Knowledge
How to calculate food cost: formula, percentage and a worked example for professional kitchens
How to calculate food cost for a period and per portion, work out your food cost percentage and turn it into a selling price – with worked examples and the most common mistakes.
- Published on
- By
- Marcel Philipp Goraus
Food cost is one of the most important figures in any kitchen. It shows what the food and drink you sold cost you in goods – and so whether your prices still match your purchase prices. This article explains how to calculate it for a period and for a single portion, what the food cost percentage tells you, and how to get from food cost to a selling price.
What is food cost?
Food cost is the value of the goods actually used in a given period, valued at purchase prices, net of VAT. It is not the same as purchasing: some of what you buy this month is still in the store room, and some of what you used was bought last month.
In practice there are two ways to look at it:
- For a period (month, quarter, year): what did the business use in goods overall?
- Per portion: what do the ingredients of a single dish cost? This is the basis of every recipe costing.
Calculating food cost for a period
The formula is:
Food cost = opening stock + purchases − closing stock
Opening and closing stock come from a stock take, purchases from your supplier invoices. Use net values throughout, without VAT. If you record staff meals or own consumption separately, deduct them as well.
A worked example for one month, using example figures:
| Item | Amount (net) |
|---|---|
| Opening stock (stock take) | €4,200.00 |
| + Purchases in the month | €18,600.00 |
| − Closing stock (stock take) | €3,800.00 |
| = Food cost | €19,000.00 |
The food cost percentage
On its own, food cost says little. It becomes meaningful in relation to sales:
Food cost percentage = food cost ÷ net sales × 100
If the business in the example had net sales of €62,000 in the same month, its food cost percentage is €19,000 ÷ €62,000 × 100 = 30.6%. Roughly 31 cents of every euro of sales went into the goods.
There is no universally “right” percentage: it depends on the type of operation, the menu and the price level. More useful than an outside benchmark is how the figure develops in your own business. If it rises month after month, look at purchase prices, portion sizes, waste and selling prices.
Calculating food cost per portion
For a single dish, add up the cost of every ingredient: quantity times purchase price per unit. What matters here is yield. If you need 200 g of peeled potatoes and 80% is left after peeling, cost 250 g of raw potatoes (200 g ÷ 0.8).
An example with example prices:
| Ingredient | Quantity | Purchase price (net) | Cost |
|---|---|---|---|
| Potatoes (raw, for 200 g peeled) | 250 g | €1.20 / kg | €0.300 |
| Chicken breast | 160 g | €12.50 / kg | €2.000 |
| Cream | 0.05 l | €3.80 / l | €0.190 |
| Butter | 15 g | €9.60 / kg | €0.144 |
| Herbs and spices (flat rate) | – | – | €0.250 |
| Food cost per portion | €2.88 |
Calculate with the exact values and round once, at the end, to whole cents. Rounding every line adds up small differences across many ingredients.
From food cost to selling price
A simple approach works from a target food cost percentage: selling price (net) = food cost per portion ÷ target percentage. With €2.88 and a target of 30%, that is €2.88 ÷ 0.30 = €9.60 net, plus the applicable VAT.
It becomes more accurate when you look at the full cost price rather than the goods alone: food cost plus labour and overhead. On the cost price you then apply either a margin or a markup – and they are not the same:
- Markup is added to the cost price. A 41% markup on a cost price of €11.74 gives €16.55.
- Margin is the share of the selling price that remains. A 41% margin on a cost price of €11.74 gives €19.90.
Mixing the two up can easily underprice a dish by several euros.
Common food cost mistakes
- Mixing gross and net: purchase prices, stock and sales all belong in the calculation net of VAT.
- Forgetting yield: peeling, trimming and cooking losses make ingredients considerably more expensive than their price per kilo suggests.
- Outdated purchase prices: a costing with last year's prices does not show what a dish costs today.
- Counting missing prices as zero: an ingredient without a price makes a dish look cheaper on paper than it is.
- Rounding too early: round at the end, not for every ingredient.
- Looking only at the goods: food cost is not the cost price – labour and overhead come on top.
Food cost with CulinaryCube
CulinaryCube costs every recipe from the purchase prices valid on the day you choose, per supplier. Labour and overhead are added the way you calculate them, and you see the selling price for the margin or markup you want. A missing price is shown as a gap, never guessed, and calculations run with exact decimals, rounded once at the end.
Read more on the recipe and menu costing page – or see it for yourself in a personal demo.