Food costing in a restaurant comes down to five calculations. Few businesses do all five, and almost nobody does them in the order they build on each other.
That is not an accusation, it is a consequence of how the subject gets explained. Search for it and you find formulas. What you do not find is the question that comes before them: which of these calculations comes first, which builds on which, and which ones you are allowed to skip.
This guide answers exactly that. It works nothing through, because the five articles it points to do that. It tells you the order in which you need them.
What does food costing in a restaurant include?
Five calculations, and each answers a different question.
| The question | The calculation | Covered in |
|---|---|---|
| What does the ingredient really cost once trimming and cooking are taken out? | Yield | Yield and waste |
| How much of every franc taken in goes to the ingredients? | Food cost percentage | Calculating the food cost percentage |
| What price has to go on the menu? | Target cost, markup and VAT | Pricing a dish |
| Is the figure that comes out any good? | Contribution margin and menu mix | A good food cost |
| What does a job off the premises cost? | Job costing | Catering costing |
Five questions, five ways of calculating, and none of them is particularly hard. The hard part is something else: they depend on each other, and you cannot tell by looking at them.
What order do you calculate in?
From the ingredient to the job. Not backwards from the price.
Yield comes first, because it corrects the input value of every other calculation. What the supplier invoices is not what lies on the plate: between invoice and plate, goods disappear during trimming and again during cooking. Skip this step and every figure that follows is built on a food cost that is too low. That is not a small error, and it shows up nowhere, because the calculation looks clean taken on its own.
Then the food cost percentage, because it supplies the target figure the price is calculated with. It is the ratio the kitchen steers by, and it is only as good as the food cost that goes into it.
Then the selling price. Only once you know what the dish costs and what share the ingredients are supposed to take can you calculate a price that carries the margin and that the market accepts.
Then the question of whether the target value was the right one in the first place. That sounds back to front, and it is not. Whether a percentage is good is not visible in the percentage; it is visible in what is left per plate in francs and how often the plate sells. That check needs a calculated price, otherwise there is nothing to check.
And last, job costing, because it requires all four and adds two cost blocks of its own that do not exist in your own function room.
The reason almost nobody works in this order is simple: the urgent question is always the price. The menu has to go to print, the dish has to go on the board. So you start in the middle. That works right up until someone measures the yield, and after that every price has to be calculated a second time.
Which food cost figure is actually meant?
There are four of them, and they are allowed to differ.
| Figure | Answers | Comes from | Not fit for |
|---|---|---|---|
| Per-dish figure | Is this dish priced right? | costing a single recipe | a statement about the business |
| Operating ratio of a period | What actually happened? | food cost against net revenue | a statement about a single dish |
| Revenue-weighted menu ratio | How does the menu stand overall? | the per-dish figures, weighted by revenue | the average of the per-dish figures |
| Food cost of a job | Does this catering job carry itself? | the job costing | a comparison with the menu |
All four can be calculated correctly at the same time and still diverge. Not an error. They do not measure the same thing: per-dish costing knows nothing of spoilage and staff meals; the operating ratio does. The menu ratio hangs on the sales mix and moves without a single recipe changing.
In practice this means: when the kitchen and the fiduciary argue about the food cost, they are usually talking about two different ones of these four. The question that resolves it is not “how high is it” but “which of the four do you mean”. Where the difference between per-dish costing and the operating ratio comes from is broken down in the food cost article; why the average of the per-dish figures is not the menu ratio is in the article on the target value.
Where do you start if you are not costing anything today?
With a set of scales and a single dish. In one evening, in three steps.
- Weigh the most expensive ingredient of your best-selling dish once before and after trimming. Do not trim more carefully than you would on a normal evening, or you measure a value the service never reaches.
- Cost that one dish cleanly, with the corrected ingredient price and in full, meaning sides, sauce and garnish included.
- Compare the result with the menu price.
Nothing more. No book of tables, no full survey, no new system. The reasoning behind this is leverage: the most expensive piece of the best-selling dish is the item where a costing error costs the most, and a business that knows this one figure is better off than one with a half-filled spreadsheet across everything. The yield test and the calculation method each sit in their own article; for the cross-check there is our free food cost calculator.
The next stage up is the same exercise for the ten dishes with the highest revenue. The precondition is that the recipes are written down at all: a costing is only as stable as the standardised recipe it sits on.
If you already cost your dishes and still have the feeling something is off, start somewhere else. Hold the sum of your per-dish costings against the operating ratio of the same period. The two almost never match, and the gap between them does not sit in the recipes but in what happens between costing and till (broken down in the food cost article). Putting a number on that gap once changes more than any further recosting, because it tells you whether the problem is in the calculation at all.
What can you safely leave out?
More than a guide normally admits. Four things.
The yield of cheap ingredients. With vegetables at a low price per kilo it is a matter of centimes per plate. The same measurement, a fraction of the effect. Start where a high price per kilo and a high loss come together (details).
The hunt for a Swiss industry benchmark. Reliable comparison figures are not freely available here, and what circulates freely mostly comes from other markets. The more useful yardstick is your own business over time (details).
Optimising the percentage itself. As long as enough is left in francs per plate, a higher percentage is not a problem. There are evenings when the ratio gets worse and the business earns more (details).
Costing the dishes at the end of the menu. What sells three times a year moves neither the ratio nor the contribution margin.
That is prioritisation, not an all-clear. The four points above are what you do later, not what you never do.
What does getting the order wrong cost?
Double work, and a menu that stands on a figure nobody ever checked.
Set prices before the yield is measured and you are costing with a food cost that is too low, and every single price has to be touched again the moment someone measures. Fix a target value before you know the contribution margin and you optimise for a ratio, possibly cutting the dish that carries the evening. And quote a catering job at menu prices and you only notice after the event that two cost blocks were missing that do not exist in your own function room.
None of these three mistakes announces itself. All three look correct in their own calculation, and that is exactly why they last for years.
How do you keep all this current when purchase prices change?
You don’t, if every figure lives in its own file. A costing is correct on the day it is created and a little less correct every day after that.
That is exactly what we are building Trolevo for: recipes with nested sub-recipes whose food cost rolls up automatically into one amount per dish, along with the food cost at the price you have set. Change a stored ingredient price and every recipe and every sub-recipe the ingredient sits in works with the new figure, so you see which dishes are affected.
What it does not do, in plain terms: it does not measure yield and has no separate field for it; the yield-adjusted price is carried as the ingredient price. It sets no price and does not know the market. And it does not calculate the operating ratio of a period, because that comes from stocktake and bookkeeping, not from the recipes. This helps keep the costing current; the pricing decision stays with the business.
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