The cost price of your dishes determines whether you make a profit or loss. Many starting restaurant owners estimate this, causing them to unknowingly lose money on every portion sold. In this article you'll learn step-by-step how to calculate exactly what each dish on your first menu really costs.
Why cost price calculation is crucial when starting out
As a new restaurant owner, you don't yet have a feel for what things cost. You might think a pasta for €18 is profitable, but if the ingredients cost €8, you're already at 44% food cost. That's too high for most restaurants.
⚠️ Note:
Always calculate with the selling price excluding VAT. The price on your menu includes 9% VAT for food.
Gather all ingredients and their prices
Start with your supplier price list. Add up literally everything that goes on the plate:
- Main ingredients (meat, fish, vegetables)
- Garnishes and side dishes
- Sauces and dressings
- Oil, butter, salt, spices
- Decoration and microgreens
Don't forget anything. Even that teaspoon of olive oil counts.
💡 Example: Pasta Carbonara
Ingredients per portion:
- Pasta (120g): €0.45
- Bacon (80g): €1.20
- Egg (1 piece): €0.25
- Parmesan (30g): €1.80
- Cream (50ml): €0.30
- Garlic, parsley, oil: €0.20
Total cost price: €4.20
Calculate cutting loss and waste
Not everything you buy ends up on the plate. With fresh products you always have loss:
- Fish: 40-55% loss (head, bones, skin)
- Meat: 15-25% loss (fat, tendons)
- Vegetables: 15-25% loss (peels)
Formula: Actual price = Purchase price ÷ (100% - loss percentage)
💡 Example: Salmon fillet
You buy whole salmon for €18/kg, but have 45% cutting loss:
- Purchase price: €18/kg
- Yield: 55% (100% - 45%)
- Actual fillet price: €18 ÷ 0.55 = €32.73/kg
So calculate with €32.73/kg, not €18/kg!
Determine your desired food cost percentage
For a healthy profit margin, keep your food cost between 28% and 35%. As a starter, you're best off aiming for 30%.
Formula for minimum selling price:
Selling price excl. VAT = Ingredient cost price ÷ (Desired food cost ÷ 100)
💡 Example: Steak
Ingredient cost price: €12.50. Desired food cost: 30%
- Minimum price excl. VAT: €12.50 ÷ 0.30 = €41.67
- Price incl. 9% VAT: €41.67 × 1.09 = €45.42
Menu price: €45.50 (rounded)
Test your prices against the market
Your cost price is correct, but is your price also realistic? Check what comparable restaurants charge for similar dishes.
Too expensive? Then you have three options:
- Find cheaper ingredients
- Serve smaller portions
- Accept higher food cost (max 35%)
⚠️ Note:
Never go above 35% food cost. Then you earn too little to cover your other costs (rent, staff, energy).
Keep track of your cost prices in a system
Excel works, but quickly becomes confusing. With an app like KitchenNmbrs you calculate cost prices automatically and see your food cost per dish at a glance.
Benefits of digital tracking:
- Automatic recalculation when prices change
- Overview of all dishes at a glance
- Easy adjustment of portion sizes
- Share with your kitchen team
Calculate cost price: step by step
Create an ingredient list per dish
Write down all ingredients with exact quantities. Spices, oil and garnish also count. Weigh or measure everything while cooking.
Calculate the costs per ingredient
Use your supplier prices and convert to the portion size. With cutting loss, divide the purchase price by the yield percentage.
Add up all costs for the total cost price
Sum all ingredient costs. This is your cost price per portion. Divide by your desired food cost percentage for your minimum selling price.
✨ Pro tip
Start with cost price calculation of your 5 most popular dishes. If those are right, you have 80% of your revenue under control.
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 need to include VAT in my cost price calculation?
No, always calculate excluding VAT. The food cost formula uses the selling price excluding VAT. For food in restaurants that's 9% VAT.
What is a healthy food cost for a starting restaurant?
Between 28% and 35% is standard. As a starter you're best off aiming for 30%. Higher than 35% becomes difficult to be profitable.
How often should I update my cost prices?
Check your supplier prices at least monthly. With major price increases (>10%) you need to adjust your menu prices immediately.
What if my cost price is too high for the market?
Find cheaper ingredients, make portions smaller, or temporarily accept higher food cost. Never go above 35%.
Do I need to include staff and rent costs in the cost price?
No, cost price is ingredients only. Staff and rent are operational costs that you cover with your margin (70% of your selling price).
📚 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.
Start your restaurant with the right numbers
A business plan without food cost calculation is a gamble. KitchenNmbrs lets you calculate recipes before you open. Start well-prepared. Try it free.
Start free trial →