How to cost a dish, step by step
To cost a dish, write down each ingredient with the amount the recipe uses. Work out what that amount costs at the price you buy it, add up the ingredients and divide by the number of portions. With the cost per portion and the selling price before VAT, you know what each dish leaves you and whether its menu price is right.
What you need
- The recipe with quantities, for a known number of portions: “for 8 portions”, not “a bit of mayonnaise”.
- The latest invoices for each ingredient, with the price before VAT and the pack size: 10 kg sack, 5 l jug, dozen.
- The menu price of the dish.
Step 1: write the recipe down as bought
Write down what you buy, not what ends up on the plate. If you peel 2 kg of potatoes and are left with 1.6 kg, the recipe cost uses 2 kg: you paid for the peel too. That difference is the trim waste, and the yield is what you keep, 80% in this case.
Trim waste matters most in vegetables, fish and meat prepared in the kitchen. Leave it out and every dish will look cheaper than it is.
Step 2: get each ingredient’s price per unit
Divide the pack price before VAT by what the pack holds. A 10 kg sack of potatoes at €9.90 comes to €0.99 a kilo. Use the price on the latest invoice, with any discounts shown on it.
VAT on purchases is left out: you reclaim it in your VAT return, so it is not a cost of the dish.
Step 3: work out what each ingredient costs
Multiply the recipe amount by the price per unit. For example, a Spanish potato salad (ensaladilla rusa) for 8 portions:
| Ingredient | In the recipe | Pack bought | Cost |
|---|---|---|---|
| Potato | 2 kg | 10 kg sack at €9.90 | €1.98 |
| Carrot | 300 g | 1 kg bag at €1.20 | €0.36 |
| Egg | 6 units | Dozen at €3.00 | €1.50 |
| Tuna in oil | 400 g | 900 g tin at €9.00 | €4.00 |
| Mayonnaise | 600 g | 3.6 kg tub at €10.80 | €1.80 |
| Olives | 100 g | 1 kg jar at €4.50 | €0.45 |
| Recipe total | €10.09 |
Step 4: divide by the portions
€10.09 for 8 portions is €1.26 per portion. That is the cost of the dish.
Step 5: work out the margin and the cost ratio
The margin is worked out on the selling price before VAT, which is what you actually keep. If you sell the salad at €7.50 with 10% VAT, the price before VAT is €6.82.
- Margin per portion: €6.82 − €1.26 = €5.56, 81.5% of the price before VAT.
- Cost ratio (the dish’s food cost): €1.26 over €6.82 = 18.5%.
You can repeat this example, or cost your own dishes, in the free recipe costing calculator. No sign-up, and nothing you type is stored.
The most common mistakes
- Counting VAT on purchases. It inflates the cost: purchase prices always go in before VAT.
- Working out the margin on the price with VAT. The 10% VAT is not yours: the margin is worked out on the price before VAT.
- Forgetting trim waste. Use the amount as bought.
- Forgetting the small things. Frying oil, salt, bread and garnish cost money too. If you don’t list them one by one, add them as “sundries”.
- Mixing units. A price per kilo with an amount in grams gives a cost a thousand times too high. Convert everything to the same unit before multiplying.
- Not keeping it up to date. A recipe cost with last year’s prices does not tell you what the dish leaves you today.
How often to update it
Every time an ingredient’s price changes. In practice, every time an invoice arrives with a different price. That is why many bars cost their dishes once and then give up: redoing it by hand with every invoice is not realistic. To know which products to watch, see how to keep supplier price rises under control. And to know whether your result is good, what a healthy food cost is for a bar.