You calculate the margin on a dish with multiple components by adding up all ingredient costs and comparing them to your selling price. Many restaurant owners...
Take Marco's Italian bistro, which thought their seafood risotto had a 70% margin until they discovered it was actually 52%. The culprit? They'd forgotten to account for the saffron, white wine reduction, and parmesan garnish. Multi-component dishes hide costs in plain sight.
What is margin and why does it matter?
Margin is the amount left over after you've deducted all ingredient costs from your selling price. It's your room for staff, rent, energy and profit.
💡 Example:
A steak with fries and salad for €28.00 (incl. 9% VAT):
- Selling price excl. VAT: €25.69
- Ingredient costs: €8.50
Margin: €25.69 - €8.50 = €17.19 (67% margin)
Inventory all components
With a dish that has multiple components, you need to count absolutely everything. Not just the main ingredients, but also:
- Sauces and dressings
- Garnishes and decoration
- Oil and butter for cooking
- Herbs and spices
- Bread or side dishes
⚠️ Watch out:
Don't forget the small things. 10 grams of butter per plate costs only €0.12, but at 100 covers per day that's €4,380 per year.
Calculate cost per component
Calculate separately for each component what it costs per portion. Use the purchase price and the amount you use for this.
💡 Example: Pasta carbonara
Ingredients per portion:
- Pasta (100g): €0.45
- Bacon (60g): €1.20
- Egg (1 piece): €0.25
- Parmesan (20g): €0.80
- Cream (50ml): €0.15
- Oil and herbs: €0.10
Total ingredient costs: €2.95
Account for trim loss and waste
With fresh products you always have loss from peeling, cutting or spoilage. You need to factor this into your calculation. From tracking this across dozens of restaurants, I've seen trim loss calculations make or break a dish's profitability.
Formula: Actual cost price = Purchase price / (Yield % / 100)
💡 Example trim loss:
You buy whole salmon for €18/kg, but after filleting you have 45% loss:
- Yield: 55%
- Actual fillet price: €18 / 0.55 = €32.73/kg
So you're paying €32.73 per kilo of fillet, not €18!
From ingredient costs to margin
Once you've added up all components, you calculate the margin by subtracting total ingredient costs from your selling price (excluding VAT).
Margin in euros: Selling price excl. VAT - Total ingredient costs
Margin percentage: (Margin in euros / Selling price excl. VAT) × 100
💡 Complete example:
Grilled salmon fillet with vegetables for €24.50 (incl. 9% VAT):
- Selling price excl. VAT: €22.48
- Salmon fillet (150g): €4.91
- Vegetables: €1.20
- Sauce: €0.40
- Oil and herbs: €0.15
Total ingredient costs: €6.66
Margin: €22.48 - €6.66 = €15.82 (70% margin)
What is a good margin?
A typical margin for restaurants is between 65% and 72%. This means your food cost is between 28% and 35%.
- Fine dining: often 65-72% margin
- Casual dining: usually 68-75% margin
- Fast casual: often 70-80% margin
⚠️ Watch out:
A high margin doesn't automatically mean more profit. You also need to cover your fixed costs. Use margin to compare dishes with each other.
How do you calculate margin? (step by step)
Make a list of all ingredients
Write down absolutely everything that goes on the plate: main ingredients, sauces, garnishes, oil, herbs. Don't forget a single component, not even the smallest one.
Calculate the cost per component
Weigh or measure the amount per portion and multiply by the purchase price per kilo/liter. Account for trim loss with fresh products.
Add up all costs
Sum all ingredient costs into one total amount per portion. These are your total food costs for this dish.
Calculate your selling price excl. VAT
Divide your menu price by 1.09 (at 9% VAT) to get the price excluding VAT. Use this to calculate further.
Subtract ingredient costs from selling price
Selling price excl. VAT minus total ingredient costs gives you margin in euros. Divide by selling price and multiply by 100 for the percentage.
✨ Pro tip
Break down your most expensive dish into 15-20 micro-components and weigh each garnish for 3 days. You'll discover hidden costs worth €1-2 per plate that most restaurants miss completely.
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
Do I need to include VAT in my margin calculation?
No, always calculate with prices excluding VAT. You'll pass the VAT on to the customer, so it doesn't count toward your margin. Divide your menu price by 1.09 at 9% VAT.
How do I account for trim loss in my cost price?
Divide your purchase price by the yield percentage. With 20% trim loss you have 80% yield. A product of €10/kg becomes €10 / 0.80 = €12.50/kg actual cost price.
What if my margin comes in below 65%?
Then your food cost is too high (above 35%). Check whether you've calculated all ingredients correctly and consider raising your selling price or adjusting portion sizes.
How often should I check my margins?
Check your best-selling dishes at least monthly. Suppliers regularly raise prices, so your cost prices are constantly changing. Check immediately if there are major price increases.
📚 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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