Food cost covers just your ingredients, while selling price is what guests actually pay. The gap between these two numbers determines if you're making money or slowly going broke on every dish.
Ever wonder why some dishes seem profitable until you actually crunch the numbers? Food cost is what you pay for ingredients, while selling price is what guests pay you. The gap between these two numbers decides if you're making money or slowly bleeding cash.
What is food cost?
Food cost is the total cost of all ingredients that go into one dish. Think of:
- Main ingredients (meat, fish, vegetables)
- Garnishes and side dishes
- Sauces and dressings
- Oil, butter, spices
- Everything that goes on the plate
💡 Example food cost calculation:
Pasta carbonara ingredients:
- Pasta: €0.80
- Bacon: €1.20
- Eggs: €0.40
- Cheese: €0.90
- Spices and oil: €0.30
Total food cost: €3.60 per portion
What is selling price?
Selling price is what you charge guests. This is what appears on your menu. But here's the catch - this price needs to cover way more than just ingredients.
The selling price must cover:
- Ingredient costs (food cost)
- Staff costs
- Rent and utilities
- Other operating costs
- Profit
💡 Example selling price:
Same pasta carbonara:
- Food cost: €3.60
- Selling price on menu: €16.50 (incl. 9% VAT)
- Selling price excl. VAT: €15.14
Food cost: (€3.60 / €15.14) × 100 = 23.8%
The difference between the two
The difference between selling price and food cost is your margin. This money pays for everything else and hopefully leaves you with profit at the end of the month.
From tracking this across dozens of restaurants, I've seen too many owners focus only on food cost while ignoring their actual margins. You might have a 25% food cost, but if your selling price is too low, you're still losing money.
⚠️ Note:
Many entrepreneurs forget that the price on their menu includes VAT. For food cost calculations, you always work with the price EXCLUDING VAT.
How do you calculate the right selling price?
Once you know what your dish costs, you can calculate the minimum selling price. Use this formula:
Minimum selling price excl. VAT = Food cost / (Desired food cost % / 100)
💡 Example calculation:
You want a food cost of 30% and your food cost is €4.50:
- Minimum price excl. VAT: €4.50 / 0.30 = €15.00
- Price incl. 9% VAT: €15.00 × 1.09 = €16.35
You need to charge at least €16.35 to achieve 30% food cost
Common mistakes
These mistakes make food cost calculations unreliable:
- Forgetting ingredients: Oil, spices and garnish also count
- Calculating with VAT: Always use the price excluding VAT
- Ignoring trimming loss: Whole fish becomes more expensive per kilo after filleting
- Not updating prices: Suppliers regularly raise their prices
Smart operators use automated systems to track these numbers without getting bogged down in spreadsheets and manual calculations.
How do you calculate food cost and selling price?
Gather all ingredients and prices
Make a list of each ingredient that goes into the dish. Note the purchase price per kilo or per unit. Don't forget: oil, spices, garnish and decoration also count.
Calculate the amount per portion
Measure or weigh how much of each ingredient you use per portion. Convert this to costs: for example, 200 grams of meat at €15/kg costs €3.00 per portion.
Add up all costs for the food cost
Sum all ingredient costs per portion. This is your food cost. Account for trimming loss: whole fish becomes more expensive per kilo after filleting.
Determine your desired food cost percentage
Choose a food cost percentage between 25-35%. This is the portion of your selling price that goes to ingredients. The rest covers other costs and profit.
Calculate the minimum selling price
Divide your food cost by your desired food cost. At €4 food cost and 30% food cost: €4 / 0.30 = €13.33 excl. VAT. Incl. 9% VAT this becomes €14.53.
✨ Pro tip
Calculate your food cost percentage backwards from your target profit margin first, then set your selling price. Most restaurants do it the wrong way around and wonder why they're not profitable.
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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
Should I include VAT in my food cost calculation?
No, always work with prices excluding VAT. The price on your menu includes VAT, but for food cost calculations you use the price excluding VAT.
What food cost percentage is normal?
For restaurants, a typical food cost is between 28% and 35%. Above 35% it becomes difficult to be profitable, below 25% you're often too expensive for guests.
Should I also count oil and spices?
Yes, absolutely. Small amounts like oil, butter, spices and garnish also count. Per dish it seems like little, but over a year this can add up to thousands of euros.
What if my food cost is higher than I thought?
Then you have three options: raise your selling price, reduce your portions, or choose cheaper ingredients. Doing nothing means losing money on every dish you sell.
📚 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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