Food cost is the share of the ingredient cost in the price of a dish. It's the simplest indicator that tells you whether a menu price makes sense. Many venues calculate it once, when they put the menu together, and then ingredient prices go up, portions “grow” and the margin disappears without warning.
We show how to calculate the cost of a portion, how to set a price from it and how to check food cost at the end of the month. The amounts in the examples are illustrative, in Polish zloty. For your own calculation, use the prices from your invoices.
The food cost formula
Food cost (%) = cost of the ingredients of one portion ÷ net selling price × 100
Example: the ingredients of a dish cost PLN 12, and the dish costs PLN 40 net on the menu. The food cost is 12 ÷ 40 × 100 = 30%.
The formula also works the other way. When you know the cost of a portion and your target food cost, you can work out the price:
Net price = ingredient cost ÷ target food cost
With a cost of PLN 12 and a 30% target: 12 ÷ 0.30 = PLN 40 net.
What a good food cost is
According to training materials for food service, most restaurants average 30–35%. That's the average for the whole menu. Individual dishes can differ from it significantly:
- meat, fish and seafood dishes usually have a higher food cost,
- pasta, pizza, soups and salads usually a lower one.
So you don't have to keep every dish at 30%. What matters is that the average of what you actually sell stays within your target. A dish with a high food cost can pay off if it sells well and brings in guests who also order a drink or a dessert.
The recipe costing card
You calculate food cost from a recipe costing card (a standard recipe). It's a list of the ingredients of one portion with quantities and prices. Without it every cook makes the portion a little differently, and the cost is a guess.
Example: a burger with fries. The net purchase prices are illustrative.
| Ingredient | Quantity per portion | Net purchase price | Cost per portion |
|---|---|---|---|
| Bun | 1 pc | PLN 1.60/pc | PLN 1.60 |
| Ground beef | 150 g | PLN 42.00/kg | PLN 6.30 |
| Cheddar cheese | 20 g | PLN 50.00/kg | PLN 1.00 |
| Lettuce, tomato, onion | – | – | PLN 0.90 |
| Sauce | 30 g | PLN 20.00/kg | PLN 0.60 |
| Frozen fries | 150 g | PLN 8.00/kg | PLN 1.20 |
| Frying oil (share per portion) | – | – | PLN 0.40 |
| Total | PLN 12.00 |
At a 30% food cost the net price is 12.00 ÷ 0.30 = PLN 40.00. Guests see the price with VAT on the menu. At Poland's 8% rate for food services that's PLN 43.20, so the menu will say e.g. PLN 42.90. The food cost is then 12.00 ÷ (42.90 ÷ 1.08) = about 30.2%.
Don't put takeaway packaging on the card. Count it separately, because a dish eaten in doesn't have it.
Ingredient yield
You buy ingredients as purchased: fish with bones, meat that needs trimming, vegetables with their skins. Only part of it reaches the plate. The ratio of what's left to what you bought is the yield:
Yield (%) = weight after preparation ÷ purchased weight × 100
From the yield you calculate the real cost of a kilogram that reaches the plate:
Cost per kg of usable ingredient = purchase price per kg ÷ yield
Example: you buy beef tenderloin at PLN 120/kg. After trimming, 1.75 kg is left from 2.5 kg, so the yield is 70%. A kilogram of trimmed tenderloin therefore costs 120 ÷ 0.70 = about PLN 171.40, not PLN 120. A 180 g portion costs about PLN 30.90 instead of the PLN 21.60 you'd get from the invoice price.
Leaving out yield is one of the most common reasons why food cost looks good on the card and bad at the end of the month. It's best to test yield yourself: weigh the ingredient before and after preparation, several times, and take the average.
Food cost on the card and at the end of the month
Food cost from costing cards is a theoretical value: what the ingredients should cost if everything goes by the recipe. Once a month, calculate the actual value:
Ingredient usage = opening stock + purchases − closing stock
Actual food cost (%) = ingredient usage ÷ net sales × 100
Example: opening stock PLN 12,000, purchases during the month PLN 30,000, closing stock PLN 11,000. Usage came to PLN 31,000. With net sales of PLN 95,000, the actual food cost is about 32.6%.
If the costing cards average 29%, the difference of 3.6 percentage points is about PLN 3,400 a month. The most common causes:
- portions larger than in the recipe,
- waste – expired stock, burnt and returned dishes, prep trimmings,
- staff meals and dishes “on the house” that don't show up in sales,
- out-of-date prices on the cards – an ingredient got more expensive, and the card doesn't know,
- stocktaking errors.
Update the cards when prices change
The cost of a portion changes with ingredient prices, so costing cards need to be recalculated regularly, especially when inflation is high. A practical rule: recalculate a card when a dish's key ingredient goes up by more than a few percent, and review the whole menu at least once a quarter.
When a dish's food cost rises, you have several options, not just a price increase:
- a different supplier or pack size,
- a smaller portion of the expensive ingredient and more of a cheaper side,
- swapping an ingredient for another at a similar price,
- dropping a dish that costs a lot and sells poorly.
Food cost and markup multipliers
Some venues set prices with a multiplier: ingredient cost times 3 or times 4. It's the same food cost, just written differently. A multiplier of 3.33 corresponds to a 30% food cost, and a multiplier of 4 to 25%. Remember that you apply the multiplier to the net price too, and add VAT at the end.
Summary
Food cost is the cost of a portion's ingredients divided by the net price. Calculate it from costing cards, taking ingredient yield into account, and set your prices from it. Once a month, compare it with actual usage from the stocktake: the difference shows how much you lose on portions, waste and out-of-date prices. An average of 30–35% is common, but more important than one number is knowing what each dish on your menu really costs.
Sources
- Basic Kitchen and Food Service Management: Food Costing (BCcampus)
- Basic Kitchen and Food Service Management: Yield Testing (BCcampus)
- Basic Kitchen and Food Service Management: The Basic Calculation of Operating Costs (BCcampus)
- Illinois State Board of Education / CAERT: Food Costing (PDF)
- The Culinary Institute of America: Kitchen Calculations (PDF)
