The Price-Base-Cost-Revenue (PBR) Triangle

The Price-Base-Cost-Revenue (PBR) Triangle (pyramid) is a theoretical concept and a practical financial tool that can significantly boost profitability in the food and beverage industry. By grasping the interplay between Price, Base Cost, and Revenue, a food & beverage owner, manager, or chef can make strategic changes that directly impact the establishment’s operating costs and profitability.  

The PBR Triangle is a game-changer for food and beverage owners, operators, and managers. It empowers them to scrutinize the profitability of menu items and determine the ideal price to maximize the profit margin. For example, adjusting the selling price can significantly boost the profit margin if a menu item has a high base cost but is too low. This tool enables those in charge of financial decisions to make informed choices about pricing, menu development, and cost control, propelling the business toward its financial goals. 

In short, the PBR Triangle is a powerful tool that can help food service businesses analyze their menus and make data-driven decisions, increasing their profitability and achieving long-term success. The PBR Triangle is a financial tool used in the food service industry to calculate profitability. PBR stands for Price, Base Cost, and Revenue. The triangle illustrates the relationship between these three factors. 

Price is the amount a customer is willing to pay for a particular menu item. (menu price) 

Base Cost is the cost of the ingredients or labor required to produce that item. (cost of food or cost of labor) 

Revenue is the difference between the price and the base cost, representing the profit margin. 

By analyzing the PBR Triangle, a food and beverage business can determine the best price for each menu item to maximize its profit margin. More importantly, it will help you calculate the financial calculations in this course. 

To find any of the three values, cover the one you’re looking for; the remaining two will tell you the operation to perform.

• To find the Percentage, Cover “Percentage.” You’re left with “Base” times “Rate.” So, Percentage = Base * Rate.
• To find the Base, Cover “Base.” You’re left with “Percentage” divided by “Rate.” So, Base = Percentage / Rate.
• To find the Rate: Cover “Rate.” You’re left with “Percentage” divided by “Base.” So, Rate = Percentage / Base.

Example: If you know the Base is 200, and the Rate is 0.25 (or 25%), you can find the Percentage:

• Percentage = Base * Rate
• Percentage = 200 * 0.25
• Percentage = 50

Remember, the terms Food Cost and Cost of Food are used interchangeably.

You can also use this formula to solve for beverage and labor costs.

Remember, the terms Food Cost and Cost of Food are used interchangeably, and we could substitute Menu Selling Price for Food Sales.

You can also use this formula to solve for beverage and labor cost percentages.

The minimum menu price (MMP) is the lowest amount a restaurant can charge for a dish to cover the cost of ingredients (food cost).