How to Price Restaurant Menu Items in Canada

Running a restaurant in Canada right now is tough. That's exactly why you can't just wing it when it comes to menu pricing. You need a solid strategy backed by actual numbers, not guesswork.

In this guide, we walk you through the pricing models that actually work, show you the math behind profitable menu items, and share tactics that other Canadian restaurant owners are using right now to stay in the black. We've got the tools, templates, and local data you need to price your menu with confidence.

Why Menu Pricing Strategy Matters

Pricing is one of the most powerful levers you can pull to improve profitability. But higher prices don’t automatically equal higher profits — especially in a climate where 84% of Canadian diners say they are more selective about where they eat out.

According to the Toast Consumer Preferences Survey 2025, where 200 Canadian diners were surveyed about restaurant pricing and value, price is a primary or influential factor for 67% of Canadians when choosing where to dine. That means your pricing needs to strike the right balance between covering your costs and delivering perceived value.

Popular Pricing Models for Canadian Restaurants

Here are five common restaurant pricing strategies that Canadian operators use to stay competitive and profitable:

• Cost-plus pricing: Mark up each dish based on food and labour costs

• Prix fixe menus: Fixed multi-course pricing — preferred by 34% of Canadian diners

• Promotional pricing: Discounts, happy hours, or bundle deals 

• Seasonal/limited menus: A flexible model that works well with local, farm-to-table sourcing

• Psychological pricing: Removing currency symbols or rounding to whole numbers

Understanding Prime Costs and Food Cost Percentage

Many Canadian operators search for clear, step-by-step breakdowns of prime cost, food cost percentage, and break-even point strategies. Here’s a quick overview:

Prime Cost Formula

Prime Cost = Labour Costs + Cost of Goods Sold (COGS)

Food Cost Percentage Formula

Food Cost % = (Beginning Inventory + Purchases – Ending Inventory) ÷ Food Sales

Break-even Point Formula

Break-even = Fixed Costs ÷ ((Sales – Variable Costs) ÷ Sales)

Pricing in Practice: Plate Costing Example

Let’s say your food cost for a dish is $2.20, and you aim for a maximum food cost percentage (MFC) of 32%. Your target menu price would be:

$2.20 ÷ 0.32 = $6.88

This helps you stay within healthy margins while offering prices that reflect value — something that matters to the 79% of Canadians who care about sustainability and portion transparency (source: Voice of the Canadian Restaurant Industry).

What Canadian Diners Expect

According to the Toast Consumer Preferences Survey 2025:

• 60% notice price changes regularly

• 40% dislike portion shrinkage instead of price increases

• 58% are more forgiving of pricing increases when loyalty schemes or sustainability are in place

This is your opportunity to clearly communicate value. Consider explaining sourcing or fair wage practices on your menu, as 44% of guests say they’re more likely to support a restaurant that does this.

Optimize with Tech, Not Just Maths

Modern POS systems like Toast offer real-time inventory tracking, automated recipe costing, and sales analytics that make pricing less of a guessing game.

Final Thoughts

Your customers are definitely keeping a closer eye on what they're spending these days. The key is finding that sweet spot where your prices make sense for your guests, stay true to what your restaurant stands for, and keep your business healthy. It's not always easy, but it's totally doable.

Use your sales data to back up your decisions, be upfront about why your food is worth it, and don't be afraid to tweak things as you go.