How to Cost a Dish: A Step-by-Step Guide for Restaurant Owners
Costing a dish means calculating the exact ingredient cost for one serving, then using that number to set a menu price that covers your costs and protects your profit margin. Here is how to do it correctly — with a real worked example.
The Core Formula
Example: $4.00 ingredient cost / 0.30 (30% target) = $13.33 menu price
Step 1: List Every Ingredient
Start with a standardized recipe — a recipe that specifies exact quantities for a fixed number of portions. List every single ingredient including:
- ·Main protein or primary ingredient
- ·Vegetables, starches, and sides on the plate
- ·Sauces, glazes, and marinades
- ·Oils, butter, and cooking fats
- ·Garnishes (herbs, microgreens, lemon wedge)
- ·Condiments served with the dish
- ·Packaging and containers (for delivery or takeout)
Common mistake: Forgetting small items
Salt, pepper, a lemon wedge, a sprig of parsley — individually small, but across 80 covers a night they add up. Add a miscellaneous line of $0.10–0.25 per dish to capture these.
Step 2: Calculate Each Ingredient Cost
For each ingredient, the formula is:
Example 1 — Chicken: You use 220g raw chicken. You buy 1 kg bags at $8.50. Cost = (220 / 1000) x $8.50 = $1.87
Example 2 — Olive oil: You use 15ml. You buy 1L bottles at $15. Cost = (15 / 1000) x $15 = $0.23
Example 3 — Fresh herbs: You use 5g basil. You buy 25g packs at $4. Cost = (5 / 25) x $4 = $0.80
Step 3: Adjust for Yield
Raw ingredients lose weight during prep and cooking. If you ignore this, your food cost will be understated. The yield-adjusted cost per usable unit is:
A chicken thigh at $8.50/kg with 72% yield (after cooking shrinkage) costs $8.50 / 0.72 = $11.81/kg of usable meat. Always use the yield-adjusted cost in your ingredient calculation.
Worked Example: Pan-Roasted Chicken Thigh
Here is a full ingredient cost breakdown for one portion, using yield-adjusted costs:
| Ingredient | Amount | Yield | Unit Cost | Line Cost |
|---|---|---|---|---|
| Chicken thigh (bone-in) | 220g raw | 72% | $8.50/kg | $1.87 |
| Olive oil | 15ml | 100% | $0.015/ml | $0.23 |
| Garlic | 10g | 88% | $0.012/g | $0.12 |
| Cherry tomatoes | 80g | 95% | $0.008/g | $0.64 |
| Fresh basil | 5g | 90% | $0.04/g | $0.20 |
| White wine | 30ml | 100% | $0.009/ml | $0.27 |
| Salt, pepper, herbs | — | — | — | $0.15 |
| Total Ingredient Cost per Serving | $3.48 | |||
Ingredient Cost
$3.48
At 30% food cost
$11.60
suggested price
Gross Margin
70%
before labor/OH
Step 4: Add Labor and Overhead (Optional but Important)
Ingredient cost alone does not tell you whether a dish is profitable — you also need to cover labor and overhead. The industry rule of thumb:
If your three costs total more than 80% of revenue, you are not profitable. That is why food cost control is so critical — a 3% reduction in food cost goes directly to your bottom line.
Step 5: Set the Menu Price
Once you have your ingredient cost per serving, divide by your target food cost percentage:
Apply psychological pricing — round to .99 or .95 endings. $11.60 becomes $11.99. $13.92 becomes $13.99 or $14. These price points feel lower to guests while improving perceived value.
How to Cost a Dish for Delivery
Delivery platforms like DoorDash and Uber Eats charge 15–30% commission. This dramatically changes your effective food cost. A dish you price at $12 for dine-in:
Most restaurants add a 15–20% markup to delivery prices. Price that dish at $14–15 on delivery apps to maintain the same effective food cost percentage.
Use the free recipe cost calculator
Enter your ingredients, quantities, and prices — get cost per serving and suggested menu price instantly. No spreadsheet required.
5 Costing Mistakes That Quietly Distort Your Numbers
Every one of these produces a costing card that looks finished and is wrong. They are listed in roughly the order we see them cause the most damage.
Using purchase weight instead of yield-adjusted weight
The most common costing error by a wide margin. Proteins especially lose significant weight through trimming and cooking, so costing a 200g portion against the raw purchase price understates the true cost. Always apply a yield percentage to proteins.
Costing the recipe as written, not as cooked
If your cooks plate a different portion than the spec says, your costing card describes a dish nobody serves. Weigh a few plated portions during an actual service before trusting the card.
Forgetting the small ingredients
Oils, spices, herbs, and condiments feel too minor to bother with. Together they commonly add $0.30 to $0.60 per dish, which is enough to move food cost 2 to 3 points on a lower-priced item.
Ignoring house-made components
If you make your own stock, dressing, sauce, bread, or pasta, each needs its own sub-recipe cost before it can be entered into the main dish. Costing them as though they were free is one of the biggest silent gaps in scratch kitchens.
Never updating after supplier prices move
A costing card from six months ago can already be 10 to 15% off on proteins. The build is not the hard part; keeping it current is. Put a recurring audit in the calendar or use something that recalculates for you.
Frequently Asked Questions
How often should I re-cost my dishes?
Re-cost every time a key ingredient price changes significantly — typically every 3–6 months, or whenever your food cost percentage rises more than 2–3 points above target. Protein and produce prices fluctuate seasonally; these are the items to watch most closely.
What is the difference between theoretical and actual food cost?
Theoretical food cost is what your food cost should be based on your recipe costing. Actual food cost is what you really spent, calculated from your inventory counts. The gap between the two — often called variance — reveals waste, theft, portioning errors, and spoilage. Healthy restaurants keep this variance under 1–2%.
Do I need to cost every dish on my menu?
Yes — every dish should have a cost card. Prioritize your highest-selling and highest-cost items first. Use your recipe cost calculator to build a cost card for each dish and update them whenever ingredient prices change.
How do specials and seasonal dishes get costed?
Cost them the same way before you add them to the menu. The advantage of specials is that you can respond to ingredient market prices — if produce is cheap this week, feature dishes heavy in that ingredient to achieve lower food cost while offering perceived value to guests.