Start with a standard recipe
A cost is only as good as the recipe behind it. Write down the exact quantity of every ingredient for one batch, the number of portions the batch makes, and the size of each portion. If two cooks make the dish differently, you have two costs.
Cost each ingredient at the price you pay
Use the price on your latest invoice, per unit you actually use. If you buy by the case and cook by the gram, convert the case price to a price per gram first.
Then account for trim. The price on the invoice is for the product as purchased; you only use the edible portion. Divide by the yield percentage to get the cost of what ends up in the dish.
Edible portion cost
Edible portion cost = as-purchased cost ÷ yield %
Carrots at $2.00/kg, 80% usable after peeling and trim: $2.00 ÷ 0.80 = $2.50/kg
A worked example: plate cost
A batch of ragù makes 10 portions. Add up the ingredients, each at its quantity times its cost per unit, then divide by the portions.
Batch of 10 portions
Ground beef: 1.5 kg × $20.00/kg = $30.00
Canned tomato: 2 kg × $3.00/kg = $6.00
Onion, carrot, and celery: 1 kg × $2.50/kg = $2.50
Olive oil: 0.1 L × $12.00/L = $1.20
Red wine: 0.25 L × $10.00/L = $2.50
Dried pasta: 1 kg × $2.40/kg = $2.40
Parmesan: 0.2 kg × $22.00/kg = $4.40
Batch cost = $49.00; plate cost = $49.00 ÷ 10 = $4.90
From plate cost to menu price
Pick the food cost percentage you want the dish to earn, then divide the plate cost by it.
Menu price
Menu price = plate cost ÷ target food cost %
$4.90 ÷ 0.30 = $16.33, which you might set at $16.50
Check: $4.90 ÷ $16.50 = 29.7%; gross profit per plate = $16.50 − $4.90 = $11.60
Mistakes that make a cost wrong
- Leaving out oil, garnish, sauces, and the small items that are never weighed
- Costing the product as purchased and ignoring trim and yield
- Using last quarter's prices
- Costing the recipe on paper while the kitchen serves a larger portion
- Forgetting packaging on takeout and delivery dishes
Keep it current
A plate cost is true on the day you work it out and starts going stale the next time a vendor's price moves. The way to keep it true is to tie each ingredient to your invoices, so that a new invoice re-costs every dish it touches. Then review the dishes whose margin has slipped.