Food cost for beginners: three steps and a calculator
A dish that costs £3.50 in ingredients and sells for £12 leaves you £8.50 gross margin. That margin pays your rent, gas, wages and (with luck) a bit of profit. Food cost is the percentage of the selling price taken up by ingredients: in this case, 29%. Getting it right tells you whether a dish earns its place or quietly bleeds you dry.
Three steps (once, for every dish)
1. List every ingredient and its quantity. Write down grams, millilitres or units. No "a splash of oil" — weigh or measure it once and note it.
2. Calculate the cost of each ingredient in that recipe. If you buy a kilo of flour for £1.20 and use 200 g, the cost is £0.24. Add up all the ingredients.
3. Apply the food cost formula. Divide the total cost by the selling price and multiply by 100:
Food cost % = (Ingredient cost ÷ Selling price) × 100
Example with round numbers
| Dish | Ingredient cost | Selling price | Food cost % | Gross margin |
|---|---|---|---|---|
| Avocado toast | £2.00 | £7.00 | 29% | £5.00 |
| Soup of the day | £1.20 | £5.50 | 22% | £4.30 |
| Carrot cake | £0.80 | £3.50 | 23% | £2.70 |
Example (illustrative numbers). Food cost % = (cost ÷ price) × 100. Gross margin = price − cost.
A food cost between 25 % and 35 % usually works for small cafés and restaurants, but it depends on your rent, your location and your other overheads. What matters is that you know the exact number for each dish.
What to do this week
Start with your three best-sellers. Weigh them once, calculate the real cost and compare it to what you charge. If a popular dish has a 45 % food cost, you're losing money every time you serve it. Adjust the recipe (smaller portion, cheaper ingredient) or raise the price a little.
If you've got ten dishes on the menu, repeat the calculation for all of them. It'll take an hour. Then revisit the numbers whenever a supplier price changes.
Compare your prices to the market using Pricora's price analyzer, which crosses your costs against real data and tells you if there's room to raise prices or if you're out of range.
FAQ
Do I have to include oil, salt and spices?
Yes. Even if it's a small amount, add it in. A drizzle of extra-virgin olive oil costs £0.10–£0.15 per portion; over a hundred plates a month that's £10–£15 disappearing if you don't count it.
What if my food cost is over 35 %?
First check your portions: often you're serving more than you need to. If the portions are right, cut back on one expensive ingredient, swap it for something seasonal or raise the price by £0.50–£1. Do the sums before you change anything.
Do I need special software?
No. A spreadsheet, a calculator or even pen and paper will do. What matters is writing down the real numbers and recalculating when prices change.