menu-price-engineering

---
name: menu-price-engineering
description: Works out the menu price a dish needs to hit a stated target gross profit percentage, starting from its true VAT-exclusive ingredient cost and the VAT it will carry once sold. It shows the arithmetic in full, keeps VAT-exclusive cost separate from the VAT-inclusive price a customer pays, and flags any dish where hitting the target means a price that looks out of place. Use once a dish is costed and before it goes on the menu, and whenever a target changes.
---

# Pricing the dish to the margin you actually need

Give this a dish's VAT-exclusive cost and a target gross profit percentage. Get back the VAT-exclusive price needed, the VAT-inclusive price charged, and the true gross profit delivered.

## What it does

1. **Start from the VAT-exclusive cost, never the VAT-inclusive one.** Standard VAT is 20%, since 4 January 2011 (HMRC, VAT rates). Most eat-in food is standard-rated: "You must always charge VAT at the standard rate if you make a supply of food and drink for consumption on the premises" (VAT Notice 709/1, 3.1). Mixing a VAT-inclusive cost into a margin sum understates true profit by roughly a sixth.
2. **Apply the target to the VAT-exclusive cost**: required price is cost divided by (1 minus target GP, as a decimal).
3. **Add VAT to get the customer's price**, at the rate that applies to how the dish is sold (see vat-liability-checker). The menu price is VAT-inclusive; the margin sum is not.
4. **Show the working**: cost, target GP%, VAT-exclusive price, VAT rate, VAT-inclusive price, and GP% recalculated from the final price.
5. **Flag a sharp move from the dish's last price**, unsoftened. A 40% rise needed to hit target is the owner's decision, not this skill's to talk away.

## Then it checks

1. The cost used is stated VAT-exclusive, with its source named.
2. The VAT rate matches the dish's actual sale type, not a default assumption.
3. The recalculated GP%, worked back from the final price, matches the target within rounding.
4. Every figure is shown with its formula.
5. Any price change over 10% from a known prior menu price is named explicitly.

Any check fails: name it, redo once. Failed twice: say what is wrong and stop.

## Rules

- Public information only. Never invent a fact, a number or a quote, or a target gross profit; it is set by the owner.
- Anything sent in someone's name says whose name it is.
- Never state an industry-average GP% or food cost % as fact; no verified UK-wide figure was found, and a vendor's marketing figure is not a benchmark.
- Never treat a VAT-inclusive price as the cost base for a margin calculation.
- Working document for the owner to check against their own costs and VAT position, and their accountant to confirm the treatment and decision. Not tax or accountancy advice.

## Built from
- HMRC, "VAT rates", https://www.gov.uk/vat-rates, read 4 November 2026: the 20% standard rate since 4 January 2011, used to convert the VAT-exclusive price to the price charged.
- HMRC, "Catering, takeaway food (VAT Notice 709/1)", https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091, published 7 October 2013, updated 8 June 2026, read 4 November 2026: section 3.1, confirming most eat-in food is standard-rated.

# menu-price-engineering

## You are given
Dishes, each with a VAT-exclusive ingredient cost (ideally dish-cost-builder's output), a target gross profit percentage set by the owner, the VAT treatment for how the dish is sold (`standard`/`zero`/`reduced`, with rate), and, where known, the current VAT-inclusive menu price.

## Produce
Write into a `./menu-price-engineering-output/` folder:

1. `pricing-build.csv`: `dish_name`, `cost_ex_vat`, `target_gp_percent`, `required_price_ex_vat`, `vat_treatment`, `vat_rate_percent`, `required_price_inc_vat`, `current_menu_price_inc_vat`, `price_change_percent`, `recalculated_gp_percent`, `formula_shown`. `required_price_ex_vat` = `cost_ex_vat / (1 - target_gp_percent/100)`. `required_price_inc_vat` = `required_price_ex_vat * (1 + vat_rate_percent/100)`. `recalculated_gp_percent` = `(required_price_ex_vat - cost_ex_vat) / required_price_ex_vat * 100`, must match target within 0.1 point. `formula_shown` is the exact arithmetic string, e.g. `4.80 / (1 - 0.68) = 15.00`.
2. `large-moves.csv`: `dish_name`, `current_menu_price_inc_vat`, `required_price_inc_vat`, `price_change_percent`, `direction` (`increase`/`decrease`). One row per dish where the change exceeds 10% either way.
3. `gaps.md` - numbered list of: any dish with no VAT treatment; any dish where recalculated GP% misses target; any dish whose cost isn't marked VAT-exclusive; every row in `large-moves.csv`, repeated first.

## Rules
- Codex calculates, checks and records. It never sets a target GP%, never assumes an unsupplied VAT treatment, and never softens a large price move to make it less visible.
- Every formula is written out with the real numbers used, not a generic description.
- `cost_ex_vat` is used exactly as supplied; if VAT status is unstated, record `cost VAT status unconfirmed` in `gaps.md` rather than assuming.
- Never apply a VAT rate not supplied for that dish; if none is given, leave `required_price_inc_vat` blank and flag it.
- Never write an industry-average GP% or food cost % into any file.
- British English, GBP, DD Month YYYY dates. No em dashes.
- Every file ends with: this is a working document prepared for the owner to check against their own costs and VAT position, and for their accountant to confirm the VAT treatment and the pricing decision. It is not tax or accountancy advice.

## Return
The absolute path and row count of each file. For every dish: cost, target GP%, required ex/inc-VAT prices, formula string. Every dish in `large-moves.csv` with its change and direction. The number of dishes whose recalculated GP% missed target, and by how much. The number with no VAT treatment or unconfirmed cost status. The `gaps.md` item count.