Working out dish cost and margin
Most restaurants know the selling price but not the exact cost of the dish, and without a correct cost, pricing is a guess. This page explains how it is worked out and how BayanLine works it out for you automatically.
How do you work out the cost of a dish?
- Dish cost = the total cost of its ingredients, each at the quantity really used in the dish and at its purchase price.
- Food cost % = dish cost ÷ selling price before tax × 100.
- Margin = selling price − dish cost.
An illustrative example: a dish sells for 100 and its ingredients cost 32, so the food cost is 32% and the margin 68. If an ingredient's price rises and the cost becomes 38, the percentage becomes 38% while the selling price has not moved. That is why you need a number that follows purchase prices, not an old estimate in a spreadsheet. The right percentage depends on the kind of restaurant and its menu.
What else goes into cost besides ingredients?
- Packaging for takeaway and delivery.
- Waste: what is thrown away or spoils before it is sold.
- Labour, overheads and depreciation, spread over the dishes.
How does BayanLine work it out?
- A recipe for every product, size, add-on and packaging, and a ready library of materials and recipes to add from.
- A theoretical cost before the sale, and the actual cost fixed at each sale from real purchase prices.
- Labour, overheads and depreciation are spread over the dishes, and waste is classed as normal or abnormal.
- You know a dish's cost and margin before and after the sale, so you price on a number, not a guess.
Frequently asked questions
What is the difference between theoretical and actual cost?
The theoretical cost is what the recipe says before the sale; the actual cost is what is fixed at each sale from real purchase prices.
Are there ready recipes?
Yes, a ready library of materials and recipes you can add from.
All solutions
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