Converting menu price to cost price accurately prevents costly miscalculations that can destroy your restaurant's profitability. Many entrepreneurs forget VAT in their calculations, making their food cost appear 9% lower than reality. Here's how to calculate back from any price including VAT to get the real cost price.
Why calculate back to cost price?
Your menu displays prices with VAT included. But food cost calculations require the price excluding VAT. Skip this step and your food cost percentage becomes meaningless – you'll make decisions based on false data about profitability.
⚠️ Watch out:
Many entrepreneurs calculate food cost using the price including VAT. Your food cost then appears 9% lower than it actually is. This can be the difference between profit and loss.
VAT rates in hospitality
Different VAT rates apply to hospitality in the Netherlands:
- Eating in restaurant: 9% VAT
- Takeaway and delivery: 9% VAT
- Alcoholic beverages: 21% VAT
- Non-alcoholic in restaurant: 9% VAT
The formula for calculating back
The basic formula is straightforward but often misapplied:
Price excl. VAT = Price incl. VAT ÷ (1 + VAT percentage)
💡 Example at 9% VAT:
Menu price: €28.00 including VAT
- Calculation: €28.00 ÷ 1.09 = €25.69
- Check: €25.69 × 1.09 = €28.00 ✓
Price excl. VAT: €25.69
💡 Example at 21% VAT:
Wine price: €32.00 including VAT
- Calculation: €32.00 ÷ 1.21 = €26.45
- Check: €26.45 × 1.21 = €32.00 ✓
Price excl. VAT: €26.45
From cost price to food cost percentage
After managing kitchen operations for nearly a decade, I've seen how this calculation becomes the foundation of profitable menu engineering. Once you have the price excluding VAT, you can calculate your actual food cost:
Food cost % = (Ingredient costs ÷ Selling price excl. VAT) × 100
💡 Complete example:
Pasta carbonara on the menu: €24.50 incl. VAT
- Price excl. VAT: €24.50 ÷ 1.09 = €22.48
- Ingredient costs: €7.20
- Food cost: (€7.20 ÷ €22.48) × 100 = 32.0%
That's a healthy food cost for pasta.
Common mistakes
You'll often encounter these errors in cost price calculations:
- Mistake 1: Subtracting VAT percentage instead of dividing
- Mistake 2: Using the wrong VAT rate (21% for food)
- Mistake 3: Calculating food cost using price including VAT
⚠️ Watch out:
€28.00 - 9% = €25.48 is WRONG! You must divide: €28.00 ÷ 1.09 = €25.69
Practical tips for the kitchen
To speed up this process in your daily operations:
- Create a calculation table with your most sold prices
- Check monthly if your suppliers have raised prices
- Use an app like KitchenNmbrs to calculate automatically
- Check at least your 10 best-selling dishes
With accurate calculations you'll understand your real margins and can make informed pricing decisions.
How do you calculate from including to excluding VAT? (step by step)
Determine the correct VAT rate
For food and non-alcoholic beverages in restaurants this is 9%. For alcoholic beverages 21%. Always check this first before you start calculating.
Divide by (1 + VAT percentage)
At 9% VAT you divide by 1.09. At 21% VAT you divide by 1.21. For example: €28.00 ÷ 1.09 = €25.69 excluding VAT.
Check your calculation
Multiply your result by the VAT percentage to verify. €25.69 × 1.09 = €28.00. Does it match? Then you did it correctly.
Calculate your food cost percentage
Divide your ingredient costs by the price excluding VAT and multiply by 100. This gives you your real food cost percentage.
✨ Pro tip
Calculate your 15 most popular menu items every 2 weeks using this formula. Post the results in your prep area so kitchen staff can spot ingredient cost creep immediately.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Why not just subtract 9% from the price?
Because VAT is calculated on the price excluding VAT, not on the final price. €28.00 - 9% = €25.48, but the correct calculation is €28.00 ÷ 1.09 = €25.69.
What VAT rate applies to takeaway meals?
Also 9% VAT, just like eating in the restaurant. Only alcoholic beverages always have 21% VAT, even for takeaway.
Do I need to calculate this for each dish separately?
For your food cost calculation yes. But you can also create a calculation table with the most common prices, or use an app that does this automatically.
What if I have mixed dishes with alcohol?
Then you calculate the alcoholic and non-alcoholic parts separately. The food at 9%, the alcohol at 21% VAT.
How often should I recalculate my food cost?
At least monthly for your top sellers, and always when suppliers raise their prices. Many restaurants check their 5 best-selling dishes weekly.
Can't I just estimate this?
Estimating is risky. A difference of 2 percentage points in food cost can mean €6,000 per year on €300,000 turnover. Exact calculation always pays off.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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