Converting your menu price including VAT to excluding VAT is the basis for every food cost calculation. Many entrepreneurs make mistakes here, which is why their food cost percentages don't add up. In this article you'll learn the exact formula and avoid costly calculation errors.
Why calculate excluding VAT?
For food cost calculations you always work with the price excluding VAT. The reason is simple: VAT is not part of your margin. You collect VAT for the government and pass it on.
⚠️ Important:
If you calculate food cost with the price including VAT, your food cost will appear lower than it actually is. This gives a distorted picture of your profitability.
The formula for excluding VAT
The basic formula to go from including to excluding VAT:
Price excl. VAT = Price incl. VAT ÷ (1 + VAT percentage)
These VAT rates apply in hospitality:
- Food and non-alcoholic beverages: 9% VAT
- Alcoholic beverages: 21% VAT
- Takeaway and delivery: 9% VAT
💡 Example at 9% VAT:
Pasta carbonara on menu: €24.50
Calculation: €24.50 ÷ 1.09 = €22.48 excl. VAT
For food cost you calculate with €22.48, not €24.50
💡 Example at 21% VAT:
Bottle of wine on menu: €32.00
Calculation: €32.00 ÷ 1.21 = €26.45 excl. VAT
For pour cost calculation you use €26.45
Practical calculation tips
To calculate quickly you can remember these factors:
- At 9% VAT: divide by 1.09 (or × 0.917)
- At 21% VAT: divide by 1.21 (or × 0.826)
For quick verification: at 9% VAT the excluding price is roughly 8% lower than the including price. At 21% VAT roughly 17% lower.
💡 Example full menu:
Appetizer €12.50 → €11.47 excl. VAT
Main course €28.00 → €25.69 excl. VAT
Wine €6.50 → €5.37 excl. VAT
These amounts are what you use for your food cost calculations
Common mistakes
The biggest mistake is applying the VAT percentage incorrectly:
- Wrong: €25.00 - (€25.00 × 0.09) = €22.75
- Correct: €25.00 ÷ 1.09 = €22.94
The difference seems small, but across your entire menu it adds up to incorrect food cost percentages.
⚠️ Watch out for mixed menus:
If you sell both food and alcoholic beverages, pay attention to the correct VAT rate per product. A beer with lunch has 21% VAT, the lunch itself 9%.
Digital tools
Manual conversion takes time and leads to errors. An app like KitchenNmbrs automatically converts your excluding VAT prices and uses them for food cost calculations. This way you avoid calculation mistakes and always have the correct figures at hand.
How do you calculate excluding VAT prices? (step by step)
Determine the correct VAT rate
Check per product whether it's 9% (food, non-alcoholic) or 21% VAT (alcohol). This is shown on your receipt or in your POS system. Unsure? Food and soft drinks are almost always 9%.
Apply the formula
Divide the including VAT price by (1 + VAT percentage). At 9%: divide by 1.09. At 21%: divide by 1.21. Round to 2 decimal places for practical use.
Check your result
Quick check: at 9% VAT your result should be roughly 8% lower than your starting amount. At 21% VAT roughly 17% lower. Doesn't match? Then you probably made a calculation error.
✨ Pro tip
Create a list of all your dishes with both including and excluding VAT prices. This way you don't have to recalculate every time and you avoid errors in food cost calculations.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Do I always have to calculate excluding VAT for food costs?
Yes, always. VAT is not part of your margin but a pass-through to the government. If you calculate with including VAT then your food cost appears lower than it actually is.
What if I sell mixed products like a lunch with a beer?
Calculate each item separately. The lunch has 9% VAT, the beer 21% VAT. Convert both to excluding VAT and only then add up your food costs.
Can't I just subtract 9% from my menu price?
No, that's wrong. You need to divide by 1.09, not subtract 9%. The difference seems small but leads to incorrect food cost percentages across your entire menu.
How do I know for sure which VAT rate to use?
Check your POS system or receipt. Food and non-alcoholic beverages are 9%, alcoholic beverages 21%. If in doubt: ask your accountant or supplier.
Do I have to do this for each dish separately?
For accurate food cost calculation, yes. Many entrepreneurs use an app like KitchenNmbrs that does this automatically for all dishes at once.
📚 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.
Set selling prices based on facts
Guessing at prices? KitchenNmbrs calculates the ideal selling price based on your actual food cost and desired margin. Test it free for 14 days.
Start free trial →