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Food cost guide
Food Cost %: Divide by the Price Without Tax
A small mistake I see in a lot of cafes and food trucks: food cost is calculated on the menu price including tax. It makes every dish look cheaper to run than it is.
The formula
Food cost % = plate cost ÷ selling price without tax × 100
Plate cost is the cost of every ingredient on the plate, at what you actually pay. Selling price is what you keep from the sale. VAT or sales tax is collected for the government; it was never yours, so it cannot be part of the base.
The tax trap, in numbers
A dish sells for 12.30 including 23% VAT. The ingredients cost 3.00.
| Calculation | Result |
|---|---|
| 3.00 ÷ 12.30 (price with VAT) | 24.4% — looks great |
| 12.30 ÷ 1.23 = 10.00 (price without VAT) | |
| 3.00 ÷ 10.00 | 30.0% — the real figure |
Almost six points of difference. Spread across a whole menu, that is the gap between "we're on target" and "why is there no money left at the end of the month".
VAT vs sales tax
In the EU and the UK, menu prices normally include VAT, so you must take it out before dividing. In the US and Canada, menu prices are usually shown before sales tax, so the menu price is already the right base. If you are not sure which applies to you, check how your till reports net sales.
Get the plate cost right first
Use usable yield. If you trim 20% of a vegetable, the cost per usable kilo is the pack price ÷ 0.8. A whole salmon, a case of strawberries or a bunch of herbs all lose weight before they reach the plate.
Cost prep recipes once. Sauces, dressings, doughs and stocks are recipes of their own. Cost them per kilo or litre, then use that cost wherever they appear.
Count garnish and sides. The lemon wedge, the oil drizzle and the bread basket are all food cost.
Theoretical vs actual food cost
Your recipe costs give the theoretical food cost: what the menu should cost if every plate is made exactly to spec.
Actual food cost % = (opening inventory + purchases − closing inventory) ÷ food sales without tax
Run it weekly. If actual is clearly above theoretical, the usual causes are waste, over-portioning, theft, or dishes nobody wrote a recipe for.
Set the menu price from your target
Price without tax = plate cost ÷ target food cost %
A 3.00 plate at a 30% target needs 10.00 without tax. With 23% VAT included, that is 12.30 on the menu. Then round to a price that fits your menu, and check what the dish earns in money, not only in percent: a steak at 38% may still bring more cash per plate than a pasta at 22%.
Check any dish in seconds with the free food cost % calculator.
Quick checklist
- Divide by the price without VAT or sales tax.
- Cost ingredients at usable yield.
- Cost sauces and doughs as prep recipes.
- Include garnish, sides and bread.
- Compare theoretical and actual food cost every week.
- Re-cost when supplier prices change.
Cost the whole menu in one workbook
Our restaurant workbook does all of the above: ingredients with yield %, prep recipes, plate cost, VAT-aware menu prices at your target, menu engineering and a weekly actual food cost tracker. Google Sheets and Excel.
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Written by Ivan, a professional cook, for DoughMath Studio. This is a costing guide, not tax advice; check tax rules for your country.