COGS (Cost of Goods Sold) is the total purchase value of all products you've sold in a specific period. It differs from food cost because COGS looks at your entire business, not individual dishes. By month's end, you'll know exactly how to calculate COGS and what it reveals about your profitability.
What exactly is COGS?
COGS stands for Cost of Goods Sold and is one of the most important figures in your P&L (profit and loss statement). It shows how much you've spent on ingredients for everything you've actually sold.
- COGS = only sold products (not your entire inventory)
- Food cost = percentage per individual dish
- COGS percentage = COGS as a percentage of your total revenue
💡 Example:
Restaurant De Smaak in January:
- Total revenue: €45,000
- Ingredient purchases: €13,500
- COGS percentage: 30%
This means 30% of every euro goes to ingredients.
The COGS formula
The basic formula for COGS is straightforward, but you need to use the right numbers:
COGS = Beginning inventory + Purchases - Ending inventory
And for the percentage:
COGS % = (COGS / Revenue excl. VAT) × 100
⚠️ Important:
Always calculate with revenue EXCLUDING VAT. The revenue on your receipt includes 9% VAT. For COGS, divide by 1.09 to get the net revenue.
Calculating COGS with inventory
Most restaurants forget to include inventory changes. That gives a distorted picture — something most kitchen managers discover too late when their numbers don't match reality:
💡 Example calculation:
Bistro Luna in March:
- Inventory March 1: €3,200
- Purchases in March: €18,500
- Inventory March 31: €2,800
- March revenue: €58,000 incl. VAT
COGS = €3,200 + €18,500 - €2,800 = €18,900
Revenue excl. VAT = €58,000 / 1.09 = €53,211
COGS % = (€18,900 / €53,211) × 100 = 35.5%
What is a good COGS for restaurants?
COGS percentages vary by restaurant type, but here are common benchmarks:
- Fine dining: 28-33%
- Casual dining: 30-35%
- Fast casual: 25-32%
- Pizzeria: 22-28%
- Café with kitchen: 28-35%
If your COGS is above 35%, profit is likely leaking away. Below 25% might mean you're overpriced or serving portions that are too small.
COGS vs. food cost: what's the difference?
Many restaurant owners use these terms interchangeably, but they measure different things:
💡 Difference in practice:
Food cost: Your steak costs €8 in ingredients, sells for €28. Food cost = 31%
COGS: Your entire restaurant sold €50,000 this month, ingredients cost €16,000. COGS = 32%
COGS is the average of all dishes combined.
How systems help with COGS tracking
With a system like tools such as KitchenNmbrs, you can track your COGS automatically without Excel sheets:
- All recipes with exact cost prices
- Automatic calculation of total ingredient costs
- COGS percentage real-time in your dashboard
- Comparison with previous months
This way you see immediately if your COGS is rising and can adjust before it eats into your profit.
How do you calculate COGS? (step by step)
Count your inventory value at the start of the period
Go through your fridge, freezer, and dry storage. Note everything you have in stock and add up the purchase value. This is your beginning inventory.
Add up all purchases for the period
Collect all supplier invoices from that month. Only add up ingredients, not cleaning supplies or equipment. These are your total purchases.
Count your inventory value at the end of the period
Do the same inventory count as in step 1, but now at the end of the period. This is your ending inventory.
Calculate COGS using the formula
COGS = Beginning inventory + Purchases - Ending inventory. This gives you the actual cost of goods sold.
Calculate your COGS percentage
Divide COGS by your revenue excl. VAT and multiply by 100. With 9% VAT: divide your cash register revenue by 1.09 to get net revenue.
✨ Pro tip
Track your COGS weekly during your first 3 months of operation. New restaurants often see wild swings in their numbers, and weekly monitoring helps you spot problems before they compound into major losses.
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 COGS calculation?
No, always calculate with revenue EXCLUDING VAT. Your cash register revenue includes 9% VAT, so divide by 1.09. For your purchases, you don't pay VAT (you get it back), so you count those without VAT.
What if I don't do inventory counts?
Then you can't calculate COGS exactly. You can make an estimate by just dividing your purchases by revenue, but that gives a distorted picture if your inventory rises or falls.
My COGS is 38%, is that bad?
That's on the high side for most restaurants. Check if your menu prices are too low, if your portions are too large, or if there's a lot of waste. Below 35% is better.
Does COGS vary by season?
Yes, it can. In summer, many vegetables are cheaper; in winter, they're more expensive. Your menu composition can also be seasonal. So compare with the same month last year.
📚 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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