Target Cost %
Definition:
Target Cost % (also known as target pour cost) is the percentage of a menu item’s selling price that you aim to spend on ingredients. It’s a goal, not a calculation — used to reverse-engineer menu prices based on desired profitability.
Formula:
Menu Price = Ingredient Cost / Target Cost %
In Context:
Setting a target cost percentage helps bar managers stay consistent with their pricing strategy across a menu. For example, if you aim for a Target Cost % of 20%, and a drink costs $2.50 to make, then:$2.50 / 0.20 = $12.50
That’s the menu price you'd set to stay within your goal.
In Spec, users can choose to price items using Markup, Target Profit Margin, or Target Cost %, depending on how they prefer to manage profitability.
Pro Tip:
Target Cost % is ideal when you want to anchor your pricing to profitability goals, especially in programs where consistency is more important than dynamic pricing. It’s also helpful when presenting your pricing strategy to ownership or financial stakeholders.
Example:
A high-end bar might target an 18% cost, while a dive bar might accept 25–30% to stay price-competitive. Spec lets you set different targets per menu to fit your concept and margin needs.
Related Terms: