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How food cost is calculated
Food cost is the share of your selling price that goes on raw ingredients. It's always calculated on the price excl. VAT: otherwise the result is thrown off by the VAT amount.
Dish ingredient costfor each ingredient, the sum of the quantity used × its purchase price
Selling price excl. VATmenu price incl. VAT ÷ (1 + VAT rate ÷ 100)
Food cost (%)ingredient cost ÷ selling price excl. VAT × 100
Gross margin (€)selling price excl. VAT − ingredient cost
Multiplierselling price excl. VAT ÷ ingredient cost
What each term means
- Ingredient cost
- What the ingredients on the plate cost you to buy, at the weight actually served. Count the trimmings and prep waste: 200 g of tomatoes on the plate is not 200 g bought.
- Selling price excl. VAT
- Your menu price with the VAT taken off. For eat-in dining it's 10% on food and soft drinks, 20% on alcohol. A dish listed at 14,08 € incl. VAT only earns you 12,80 € excl. VAT.
- Food cost
- The percentage of the price excl. VAT eaten up by ingredients. It's a management indicator, not a goal in itself.
- Gross margin
- What's left once the ingredients are paid for. It's this, multiplied by the number of sales, that pays the kitchen, the front of house, the rent and you.
- Multiplier
- The multiplier applied to the ingredient cost to reach the price excl. VAT. A food cost of 25% is the same as a multiplier of 4.
A worked example: a margherita pizza
Let's take the calculator's pre-filled values, line by line.
- Tomatoes: 200 g at 8 €/kg0,200 × 8 = 1,60 €
- Mozzarella: 100 g at 12 €/kg0,100 × 12 = 1,20 €
- House dough ball: 1 unit at 0,40 €= 0,40 €
- Dish ingredient cost1,60 + 1,20 + 0,40 = 3,20 €
- Menu price: 14,08 € incl. VAT, VAT 10%14,08 ÷ 1,10 = 12,80 € excl. VAT
- Food cost3,20 ÷ 12,80 × 100 = 25,0%
- Gross margin12,80 − 3,20 = 9,60 €, i.e. 75% of the price excl. VAT
- Multiplier12,80 ÷ 3,20 = 4,0
Food cost 25% · gross margin 9,60 € · multiplier 4,0 — the pizza is on target.
These 9,60 € aren't profit: they still have to pay the chef, the oven, the rent and the unsold stock. That's why two dishes with the same food cost can have opposite profitability — one that sells 40 times a service brings in 384 € of margin, one that sells 3 times brings in 29. The restaurant food cost software cross-references your sales and your margins precisely to spot the dishes that really carry the house.
FAQ
Food cost: frequently asked questions
The questions you ask yourself in front of your menu, with the trade's benchmarks.
What food cost should you aim for in a restaurant?
Aim for a food cost between 25 and 35% of the selling price excl. VAT: that's the usual range in casual dining. Below 25%, the margin is comfortable but the price can look steep to the customer; above 35%, it gets hard to pay payroll and fixed costs. A bar or a pizzeria often runs lower (20-30%), while a fine-dining restaurant sometimes accepts 35-40% on premium produce, offset by a higher average spend.
Is food cost calculated on the price excl. VAT or incl. VAT?
Always on the selling price excl. VAT. VAT isn't your money: you collect it for the state. Calculating food cost on the price incl. VAT makes it look about 10% lower than reality (at 10% VAT), and you think you're making margin when you aren't. So the formula is: ingredient cost ÷ (price incl. VAT ÷ 1,10) × 100 for a dish at 10% VAT.
Why aim for a multiplier of 3 to 4 on the ingredient cost?
Because a multiplier of 3 corresponds to a food cost of 33%, and a multiplier of 4 to 25% — the trade's target. Below 3, the gross margin no longer covers labour, energy and fixed costs, which weigh far more in a restaurant than the ingredients do. The multiplier is still a shortcut: applied blindly, it produces absurd prices on very expensive items (a côte de bœuf at ×4) or very cheap ones (a coffee at ×4).
Should labour and waste be included in the food cost?
No for labour, yes for waste. Food cost only measures ingredients; labour belongs to the full cost price, calculated afterwards. Waste, on the other hand, has to be built into the weight: if you buy 1 kg of fish for 600 g served, your ingredient cost is calculated on the kilo bought, not on the 600 g. Skipping this step is the most common and most costly mistake.
🍽️ Take it up a gear
The app does this automatically by scanning your invoices
Scan your supplier invoices: purchase prices kept current and the food cost of your whole menu recalculated continuously. Free on iPhone & iPad.
Download on the App Store Discover the Restaurant → 📘 Read the guide: calculating the cost price of a dish →📄 Leave with your calculation
A clean sheet: your line items, the result, the key figures and the calculation method. To file, attach to a quote or show your accountant.
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