Food Cost
Build a recipe card, add trim loss, calculate portion cost. Real food cost — not guesswork.
Recipe Card
| Product | Quantity | Unit | ₼/unit | Trim % | Total | |
|---|---|---|---|---|---|---|
| 2.49 ₼ | ||||||
| 0.36 ₼ | ||||||
| 0.67 ₼ | ||||||
| Total food cost | 3.53 ₼ | |||||
Parameters
Understanding Food Cost
Know the logic before you run the numbers.
What Is Food Cost?
The food cost of a restaurant is the ingredient cost of every dish sold. Labor, rent and utilities are excluded — only the material that lands on the plate.
Full COGS Formula
Opening Inventory
+ Purchases during period
− Returns
= Available goods
− Closing Inventory
= Usage (COGS)
Food Cost % = COGS ÷ Sales × 100
Inventory Valuation
You bought the same item at different prices — which price do you use?
FIFO — Recommended
First in, first out. Calculated at old purchase prices. The most accurate method for restaurants.
WAC (Weighted Average Cost)
Total value ÷ item count = average cost. Simple, but misses the impact of price changes.
Last purchase price — Misleading
Overstates cost when bought in bulk. Applying a new price to old stock distorts food cost.
What Is Trim Loss?
After cleaning 1 kg of chicken, only 850g is usable — 15% trim loss. This raises the real ingredient cost.
Sample trim loss percentages
4 Factors That Affect Food Cost
Because these factors change, food cost differs from one restaurant to another.
Purchase Price
The cost you pay for raw ingredients. Purchasing is within your control: visit the market, research supplier alternatives, find a cheaper source at the same quality. Apply FIFO — old stock should be used first. Run weekly price comparisons.
Menu Price
You cannot set a menu price without a recipe and a cost calculation. Calculate food cost first, then set the price based on your target margin. Pricing by "what the competitor charges" is the biggest mistake. Correct formula: cost price × target multiplier = menu price.
Product Mix
You sell the same item at the same price, yet the financials differ — why? One server sells Stars, another sells Dogs. It depends on the guest, the team and the location. Fix it: use menu engineering to push Stars into recommended sales, and either rework or drop Dogs.
Restaurant Controls
Recipes, staff meals, spoilage, comps, register shortages — all must be tracked. Apply FIFO — old stock first. Meat is the costliest source of loss — start there. Run weekly spoilage counts and compare against variance reports.
DK Agency Tip
In Azerbaijan, 90% of restaurants operate without knowing their food cost. Apply FIFO with a POS system and keep everything under control.
Read full articleOCAQ Panel
Store all recipes, calculate food cost automatically, track inventory with FIFO. Real-time financial control.