How do you calculate food cost in a restaurant?

Menu prices are often set by looking at competitors. But the starting point for the right price is the real cost of everything that goes on the plate.

1. Write the recipe to the gram

For one portion of Adana kebab, write down the amount of minced meat, flatbread, roasted pepper and garnish. Measures like "a handful" or "by eye" hide cost. Once the recipe is written, stock can also be deducted automatically with every sale.

2. Don't forget waste

Trimming meat, peeling vegetables, cooking loss… If 1 kg of lamb shank yields 650 grams once cooked, the cost calculation must divide the price of 1 kg by 650 grams. Adding the waste rate to the recipe removes this error.

3. Watch the cost ratio

The ratio of food cost to selling price is the simplest indicator of a healthy menu. A common target in the industry is 28–35 percent, but it is better to set separate targets for drinks, desserts and mains.

• If the cost ratio is above target, review the portion, the supplier or the price.
• If it is very low, the item may be too expensive and selling in low numbers.

4. Update prices regularly

As ingredient prices change, the cost ratio drifts. A system that tracks weighted average cost shows you weeks in advance which items are losing margin.

In short

The right cost needs the right recipe, realistic waste and regular tracking. With these three in place, menu pricing stops being a guess and becomes a calculation.