A recipe is not a cost — until you make it one
Every dish on your menu started as a recipe: a list of ingredients and quantities. But a recipe alone tells you nothing about profitability. To understand whether a dish makes money, you need to turn that recipe into a costed recipe — and then into a priced dish.
Step 1: Cost every ingredient per unit
Start with your supplier invoices. For each ingredient, calculate the cost per usable unit — not per purchased unit. A 5 kg bag of flour doesn't give you 5 kg of usable flour; there's always loss.
This is where yield factors come in:
- A whole fish yields roughly 40–50% of fillets
- Onions lose ~20% when peeled and trimmed
- A bunch of herbs yields 60–70% usable leaves
If you cost at purchased weight, you're under-costing every recipe that uses that ingredient.
Step 2: Build the recipe cost
For each ingredient in the recipe:
Ingredient cost = (Quantity used × Cost per usable unit)
Sum all ingredient costs to get the total recipe cost. Divide by the number of portions to get the cost per portion.
Step 3: Calculate your margins
Once you have the cost per portion, the math is straightforward:
- Selling price (net) = the price before VAT
- Selling price (gross) = the price including VAT
- Food cost % = (Cost per portion ÷ Net selling price) × 100
- Gross profit margin % = 100 − Food cost %
Step 4: Set — or verify — your selling price
Most operators target a food cost percentage of 28–35%. But the real question isn't "what should my food cost be?" — it's "what selling price gives me the margin I need?"
A recommended selling price works backwards from your target margin:
Recommended price = Cost per portion ÷ Target food cost %
The automation advantage: When every ingredient has a tracked cost, updating a single supplier price should recalculate every recipe — and every menu margin — instantly. If you're still doing this manually, you're always working with yesterday's numbers.
Recipe costing isn't a one-time exercise. It's a living system that keeps your menu profitable every single day.