Recipe Costing: One of the questions that many chefs ask is: “How do I calculate food cost?” Many involved in restaurant management will often shy away from getting involved with this area of the business as they have never been taught how to cost a menu or even how to calculate a Gross Profit (GP). However it is essential that a good business chef knows and understands the fundamentals of plate cost, food cost percentage and food cost formula. This is the difference between a CHEF and a COOK, chefs are (and must be!) interested in how their restaurants make or lose money.
Restaurant pricing – How to calculate food cost for a recipeA restaurant menu, indeed each menu item, is written and costed inclusive of any food waste.
This total of the individual ingredients gives up the COST PRICE. The price you sell the dish at is the SELLING PRICE, which will have VAT included (currently set at 20% in the UK but will vary according to location).
To find the true selling price the VAT must be removed.
Food cost definition
The actual food cost % is then calculated by dividing the COST PRICE by the SELLING PRICE and multiplying by 100 as in the equation above. Example: Assume the Cost Price is £2.00 and the Selling Price is £12.00 To remove the tax (20%) from the selling price, divide by 1.2 * (see notes on VAT below) So the Selling Price (less VAT) = £10.00