Canada: PIPEDA, provincial acts and breach rules
• Why are restaurant costs still rising in Canada, and what is already set for 2027?

More in the Canadian guides for food businesses.