The Evolution of a Dish:

Essential Food Costing Tips: How to Calculate Food Cost Percentage

Operating on an assumed restaurant food cost percentage? Learn why it’s so important to stop playing guessing games with your food expenses.

Restaurant food costing, or the process of tracking the cost of all the ingredients used in a recipe, is still one of the most misunderstood areas of restaurant operations. 

It makes sense why; if you’re a chef, wouldn’t you prefer to spend time serving beautiful and delicious cuisine to customers than doing “complicated” math problems? 

If you're making anything from scratch, it's very hard to trace the cost of goods. This was true even before poultry, eggs, and countless other ingredients experienced historic price hikes,

So what’s a chef or operator to do? Learn how to calculate the food cost percentage for your restaurant, why food cost control is important, plus 5 tips for calculating food costs accurately.

TL;DR - Why is it so hard to figure out food costs at a restaurant?

🔢 You Haven’t Baked In Your Yields. A recipe that doesn’t account for yield loss could end up being way more expensive than you thought. Unless you're simply mixing ingredients together, the cost of that recipe will be much different once you account for the final yield. Make sure you're always adding the final yield and testing that yield as you scale to ensure consistency.

🥄 You Don’t Have Proper Unit Conversions. How you buy a product is NOT the same as how you cook it. Your recipe might call for 30g of lemon juice, but you buy lemons whole by the count. OR, maybe you buy onions by the pound and need ½ a cup for a recipe. If you don't know how much loss comes from fabrication, you're already behind (see point above). But you also need to know how much the ingredient weighs. Again, this adds up quickly and leads to inaccurate costs.

✍️ You Aren’t Being Specific Enough. This means a couple of key things. First, you must measure how much of each ingredient goes into a recipe. It might be variable, but it’s a baseline. Next, you need to say what you’re doing to an ingredient (peeling, grating, chopping, etc.) All this impacts the final yield and your cost. And lastly, stay away from vague units of measure like a “tub” or “can” - the weight and volume of these “measurements” can easily change.

Want more details? Keep reading ⬇️

Why is Food Cost Percentage so important?

Food cost percentage refers to the ratio of the amount of money a restaurant spends on food and beverage ingredients (food inventory) to the revenue generated from selling those ingredients as menu items (food sales). It is expressed as a percentage of the total revenue from food sales.

Knowing your food cost percentage is crucial because it serves as a key indicator of profitability and overall success in the restaurant industry. Restaurants typically operate on slim profit margins, usually around 3-5%. Therefore, keeping food costs at an appropriate level is essential for maintaining profits.

There are 3 main advantages of calculating your food cost percentage:
  1. Better Decision-Making: By determining the food cost percentage and cost of goods sold (COGS) for each menu item, you can ensure that your menu items align with your food cost targets. This information helps identify the most profitable menu items, enabling you to focus your promotions effectively.
  2. Optimize Your Menu: Utilizing food cost percentage for menu engineering empowers you to make informed decisions about menu pricing, ensuring your menu remains both appealing to customers and profitable for your business.
  3. Gain Actionable Insights: The restaurant industry's supply chain can be unpredictable. Having a restaurant food costing tool that automatically calculates food cost percentages can help you monitor these fluctuations and mitigate the supply chain's impact on your restaurant's cost.

Food Cost Percentage Formula

To calculate your restaurant's food cost percentage, use this food cost formula: 

((Beginning Inventory Value + Purchases) - End Inventory Value) % Total Food Sales = Food Cost Percentage

By using this food cost percentage formula, you can see how much money your restaurant makes from selling a dish compared to how much is spent on ingredients.

Let's run through an example with the following numbers:

Beginning Inventory = $13,000

Purchases = $6,000

Ending Inventory = $15,000

Food Sales = $12,500

Your food cost formula for this example would be: (13,000 +6,000 – 15,000) ÷ 12,500 = 32%

To calculate food cost manually, there's a lot you need to do:

  1. Record the initial-week food supplies received.
  2. Sum up how much each ingredient costs in a dish.
  3. Monitor purchases made throughout the week following the initial inventory period.
  4. Conduct another inventory at the beginning of the subsequent week
  5. Aggregate the total food sales for each shift.

Once all of this is complete, then you can calculate actual food expenses using the above formula. Instead of monitoring all of this week to week, we highly recommend using a food cost calculator like the one offered in meez.

What is a Food Cost Calculator?

A food cost calculator is a tool used by restaurant owners and managers to determine the cost of ingredients for a particular dish or menu item, and to understand various metrics related to food costs. These calculators can be software applications, spreadsheets, or online tools that help streamline the process of calculating food costs, pricing menu items, and managing overall profitability.

Common Metrics a Food Cost Calculator Helps Understand

One of the primary metrics calculated in a food cost calculator is the food cost percentage, which is the ratio of the cost of ingredients to the revenue generated from selling those dishes.

This percentage is calculated by dividing the total food cost by the total food sales and multiplying by 100. Understanding this metric helps in pricing strategies and profit management, ensuring that the cost of ingredients aligns with the revenue generated.

Another vital metric is the portion cost, which focuses on the cost associated with a single serving of a dish. This metric ensures consistent portioning and helps maintain standard costs across servings.

Profit is another critical metric, defined as the difference between sales revenue and total food cost. This figure indicates the profitability of the restaurant before accounting for other operating expenses. Similarly, the cost per serving is calculated by dividing the cost of ingredients by the number of servings produced. This metric helps in pricing individual servings to ensure each contributes to overall profitability.

Whether you're looking to determine your food cost percentage, profit margin, or find the optimal selling price for a dish, meez's food cost calculator can do all of this for you.

Once you've inputted the costs of the ingredients in your recipe, our Food Cost Calculator will instantly display the total cost and cost per unit. Our calculator will automatically calculate the cost based on the ingredient costs you've provided in a recipe.

With access to our extensive database of over 2,500 system ingredients, complete with yield, prep loss, and unit of measurement equivalencies, you can quickly and accurately cost your recipes. This empowers you to make informed decisions and take your culinary business to new heights.

See meez's food cost calculator in action.

How to calculate accurately: 5 tips for restaurant food costing

While creating a positive dining experience is essential to getting people through the door, it doesn’t necessarily translate to profit margins. You don’t want the true cost of your ingredients to be greater than the menu price. At the same time, you don’t want to price dishes so high that customers won’t order them. 

To help you cost food more accurately, we asked our team of culinary industry pros what they’ve seen firsthand as start-stoppers to proper costing. Below are a few tips based on their decades of experience. 

Tip #1: Always Consider Your Yields

Figuring out the true cost of a menu item is more than assuming your yield is 100%. First, you must account for shrinkage, waste, trim, and any fabrication before a dish is served.

Let’s see how this typically plays out in the kitchen: 

  1. Costing an onion. Your invoice may say it costs you $1.23/lb, but ultimately that’s not the actual cost of what ends up on the plate. A brunoise onion only has a 68% yield, meaning 32% is going into the compost or trash. After all is said and done, it might cost you $1.78/lb. 
  2. Costing herbs such as mint. Did you know you lose more than 50% of the mint when you pick the leaves for a salad?! If you're not using the mint stems, that means you're not paying $10.00/lb, you're paying more than $20.00/lb!

There are countless other examples like the above in our recipes. And restaurant food costs can add up over time.


Fabrication will always result in loss; this needs to be accounted for by a yield percentage applied to that ingredient and the recipe it’s in. But who has time to calculate the loss of every single ingredient you're using in a kitchen? And why should every kitchen have to do this?

That's why meez tests all of these ingredients and builds that information right in for over 2,500 ingredients, so you don't have to do the math.Our tool has a fundamental understanding of any prep action, whether it's peeling, dicing, slicing, or something else, and will automatically change how that ingredient is measured, cooked, and expensed.

“I strongly believe ingredient yields are the number one obstacle food professionals face when they're trying to get accurate food cost calculations. Many chefs simply don’t use ingredient yields properly. A yield percentage on an ingredient that's fabricated is just about counting how much is lost in the process.”   

Gabe Ross

Head of Process and Implementation, meez

Tip #2: Have Proper Yield Conversions

It might seem obvious, but if you don't measure the quantities of your ingredients in units that are measurable, you will not know how much of the ingredient is in a recipe. This means writing a recipe with weight or volume-based measurements like fluid ounces, cups, milliliters, and pounds.

Staying away from variable “measurements” like a leaf of lettuce or a slice of cheese, or container units such as cases and cans is good practice. 

For example, say your stock recipe requires a case of chicken bones. Your go-to vendor may sell a 40-pound case of bones at $28.50. But things could change. The vendor could start selling 30-pound cases at the same price or 50-pound cases the next week for a couple of bucks more. Because the recipe technically changes every time the case size does, your true restaurant food costs ends up inaccurate.


Stay away from vague units of measure. Or, at the very least, define what a “can” means for the recipe. Because we know that every chef’s process is unique, meez allows you to create custom units of measure so you can be more specific. This prevents errors when your team is prepping a recipe.

For example, if you buy a “tub” of ricotta cheese for $10 at 2.85 pounds,  you can create a custom unit of measure called “tub=2.85lb” that equals 2.85 pounds. With this customization, even if you only use half a pound of ricotta in a recipe, meez can calculate the cost accurately.

Tip #3: Be Specific With Your Prep Actions

It’s common for some recipes to be more of a guide for experienced cooks. This is fine if your goal is to show the process of putting together a dish. But if you want to cost your recipes, you need to be more detailed and write down your prep actions. Instead of just saying onion, you want to say sliced onion, diced onion or whatever else applies to your yield percentages. All of these details have to be reflected in the final recipe that ends up on a customer’s plate. 

If you incorporate the measurement of each ingredient and capture yield percentages while developing a recipe, it saves you time. Because you're already in the process of figuring out what goes into the dish, you can easily combine, experiment and change quantities.

While you can't expect your team to weigh everything every time they make a dish, the first time they make a recipe, they need to see what the actual quantities look like. This way they can follow the recipe measurements within approximation when they are eyeballing it later on.


The way we buy products is not the way we cook it! Maybe you assume some basic math, like converting ½ cup of onion into 4oz and then do more calculations. Still you need to account for loss and how the ingredient is fabricated (sliced, mirepoix, etc).

With meez, these conversions are built right in, so you can just write the recipe the way you make it, and let the app do the math.

What if I’m a baker? 

As a baker, your food costing process and calculations are very different compared to something like a full-service restaurant. You expect things like chocolate or specialized ingredients to be costly, but that your baking basics would remain in the same price range.

Unfortunately, this is no longer the case. Butter and eggs have seen massive price increases in the last twelve months. If you have only calculated recipe costs once, your food cost percentage will be off. 

I’ve seen firsthand with my own restaurant how much easier it is to monitor prices and keep track of fluctuations over time with meez. I don’t have to depend on a cost index with a spreadsheet anymore and can make adjustments based on these price changes easily.

Ursula Siker

Account Executive at meez 


Tip #4: Don’t Just Price Out Your Protein 

When 70% to 80% of a dish’s price comes from the protein, it's pretty easy to tack on a couple extra dollars for starch and veg and then call it a day. This seems like a smart strategy, however, you're missing so much by taking this shortcut. 

Running a restaurant is such a nickel and dime business. If your restaurant’s food cost calculations are just a little off, it adds up quickly.

For example, say you sell a steak dish and the cost of the dish is off by $0.25. If you sell 50 of these a day, you’ll end up losing out on about $600 per month. And that’s for only one dish, not your full menu. 


Stop playing guessing games and actually figure out if a dish is profitable. One of the easiest ways to do this is by using meez’s food cost calculator. Unlike an excel spreadsheet or other software, our food cost calculator considers portion sizes when calculating costs. We don’t assume your yield and portion size are the same amount.

Because meez’s calculator is connected to your recipe, if you make adjustments to units of measure for an ingredient, the change will be reflected automatically in the total cost. You can also play around with ingredient quantities until you find that ideal profit margin and food cost percentage.

“It used to take me at least a week to cost a new menu and have training manuals, recipe books and allergen guides. Now it's all one step and I can do it in a day. 

Ross Hanson 
The Grizzly Paw, Executive Chef


Learn more about how The Grizzly Paw consolidated their restaurant food costing with meez

Tip #5: Keep Track of Your Food Costs, Not Just Your Inventory.

Whether you do it quarterly, or have a team behind you costing food monthly, every time you have a new invoice, you should be keeping track of costs and making adjustments. 

No one likes working with a spreadsheet and doing all the manual work that goes with managing it correctly. And ERP and inventory systems claim to calculate accurate restaurant food costs. However, these systems have little understanding of how chefs actually think, create, and use recipes day to day. 

Chefs and restaurant operators need a space where they can take full ownership of their food costs and recipes as a whole. 

Try meez, the #1 Restaurant Food Costing Software

For total visibility into your restaurant’s recipe and ingredient costs, your best bet is to work with a tool like meez that is built by chefs to address the unique challenges of restaurant food costing. 

With meez, you’ll enjoy:

  • Actually-accurate costs. Know the cost of every ingredient, account for yield loss from prep and create custom units of measurement. Let us figure out the precise math for you.
  • Simple purchase item importing. Send us your invoices, pull costs from back-office systems, bulk upload your ingredient cost tables, or add costs to each ingredient yourself. 
  • Receive real-time updates. Use our food cost calculator to understand how your food cost % changes as you adjust the sell price or your recipe.

Want unlimited recipes & recipe books, scaling, prep steps, built-in yields and more? Sign up for a FREE meez account or book a demo today.

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