Food served in Irish restaurants and pubs carries 9% VAT (the reduced rate came back on 1 July 2026). Alcoholic drinks carry 23%. Gross profit is always calculated on the price before VAT, because the VAT isn't yours.

The arithmetic

A dish costs €5.40 in ingredients and you want 70% GP. Price before VAT = cost ÷ (1 − 0.70) = €18.00. Add 9% VAT: €19.62. Round to a menu price of €19.50 and your real GP is 69.8%. Round to €19.95 and it's 70.5%.

Do the same sum on a €19.50 cocktail with €3.80 of liquid: price before 23% VAT is €15.85, so GP is 76%, not the 80.5% you'd see if you forgot the VAT.

Three habits that protect margin

  • Cost every dish from current supplier prices, not last year's. Prices moved 0.4% on food in the year to September 2026, but individual lines moved far more.
  • Track food and drink GP separately. A strong bar can hide a weak kitchen for months.
  • Round to .50 or .95 and check the GP at the rounded price, not the calculated one.

The free menu price calculator does the sum both ways; the recipe costing template does it for a whole menu.