I'll be honest - most new restaurant owners are bleeding money without realizing it. They guess at food costs and wonder why their bank account shrinks despite busy nights. Calculating exact dish costs isn't optional anymore.
Why cost price calculation is crucial when starting up
New restaurant owners don't have intuition for real costs yet. That €28 steak looks profitable until you crunch numbers and discover 40% food cost. Every plate becomes a loss.
⚠️ Watch out:
Restaurants don't fail from empty dining rooms - they fail from wrong pricing. You can pack the house nightly and still hemorrhage cash.
The basic formula for cost price calculation
Every dish needs its food cost percentage calculated with this formula:
Food cost % = (Ingredient costs / Selling price excl. VAT) × 100
Target food costs run 28-35%. Go higher and profitability dies.
💡 Example:
Pasta carbonara - ingredients:
- Pasta: €0.80
- Bacon: €2.10
- Eggs: €0.60
- Parmesan: €1.40
- Other (oil, pepper): €0.30
Total ingredients: €5.20
Selling price €18.50 incl. VAT = €16.97 excl. VAT
Food cost: (€5.20 / €16.97) × 100 = 30.6%
How tools speed up this process
Manual calculations for full menus take days. Food cost calculators like KitchenNmbrs automate everything:
- Ingredient database: Enter purchase prices once
- Automatic calculation: App calculates cost price per portion
- Direct food cost: See your food cost percentage immediately
- Price advice: Get suggestions for menu prices
Common mistakes with your first menu
⚠️ Watch out:
Always calculate with prices EXCLUDING VAT. Menu prices include 9% VAT for food. Beginners mess this up constantly and think their food costs are lower than reality.
Other frequent errors:
- Forgetting garnish: That butter pat, parsley sprig, bread basket
- Ignoring cutting loss: 1kg beef doesn't yield 1kg steaks
- Guessing portion sizes: "A drizzle of olive oil" becomes 20ml fast
- Using outdated prices: Internet prices lie - check your actual suppliers
💡 Example cutting loss:
Whole salmon €18/kg, but filleting leaves 60%:
- Actual fillet price: €18 / 0.60 = €30/kg
- NOT: €18 × 0.60 = €10.80 (this is wrong!)
You're paying €30/kg for usable salmon, not €18
From cost price to menu price
Once you know ingredient costs, calculate minimum selling price:
Minimum price excl. VAT = Cost price / (Desired food cost% / 100)
Then multiply by 1.09 for VAT-inclusive menu price. From years of working in professional kitchens, I've seen chefs skip this VAT step and wonder why their margins vanish.
💡 Example price calculation:
Steak with ingredient costs €9.50, targeting 30% food cost:
- Minimum price excl. VAT: €9.50 / 0.30 = €31.67
- Price incl. 9% VAT: €31.67 × 1.09 = €34.52
- Rounded on menu: €34.50
Check: €9.50 / €31.67 = 30.0% food cost ✓
Realistic time investment
For 25-dish menus:
- Manual: 2-3 days full-time calculating and double-checking
- With software: 4-6 hours (mostly ingredient entry)
- Updates later: 5 minutes per dish when prices change
Software doesn't just save initial time - it saves you when suppliers raise prices monthly. And they will.
How do you calculate cost prices for your first menu? (step by step)
Gather all recipes and ingredient lists
Make a complete ingredient list for each dish with exact quantities per portion. Don't forget garnish, sauces, oil or butter. Measure everything, don't estimate.
Enter purchase prices of all your ingredients
Check the actual prices from your suppliers, not prices from the internet. Enter these in KitchenNmbrs per unit (per kg, per liter, per piece).
Calculate cost price per dish automatically
KitchenNmbrs now automatically calculates what each dish costs. Check if the food cost is between 28-35%. If not, adjust the portion size or selling price.
Set your menu prices
Use the price advice feature to see what selling price you need. Round to logical amounts (€24.50 instead of €24.73).
Test and verify with trial runs
Make a few dishes and check if your portion sizes are correct. Adjust where needed and update the cost prices in the app.
✨ Pro tip
Focus on your 3 highest-volume dishes first and get their costs nailed down within your first week. These likely represent 60% of your revenue - perfect the rest later.
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 price calculation?
Never calculate WITH VAT. The food cost formula uses selling price excluding VAT. For restaurant food that's 9% VAT, so divide your menu price by 1.09.
What if my food cost exceeds 35%?
You're losing money on that dish. Reduce portion sizes, find cheaper ingredients, or raise the selling price. Good software shows you the impact of each change immediately.
How often should I update my cost prices?
Check monthly minimum - suppliers raise prices constantly. Update your purchase prices and see the immediate effect on food cost percentages.
Should I account for cutting loss in my calculation?
Absolutely essential. Buy whole salmon at €18/kg but lose 40% filleting? You're actually paying €30/kg for usable fillet. Calculate with that €30, never the €18.
📚 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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