Guide · Menu costing
Food cost formula: how to cost a dish, step by step
Costing a dish is simple arithmetic done consistently. This guide gives you the food cost formulas that matter, a worked example from pack price to menu price, and the mistakes that quietly erode gross profit.
The core food cost formulas
Every costing question in a kitchen comes back to five formulas. Always work in prices excluding VAT on both sides — mixing gross and net figures is the single most common source of a wrong margin.
1. Food cost percentage (per dish)
Food cost % = (plate cost ÷ selling price ex-VAT) × 100
2. Food cost percentage (per period)
Food cost % = ((opening stock + purchases − closing stock) ÷ food sales ex-VAT) × 100
The period figure is your reality check. If your recipes say 28% but your stock take says 36%, the gap is waste, over-portioning, theft or unrecorded staff food — not maths.
3. Unit cost from a pack price
Cost per gram / ml / each = pack price ex-VAT ÷ pack size
4. Yield-adjusted cost
True cost = raw unit cost ÷ yield %
A whole chicken that yields 65% usable meat at £4.20/kg really costs £4.20 ÷ 0.65 = £6.46 per usable kilo. Skipping yield understates every protein and prepped vegetable on your menu.
5. Selling price and gross profit
Selling price ex-VAT = plate cost ÷ target food cost %
Gross profit % = 100 − food cost %
Cash GP = selling price ex-VAT − plate cost
Percentages pay no bills; cash GP does. A 30% food cost on an £8 main returns £5.60, while a 30% food cost on a £3 side returns £2.10. Rank your menu by cash GP per dish, not just by percentage.
Costing a dish in six steps
- Write the recipe in exact quantities. Every gram, including cooking oil, butter, garnish, sauce and the packaging if it is takeaway. Vague recipes produce vague costs.
- Convert pack prices to unit costs. Take the ex-VAT invoice price from your supplier and divide by pack size. Use the price you actually paid last delivery, not the price on the price list.
- Apply yield and waste. Trim loss, peeling, cooking shrinkage and drained weight all raise the real cost. Divide by the yield percentage for each affected ingredient.
- Total the plate cost. Sum the yield-adjusted lines. That figure is your cost per portion — the only number your margin depends on.
- Set the selling price. Divide the plate cost by your target food cost percentage, add VAT where the sale is standard-rated (remember eat-in and takeaway can differ), then round to a sensible menu price and re-check the resulting percentage.
- Re-cost on a schedule. Monthly for volatile lines like dairy, oil and produce. A menu costed once a year is a menu with unknown margins.
Worked example: chicken caesar salad
| Ingredient | Pack price ex-VAT | Used | Yield | Cost |
|---|---|---|---|---|
| Chicken breast | £7.20 / 1 kg | 140 g | 85% | £1.19 |
| Romaine lettuce | £1.80 / head | ½ head | 80% | £1.13 |
| Parmesan | £12.00 / 1 kg | 15 g | 100% | £0.18 |
| Caesar dressing | £6.50 / 1 L | 40 ml | 100% | £0.26 |
| Croutons (in-house) | £1.10 / 400 g loaf | 40 g | 95% | £0.12 |
| Oil, seasoning, garnish | — | — | — | £0.10 |
| Plate cost | £2.98 | |||
At a 30% target: £2.98 ÷ 0.30 = £9.93 ex-VAT. Round the menu price to £9.95 ex-VAT (£11.94 including 20% VAT for an eat-in sale). Cash gross profit is £6.97 per plate and the realised food cost is 29.9%.
Now test the sensitivity: if chicken rises to £8.60/kg, the plate cost becomes £3.21 and the same £9.95 price gives 32.3% food cost — £0.23 of margin gone per plate. At 40 salads a week that is roughly £480 a year from one ingredient on one dish.
What food cost percentage should you target?
There is no universal number, but these ranges are typical for UK cafes and casual restaurants:
- Coffee and hot drinks: 10–20% food cost (80–90% GP).
- Soft drinks and bottled lines: 20–30%.
- Cakes and bakery, made in-house: 20–30%.
- Breakfast, brunch and sandwiches: 25–33%.
- Protein-led mains: 30–38%.
Blend matters more than any single line. A menu at a 32% overall food cost with strong coffee attachment can out-earn a 26% menu that sells nothing but low-value items.
Five costing mistakes that cost real money
- Using VAT-inclusive prices on one side of the formula. Always cost net-to-net.
- Ignoring yield. Untrimmed weights make every protein dish look more profitable than it is.
- Forgetting the small stuff. Oil, butter, sauces, napkins and takeaway packaging add 20–60p to many plates.
- Costing once and never again. Supplier prices move monthly; margins drift silently.
- Pricing on percentage alone. Check cash GP per dish and per minute of kitchen time.
FAQ
What is the food cost formula?
Food cost % = (cost of ingredients ÷ selling price ex-VAT) × 100. Across a period, use (opening stock + purchases − closing stock) ÷ food sales ex-VAT × 100.
How do I calculate cost per portion?
Convert each pack price to a unit cost, divide by the ingredient's yield percentage, multiply by the quantity used, and total the lines.
Should takeaway be costed differently from eat-in?
Yes. Packaging adds cost, and the VAT treatment can differ, so the same recipe can carry a different net margin depending on how it is sold.
Stop costing dishes in a spreadsheet
The Solution costs every recipe from live supplier prices, applies yield, tracks allergens, and splits VAT for eat-in and takeaway — so margins update automatically when a delivery price changes.