Your dish costs determine if you'll make money or watch it disappear with every order. Too many new restaurant owners guess at these numbers and end up losing cash on popular menu items. Here's how to nail down the real cost of each dish before you open your doors.
Why cost price calculation matters from day one
You don't have years of experience to fall back on yet. That €18 pasta might seem profitable until you realize the ingredients cost €8 — putting you at a crushing 44% food cost. Most restaurants can't survive those margins.
⚠️ Note:
Always calculate with the selling price excluding VAT. The price on your menu includes 9% VAT for food.
List every single ingredient and its price
Grab your supplier price sheets and account for everything that touches the plate:
- Main ingredients (meat, fish, vegetables)
- Garnishes and side dishes
- Sauces and dressings
- Oil, butter, salt, spices
- Decoration and microgreens
That pinch of sea salt costs money. So does the drizzle of truffle oil.
💡 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
Factor in cutting loss and waste
Raw ingredients don't magically transform into perfect portions. You'll lose chunks to prep:
- 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!
Set your target food cost percentage
Aim for 28% to 35% food cost to stay profitable. From tracking this across dozens of restaurants, 30% gives new operators breathing room without sacrificing margins.
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)
Reality-check your prices
Your math might be perfect, but customers won't care if your prices are way off market rates. Scout what similar spots charge for comparable dishes.
Priced too high? You've got three moves:
- Source cheaper ingredients
- Trim portion sizes
- Accept higher food cost (max 35%)
⚠️ Note:
Never go above 35% food cost. You won't earn enough to cover your other costs (rent, staff, energy).
Track everything in one system
Spreadsheets work initially but turn into a nightmare fast. Digital tools automatically recalculate when supplier prices shift and give you instant food cost visibility.
Benefits of going digital:
- 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
Run the numbers on your 5 highest-cost dishes within 48 hours of finalizing your menu. These expensive items will either fuel your profits or sink them if you've miscalculated.
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
Should I include VAT in my cost calculations?
No, always work with prices excluding VAT. The food cost formula uses your selling price before the 9% VAT gets added on.
What food cost percentage should I target as a new restaurant?
Stay between 28% and 35% to remain profitable. Aim for 30% as a new operator — it gives you some wiggle room while keeping margins healthy.
How often do I need to recalculate my dish costs?
Review supplier prices monthly at minimum. But if key ingredients jump more than 10%, you need to adjust menu prices immediately or risk bleeding money.
What if my calculated price is too high for my market?
You have three options: find cheaper ingredient sources, reduce portion sizes, or temporarily accept higher food cost. Never exceed 35% though — that's the danger zone.
Do labor and overhead costs go into the dish cost calculation?
No, dish cost covers ingredients only. Your staff wages, rent, and utilities come from the remaining 70% margin after food costs.
How should I handle seasonal ingredient price swings?
Monitor your key ingredients weekly during volatile seasons. Build a 5-10% price buffer into your menu to absorb minor fluctuations without constantly reprinting menus.
📚 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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