What should we charge for nachos?

Ask what to charge for nachos and you get a price back — four dollars, usually, or whatever the stand down the road charges. That is half an answer. The other half is what an order costs you, and almost nobody knows it, because nothing you buy is labelled in the unit you sell.

You buy a case of cheese. You sell an order of nachos. Between those two facts sits a number no invoice carries.

What an order actually costs

Here is one stand’s, measured rather than estimated. Three things go in a tray, and this is what each costs at the portion they actually serve.

What goes in	Portion	Cost
Nacho cheese	2.5 oz	$0.33
Tortilla chips	2 oz	$0.27
Paper tray	1	$0.03
Total		$0.63

At four dollars an order that is an 84.3% margin, which is near the top of anything a stand sells. But look at the shape of the cost rather than the total, because two things in that table are not what people expect.

The chips very nearly cost as much as the cheese. Nachos get thought about as cheese on chips, so the cheese is what gets priced and worried over and locked in the back. It is a little over half the cost of an order, and the chips are most of the rest. If you wanted to take a nickel out of an order, you would have to look at both.

The tray is three cents, and it is the thing that never appears in anyone’s arithmetic at all. Three cents is genuinely small. It is also not zero, and the same stand’s fry cups are eleven cents and a coffee cup with a lid is seven. Packaging across a whole menu adds up to real money, and it is invisible because it arrives on a different invoice from the food.

Working out yours

You need three numbers per ingredient and you already have two of them.

The first is what you paid for the case. That is on the invoice. The second is what the case contains — six cans, forty-eight ounces, five hundred trays. That is on the box. The third is the portion: how much of it goes into one order.

That last one is the whole problem. It is not written anywhere, nobody hands it over with the job, and it is the number every cost in this article depends on.

The practical answer is to measure it once. Weigh the scoop. Count how many orders a can of cheese actually made last game. You are not aiming for precision to the gram — you are aiming to know whether it is two ounces or four, because doubling the cheese in an order costs you nearly as much again as the tray, the chips and the cheese put together did before.

So what should you charge?

Not cost plus a multiplier. Price on what the crowd will pay — which for nachos at a high-school game is somewhere between three and five dollars almost everywhere — and then check the margin afterwards to make sure it is not a surprise.

The reason to run it that way round is that the margin on nachos is high enough that the price is not really a cost question. At $0.63 per serving, three dollars and five dollars are both fine businesses. What the cost tells you is something else: which items on your board are quietly not fine, and where the money actually comes from when you compare a tray of nachos against a chocolate bar you buy for $1.16 and sell for two.

That comparison is the one worth having, and it is a different article.