Menu Margin Calculator for Philippine Cafés and Restaurants
Philippine menus show VAT-inclusive prices, which makes the obvious margin calculation wrong by about 12% before you have even started. Put a real item in below and see what it actually earns — including what is left after a Senior Citizen or PWD discount.
Your numbers
Enter a menu price as your customer sees it — the price with VAT already in it, which is how Philippine menus normally work.
Cost of the recipe and its cup, lid, straw or box. Exclude rent, wages and utilities — those are fixed costs, handled below.
Rent, wages, utilities, internet. Used only for the break-even estimate.
What that item actually earns
- VAT inside the price (12%, remitted)
- ₱17.68
- Left after VAT
- ₱147.32
- Less ingredients & packaging
- −₱62.00
- Gross profit per item
- ₱85.32
Gross margin
57.9%
of the ex-VAT price
Markup on cost
137.6%
a different number
Break-even volume
704
items / month
Healthy
This is the band most Philippine cafés and drink shops aim for on their main sellers, and it leaves room for the occasional discount.
Break-even assumes every item sold carries this same margin and covers all your fixed costs. Real menus mix items, so treat it as a floor, not a forecast.
What the same item earns on a Senior Citizen or PWD sale
Under RA 9994 and RA 10754 that sale is VAT-exempt and takes 20% off the VAT-exclusive amount. Most operators never work out what that does to the margin on that plate.
- Amount the customer pays
- ₱117.86
- Gross profit on that sale
- ₱55.86
- Gross margin on that sale
- 47.4%
- Margin lost vs a full-price sale
- ₱29.46
Illustrative computation, not tax advice — confirm treatment with your accountant. The point is that the discount is a computation, not an estimate, which is why a POS has to apply it under the rule rather than let the cashier judge it.
How this is calculated
No black box. These are the four steps, so you can check the numbers against your own books.
Take the VAT out first
A ₱165 menu price with 12% VAT inside it is not ₱165 of revenue. The VAT portion is 165 × (0.12 ÷ 1.12) = ₱17.68, so ₱147.32 is what the business keeps before costs. If you are not VAT-registered, skip this step entirely — that is what the checkbox is for.
Subtract the plate cost
Ingredients plus the cup, lid, straw, box or wrapper. Not rent, not wages, not Meralco — those do not change when you sell one more latte, which is exactly why they are handled separately in the break-even figure.
Call the remainder gross profit, and divide by the ex-VAT price
Gross margin is gross profit ÷ the ex-VAT price. Dividing by the VAT-inclusive price instead is the most common mistake, and it flatters the number by roughly 12%. Markup — profit ÷ cost — is a different ratio again, which is why both are shown.
Then check it against fixed costs
A 60% margin on an item nobody buys is not a business. Break-even volume = monthly fixed costs ÷ gross profit per item. Compare that number against what you actually sell in a month, not what you hope to.
Margin questions we get asked
What is a good gross margin for a café or restaurant in the Philippines?
There is no universal number, and anyone quoting one is guessing about your rent. As a working guide: drinks usually sit higher than food because the plate cost is lower and the preparation is quicker; many cafés aim for the 55-75% band on their main sellers and accept lower margins on anchor items they are known for. What matters more is whether the blended margin across your real sales covers fixed costs with something left over. That is the number to defend, not a benchmark.
Should my menu prices include VAT?
In the Philippines, displaying VAT-inclusive prices is normal practice and is what customers expect to see. The trap is doing your margin maths on that displayed figure as though VAT were yours to keep. It is not: it is collected on behalf of the government and remitted. Always compute margin on the ex-VAT amount.
Do Senior Citizen and PWD discounts really reduce my margin?
Yes, on that sale. The transaction is VAT-exempt and the 20% discount is taken off the VAT-exclusive amount, so the customer pays noticeably less than the sticker price while your ingredient cost is unchanged. The calculator shows exactly what is left. This is precisely why the discount should be computed under the rule rather than estimated at the counter — an eyeballed discount is a silent margin leak.
Is gross margin the same as food cost percentage?
They are two views of the same arithmetic. Food cost percentage is the plate cost divided by the ex-VAT selling price; gross margin is what remains. A 38% food cost is a 62% gross margin. Operators tend to talk about food cost, accountants talk about margin, and neither is more correct.
How do I find my true cost per serving?
Weigh or measure what actually goes into the recipe, cost each ingredient at the price you really pay, and divide by the number of servings the batch yields. Do it once properly for your top ten sellers and you will find at least one item you have been mispricing. It is tedious by hand — which is exactly why recipe-level costing belongs in software, and honest note: automatic ingredient depletion from recipes is on the WSI POS roadmap, not in the product today.
Does this calculator store or send my numbers anywhere?
No. The arithmetic runs entirely in your browser. Nothing is submitted, logged or stored, and you do not need an account or an email address to use it.
Where this connects to a POS — honestly
WSI POS records cost price per product and can show gross profit and margin on your reporting, so you are not doing this in a spreadsheet every month. What it does not do today is deplete ingredient stock automatically from recipes — that is on the roadmap. So the plate cost in this calculator is still something you measure and enter yourself.
Know your margin, then know it live
Once you know what each item should earn, the next question is whether your till is actually capturing it — every shift, at every price.
Related: how a WSI POS deployment is scoped · the full FAQ