How to calculate food cost, with an example

The three steps

1. Portion cost. For each ingredient multiply the quantity used by the unit price and add everything up. If an ingredient has waste (for example trimming vegetables), divide the price by the yield: a kilo with 80% yield costs 25% more per usable kilo.
2. Price before VAT. Divide the menu price by 1 plus the rate (at 10%: price ÷ 1.10). The applicable rate depends on your case: check with your accountant. The examples use 10%.
3. Divide and multiply by 100. The result is food cost as a percentage.

Example: a pizza

Made-up amounts for illustration, not a price list.

Calculation: 1.40 ÷ 7.73 × 100 = 18.1%.

From target food cost to price

You can also start from the target. Price before VAT = ingredient cost ÷ target food cost. With €1.40 of ingredients and a 30% target: 1.40 ÷ 0.30 = €4.67, about €5.13 with 10% VAT.

There is no single value for every venue: many operators use about 30% as a starting reference and adjust it to their own model.

Careful: margin is not profit

The difference between price and ingredient cost does not include staff, rent, energy, taxes or other business costs. A low food cost alone does not guarantee a profitable venue.

Frequently asked questions