You buy the same product from different suppliers at different prices. To calculate your cost price correctly, you need to know what you're paying on average per kilo or per unit. This determines your food cost and therefore your profit margin per dish.
Why the average purchase price matters
If you buy steak from supplier A for €28/kg and from supplier B for €32/kg, you can't just use €28 or €32 in your cost price calculation. You're paying something in between, depending on how much you buy from each supplier.
💡 Example:
You buy steak from 2 suppliers:
- Supplier A: 40 kg for €28/kg = €1,120
- Supplier B: 20 kg for €32/kg = €640
Total: 60 kg for €1,760
Average purchase price: €1,760 ÷ 60 kg = €29.33/kg
The weighted average formula
For a correct average purchase price, you use a weighted average. This means you account for the quantity you buy from each supplier.
Formula:
Average purchase price = (Total costs all suppliers) ÷ (Total quantity all suppliers)
💡 Practical example:
You buy salmon from 3 suppliers in January:
- Supplier A: 15 kg × €22/kg = €330
- Supplier B: 25 kg × €24/kg = €600
- Supplier C: 10 kg × €20/kg = €200
Total: 50 kg for €1,130
Average: €1,130 ÷ 50 kg = €22.60/kg
⚠️ Watch out:
NEVER calculate the average of the prices (€22 + €24 + €20) ÷ 3 = €22. This is wrong because you buy different quantities from each supplier.
When to recalculate this
Your average purchase price changes every time:
- A supplier adjusts their price
- You proportionally buy more from a different supplier
- You add a new supplier or drop one
- Quality differs and you make different choices because of it
Many restaurants check this monthly, so their cost price calculations stay accurate.
Impact on your food cost
A difference of €2/kg on steak seems small, but it directly impacts your margin:
💡 Impact calculation:
250 gram steak, sold for €32 (excl. VAT €29.36):
- At €28/kg: 0.25 kg × €28 = €7 → food cost 23.8%
- At €30/kg: 0.25 kg × €30 = €7.50 → food cost 25.5%
Difference: 1.7 percentage points less margin per steak
Tracking digitally vs. Excel
You can track this manually in Excel, but that means going through all your purchase invoices every month and recalculating. Many business owners use a system like KitchenNmbrs where you can record multiple suppliers per ingredient with their prices.
The system then automatically calculates your weighted average based on your actual purchases, so your cost prices are always up to date.
How do you calculate the average purchase price? (step by step)
Gather all purchase data
Note from each supplier: how many kg/units you bought and what the price per unit was. Check your invoices from the past month.
Calculate total costs per supplier
For each supplier, multiply: quantity × price per unit. Add all amounts together for the total amount you spent on this product.
Divide by total quantity
Divide the total amount by the total quantity you purchased. This is your weighted average purchase price that you use in your cost price calculation.
✨ Pro tip
Focus on your top 10 ingredients by cost. If you track those well, you've solved 80% of your cost price problem.
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 do this for every ingredient?
Only for ingredients you buy from multiple suppliers. For products from one supplier, you just use that price.
How often do I need to recalculate this?
At least monthly, or when a supplier changes their prices. With large price fluctuations, you can do it more often.
What if quality differs per supplier?
Then it's better to create separate recipes or track the ingredients separately. Don't mix different qualities into one average price.
Should I include VAT in the calculation?
No, always calculate with purchase prices excluding VAT. You can usually reclaim VAT as a business owner.
What if I buy different package sizes?
Convert everything to the same unit (for example, per kg) before calculating the average. Watch out for price differences due to package size.
📚 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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