Food costing is the foundation of restaurant profitability. If you do not know what each dish costs to make, you cannot price it correctly. Here is how to do it, step by step.
What is food costing?
Food costing is the process of calculating the ingredient cost for one serving of a dish, then using that number to set a menu price that covers your costs and generates profit.
Formula 1 — Food cost per dish
Food Cost = Σ (ingredient quantity × unit cost)
Sum of every ingredient's cost for one portion
Formula 2 — Menu price from food cost
Menu Price = Food Cost ÷ Target Food Cost %
The minimum selling price to hit your target margin
Write down every ingredient that goes into one serving of the dish — including cooking oil, garnishes, sauces, and sides. Many beginners forget small-cost items like salt, pepper, and herbs. These add up.
Grilled Chicken (1 portion): Chicken breast: 180g Olive oil: 10ml Garlic: 5g Lemon: 0.25 each Mixed herbs: 2g Salt & pepper: 3g
Use your most recent supplier invoice — not the supermarket retail price. Convert pack prices to unit costs. For example: a 5kg bag of chicken costs $22 → $4.40 per kg → $0.792 per 100g.
Chicken breast: $4.40/kg → $0.0044/g Olive oil: $12/1L → $0.012/ml Garlic: $3.20/kg → $0.0032/g Lemon: $0.35 each Mixed herbs: $18/100g → $0.18/g Salt & pepper: ~$0.05 (estimated)
Apply the unit cost to the recipe quantity for each ingredient. This gives you the cost of that ingredient for one portion.
Chicken (180g × $0.0044): $0.79
Olive oil (10ml × $0.012): $0.12
Garlic (5g × $0.0032): $0.02
Lemon (0.25 × $0.35): $0.09
Herbs (2g × $0.18): $0.36
Salt & pepper (est.): $0.05
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Total food cost: $1.43Raw ingredients lose weight during preparation — trimming, cooking, evaporation. The usable portion is called yield. Divide by yield % to get the true cost.
Chicken breast yield after trimming: 92% True cost = $0.79 ÷ 0.92 = $0.86 If including a side salad that costs $0.80: Total corrected food cost = $1.43 + ($0.80 ÷ 0.95) = $2.27
This is the pricing formula. The result is the minimum price you can charge and still hit your target food cost percentage.
Food cost per dish: $2.27 Target food cost %: 30% Menu price = $2.27 ÷ 0.30 = $7.57 minimum Round up to: $8.95 or $9.50
The total ingredient cost to produce one serving. This is your starting number for everything else.
Food cost expressed as a share of the selling price. FC% = (Food Cost ÷ Selling Price) × 100.
The proportion of a raw ingredient that is usable after trimming, peeling, or cooking. A chicken breast with 92% yield means 100g raw → 92g usable.
Food cost + labor cost. Should stay under 60% of revenue for most restaurant types.
What your food cost should be based on recipes and sales mix — before actual waste, theft, or over-portioning.
What you actually spent: (Beginning Inventory + Purchases − Ending Inventory) ÷ Revenue.
Actual FC% − Theoretical FC%. More than 2–3% signals a problem worth investigating.
| Restaurant type | Target FC% | Price multiplier |
|---|---|---|
| Fast food / QSR | 25–28% | 3.6–4.0× |
| Fast casual | 28–32% | 3.1–3.6× |
| Casual dining | 28–35% | 2.9–3.6× |
| Fine dining | 30–38% | 2.6–3.3× |
| Bakery / café | 28–35% | 2.9–3.6× |
| Bar / gastropub | 22–28% | 3.6–4.5× |
Using retail prices
Always use your actual wholesale invoice price. Retail prices are 30–60% higher and will cause you to underprice.
Skipping small ingredients
Salt, pepper, oil, herbs, and garnishes add up to $0.20–0.50 per dish. Over 200 covers a day that is $40–100 in untracked cost.
Forgetting yield loss
Raw weight ≠ plated weight. Proteins lose 15–25% to cooking. Vegetables lose 10–30% to trimming. Always apply yield %.
Costing once and forgetting
Supplier prices change. Recost your top 20% highest-selling dishes every 3–6 months, or whenever a major ingredient cost shifts.
Using the same FC% for every dish
Proteins run 35–45% food cost. Beverages and desserts run 15–25%. Price each category at its own target to optimize total margin.
What is food costing?
The process of calculating the ingredient cost to produce one serving of a dish, then using that number to set a profitable menu price.
What is the food costing formula?
Two formulas: (1) Food Cost per Dish = Σ(quantity × unit cost); (2) Menu Price = Food Cost ÷ Target FC%. Example: $4.20 cost ÷ 0.30 = $14 minimum price.
What food cost percentage should a restaurant target?
28–35% for most restaurants. Fast casual targets 28–32%. Fine dining can run up to 38%. The key benchmark is prime cost (food + labor) under 60% of revenue.
How do you calculate food cost for a recipe?
List every ingredient with its quantity per portion. Find the unit cost from your supplier invoice. Multiply quantity × unit cost for each ingredient. Sum the totals. Adjust for yield. Divide by your target FC% to get the minimum menu price.
MenuPricer does all five steps for you. Enter your ingredients, get your food cost, your minimum price, and an AI-suggested optimal price — in seconds.
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