Landed cost is the actual price you pay for an imported ingredient, including all additional costs. Many restaurants only calculate with the purchase price and forget transport, import duties and other costs. In this article you'll learn step-by-step how to calculate the total landed cost.
What is landed cost?
Landed cost is the total cost price of a product from the moment it's purchased until it arrives in your inventory. It goes beyond just the supplier's purchase price.
For imported ingredients, landed cost consists of:
- Purchase price of the product
- Transport and freight costs
- Import duties and customs costs
- VAT and other taxes
- Insurance
- Storage and handling costs
Why is this important for your food cost?
If you only calculate with the purchase price, you underestimate the actual costs. This can significantly distort your food cost percentage.
💡 Example:
You import truffles from France for €200 per kg:
- Purchase price: €200/kg
- Transport: €15/kg
- Import duties: €8/kg
- Insurance: €3/kg
- Handling costs: €4/kg
Landed cost: €230/kg (15% higher than purchase price)
If you calculate in your recipes with €200/kg while you actually pay €230/kg, your food cost will run 15% higher than expected.
Transport and freight costs
These are the costs to get the product from the supplier to your location. With imports, there's often additional handling involved.
Transport costs are usually calculated based on:
- Weight: €X per kg
- Volume: €X per m³
- Value: X% of product value
⚠️ Note:
Always request a detailed quote. Some importers charge additional costs not included in the initial price.
Import duties and customs costs
When importing from outside the EU, you often pay import duties. These vary by product type and country of origin.
Common tariffs for food products:
- Fresh products: 0-10%
- Processed products: 5-25%
- Specialty products (truffles, caviar): 10-30%
Additionally, there are often customs clearance costs of €25-75 per shipment.
VAT and other taxes
You pay VAT on the total value (product + transport + import duties). For food products this is usually 9%.
💡 VAT calculation example:
Import of olive oil from Turkey:
- Product value: €1,000
- Transport: €150
- Import duties (8%): €80
- Subtotal: €1,230
- VAT (9%): €110.70
Total including VAT: €1,340.70
Insurance and risks
Transport of valuable ingredients is often insured against loss or damage. This usually costs 0.1-0.5% of the product value.
For fragile products like fresh fish or specialty cheeses, this can go up to 1-2%.
Storage and handling costs
Some imported products must be temporarily stored before they reach your restaurant. This applies especially to:
- Frozen products
- Products with special storage requirements
- Large volumes delivered in parts
Storage costs range from €2-15 per kg per month, depending on the type of storage.
Calculation per kg vs. per shipment
Some costs are per kg, others per shipment. For accurate cost calculation, you need to convert this to costs per kg.
💡 Conversion example:
You order 50 kg of specialty spices:
- Purchase price: €25/kg = €1,250
- Transport (fixed amount): €200
- Customs costs (fixed): €50
- Total fixed costs: €250
Fixed costs per kg: €250 ÷ 50 kg = €5/kg
Landed cost: €25 + €5 = €30/kg
Seasonal influences on landed cost
Transport costs can vary significantly by season, especially for fresh products. In winter, freight costs are often 20-40% higher due to weather conditions.
Exchange rates also affect your landed cost if you purchase in foreign currencies.
KitchenNmbrs and landed cost
In KitchenNmbrs you can enter the actual landed cost per ingredient instead of just the purchase price. This gives you a realistic picture of your food cost.
You can also record multiple suppliers per ingredient with their respective landed costs, so you can easily compare.
How do you calculate landed cost? (step by step)
Gather all costs
Make a list of all costs: purchase price, transport, import duties, VAT, insurance, storage and customs costs. Ask your supplier for a detailed cost breakdown.
Convert fixed costs to costs per kg
Divide fixed costs (such as transport and customs costs) by the total weight of your order. This gives you the fixed costs per kg that you add to the purchase price.
Add up all costs for the total landed cost
Purchase price + transport per kg + import duties per kg + insurance per kg + storage per kg + other costs per kg = total landed cost per kg. This is your actual cost price.
✨ Pro tip
Create an Excel sheet with all landed cost components per supplier. This way you can see at a glance which supplier is actually the cheapest, not just on purchase price.
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
Should I include VAT in my landed cost calculation?
No, for food cost calculations you always calculate excluding VAT. VAT is a pass-through item that you recover from guests. Calculate landed cost excluding VAT and use that in your cost calculation.
How often should I update my landed cost?
Check your landed cost at least every 3 months. Transport costs and exchange rates can change quickly. For products you purchase weekly, monthly checks are more sensible.
What if my supplier won't specify the landed cost?
Ask for an all-in price and compare it with other suppliers. A reliable supplier should be transparent about all costs. Otherwise, it's better to find an alternative.
Is landed cost only important for expensive ingredients?
No, landed cost can also distort your food cost with cheaper products. Especially with large volumes, transport costs can weigh relatively heavily. Check it for all imported ingredients.
Can I estimate landed cost instead of calculating it exactly?
Estimating is dangerous for your margins. An estimate of 10% extra can actually be 20%. Calculate it exactly, especially for ingredients you use regularly.
📚 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.
Optimize your purchasing with data
Know exactly which supplier is most cost-effective and how price changes affect your margins. KitchenNmbrs links purchasing directly to recipe costs. Try it free for 14 days.
Start free trial →