The formula every Thai restaurant operator needs. Real worked examples — Pad Thai, Green Curry, Tom Yum — plus the VAT trap and delivery GP that catches most people out.
That's it. But there are three traps that make this harder than it looks: VAT, delivery commissions, and hidden food costs. Let's work through real examples.
| Step | Calculation | Amount |
|---|---|---|
| Menu price (incl. VAT) | What the customer pays | £14.50 |
| VAT (20%) | £14.50 ÷ 1.2 = £12.08 (net) — so VAT is £14.50 − £12.08 | −£2.42 |
| Net selling price | This is your actual revenue | £12.08 |
| Food cost | Rice noodles £0.40 + chicken £0.90 + egg £0.20 + veg £0.30 + sauce £0.50 + garnish £0.50 | −£2.80 |
| Gross Profit | £12.08 − £2.80 | £9.28 |
| GP% | £9.28 ÷ £12.08 × 100 | 76.8% |
Many operators calculate GP on the menu price including VAT. That's wrong — VAT isn't your money, it's HMRC's. Always calculate GP on the net price (menu price ÷ 1.2). A £14.50 curry has a net price of £12.08 — calculate your GP on £12.08, not £14.50. Using the gross number makes your GP look worse than it is.
| Step | Calculation | Amount |
|---|---|---|
| Menu price (incl. VAT) | Delivery price — should be 20–25% higher than dine-in | £17.50 |
| VAT (20%) | £17.50 ÷ 1.2 = £14.58 net | −£2.92 |
| Net selling price | £14.58 | |
| Deliveroo commission (30%) | 30% of £17.50 gross (most platforms charge on gross) | −£5.25 |
| Food cost | Same ingredients | −£2.80 |
| Packaging | Container £0.35 + bag £0.10 + chopsticks £0.05 | −£0.50 |
| Gross Profit | £14.58 − £5.25 − £2.80 − £0.50 | £6.03 |
| GP% | £6.03 ÷ £14.58 × 100 | 41.4% |
Same dish: 76.8% GP dine-in vs 41.4% GP on Deliveroo. That's why you need a separate delivery menu with higher prices. At £14.50 (dine-in price) on Deliveroo, this Pad Thai would earn just £3.03 profit — a 20.8% GP. That's below survival level. See the full delivery commissions breakdown →
| Step | Calculation | Amount |
|---|---|---|
| Menu price (incl. VAT) | Mid-range, regional pricing | £13.95 |
| VAT (20%) | −£2.33 | |
| Net selling price | £11.63 | |
| Food cost | Coconut milk £0.65 + chicken thigh £0.80 + curry paste £0.35 + veg £0.40 + Thai basil £0.25 + rice £0.25 | −£2.70 |
| Gross Profit | £8.93 | |
| GP% | 76.8% |
GP% alone is misleading. A high-GP% dish that nobody orders is dead weight. A lower-GP% bestseller might be your most profitable item overall. Menu engineering plots popularity against profitability.