Ingredient cost, cost price, food cost: don't confuse them
Three figures get thrown around in the kitchen, and they often get mixed up. They don't measure the same thing and they don't drive the same decisions.
Ingredient costthe sum of the recipe-sheet ingredients, at the weight actually bought
Cost priceingredient cost + production labour (time spent × all-in hourly rate)
Food cost (%)ingredient cost ÷ selling price excl. VAT × 100
The ingredient cost is the basis for everything: without it, neither of the other two exists. The cost price adds the work, and it's what tells you whether a very technical dish is really worth a place on the menu. The food cost is neither: it's a management ratio, handy for comparing two dishes and for setting a price quickly.
A classic trap: the food cost does not include labour. A tartare and a bœuf bourguignon can show the same food cost even though the second takes three hours of cooking and a full brigade. It's the cost price that tells them apart.
The method, step by step
- Write the recipe sheetList every ingredient in the dish with its exact quantity, in the unit you serve it in: 200 g of tomatoes, 100 g of mozzarella, 1 dough ball. Without a fixed recipe sheet, the cost shifts at every service depending on the cook's hand.
- Convert the purchase pricesAn ingredient measured in grams is calculated from a per-kilo price: 100 g of mozzarella at 12 €/kg is worth 0,100 × 12 = 1,20 €. It's the conversion error, not the supplier's price, that most often throws costs off.
- Factor in waste and yieldYou pay for the kilo bought, not the weight served. If 1 kg of whole fish yields 600 g of fillets, your ingredient cost is calculated on the whole kilo: the real cost of the 600 g served is the price of the kilo, not 60% of it.
- Add the production labourTime the production of a portion once (prep included, brought back to the portion) and multiply it by your all-in hourly rate — gross wage, employer's contributions and paid leave included. That gives you the dish's cost price.
- Choose the selling price excl. VATTwo equivalent methods: divide the ingredient cost by the target food cost (3,20 ÷ 0,25 = 12,80 €) or multiply it by a multiplier (3,20 × 4 = 12,80 €). Always check that the resulting price also covers the labour calculated in step 4.
- Convert back to incl. VAT for the menuPrice incl. VAT = price excl. VAT × (1 + VAT rate ÷ 100). For eat-in dining, food and soft drinks usually fall under 10%, alcohol under 20%. A dish listed at 14,08 € incl. VAT only earns you 12,80 € excl. VAT.
You can do steps 1, 2 and 5 right now in the free food cost calculator: it adds up the ingredients, strips out the VAT and shows the food cost, the gross margin and the multiplier as you type.
A full worked example: a margherita pizza
Let's take a simple dish, from the first gram to the break-even point.
- 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= 0,40 €
- Dish ingredient cost1,60 + 1,20 + 0,40 = 3,20 €
- Target menu price: food cost 25%3,20 ÷ 0,25 = 12,80 € excl. VAT, i.e. 12,80 × 1,10 = 14,08 € incl. VAT
- Gross margin12,80 − 3,20 = 9,60 €, i.e. 75% of the price excl. VAT — and a multiplier of 4,0
- Production labour: 6 min at 30 €/h all-in0,1 × 30 = 3,00 €
- Dish cost price3,20 + 3,00 = 6,20 € — 6,60 € left per pizza sold
Food cost 25% · cost price 6,20 € · 6,60 € left per sale to pay for the rest of the restaurant.
These 6,60 € aren't profit. They still have to cover the rent, energy, the dining room, insurance, the accountant and the unsold stock. This is where the break-even point comes in: if this restaurant carries 15 000 € of fixed costs a month, it needs 15 000 ÷ 6,60 ≈ 2 273 sales to cover them, i.e. about 87 a day over 26 opening days. Below that, it's working at a loss, whatever the food cost on show.
That's also why you don't spread fixed costs dish by dish: any allocation key would be arbitrary and would change with every swing in footfall. You check that fixed costs are covered as a whole, over the month.
Benchmark table: food cost and multiplier
These ranges are common ballpark figures for the trade, to check against your own numbers — not rules.
| Type of establishment | Target food cost | Equivalent multiplier |
|---|---|---|
| Casual dining | 25 to 35% | 3 to 4 |
| Pizzeria, bar, snack | 20 to 30% | 3,3 to 5 |
| Fine dining | 35 to 40% accepted | 2,5 to 3 |
| Food cost | Multiplier | Selling price excl. VAT |
|---|---|---|
| 20% | × 5,0 | 16,00 € |
| 25% | × 4,0 | 12,80 € |
| 30% | × 3,3 | 10,67 € |
| 33% | × 3,0 | 9,70 € |
| 35% | × 2,9 | 9,14 € |
| 40% | × 2,5 | 8,00 € |
The multiplier is just another way of writing the food cost: multiplier = 100 ÷ food cost. Applied blindly, it produces absurd prices on very expensive items (a côte de bœuf at ×4) as on very cheap ones (a coffee at ×4).
The mistakes that cost the most
- Calculating on the price incl. VATVAT isn't your money: you collect it for the state. On a dish at 10% VAT, a food cost calculated on the price incl. VAT looks about 10% lower than reality. You think you're making margin, you aren't.
- Forgetting trimming wasteThe weight served isn't the weight bought. Trimmings, peelings, bones, outer leaves: if you only count what reaches the plate, your ingredient cost is systematically understated.
- Managing by percentage rather than eurosA dish at 40% food cost sold for 30 € brings in 18 € of gross margin; one at 25% sold for 12 € brings in 9. The ratio has never paid a rent: it's the gross margin multiplied by the number of sales that counts.
- Fixing purchase prices once and for allA recipe sheet costed last year is worthless now. Butter, oil or fish move by tens of percent in a season, and your food costs move with them — silently.
- Putting labour into the food costFood cost only measures ingredients. Labour belongs to the cost price, calculated afterwards. Mixing them makes your ratios impossible to compare from one dish to the next and from one month to another.