Calculate the cost of goods sold for a portion: a practical method for restaurateurs without accounting training

Many restaurateurs set their prices “by instinct” or by aligning with the competition, without calculating their true cost of goods sold. This is one of the reasons why 60% of restaurants close within the first five years: the prices don’t cover the actual costs. Calculating the cost of goods sold per portion isn’t complicated, but it requires rigor and time. Here’s a 5-step method accessible to everyone.

Step 1 - The recipe technical sheet: for each dish, list absolutely all ingredients with their precise quantities. Do not forget “auxiliary” ingredients such as cooking oils (0.02 to 0.05 euros per portion), salt and spices (count 0.05-0.10 euros per dish), garnishes (2 lettuce leaves, 1 tomato slice), and sauces. These small ingredients may seem negligible but they accumulate: they often represent 8 to 12% of the total cost of a portion.

Step 2 - Raw material costs: note the purchase price of each ingredient and calculate the price per unit of measurement used. If you buy a 5 kg bag of flour for €3.50, the price per kg is €0.70, and per portion of 200g it’s €0.14. Do this calculation for each ingredient in the recipe. Use your recent invoices from your suppliers to get current prices. Prices fluctuate: redo this calculation every quarter or during a significant price change.

Step 3 - Losses and Waste: Not all ingredients are fully usable. A 1 kg piece of meat can yield 750g of net meat after trimming (yield ratio = 75%). A 500g leek yields 350g of usable white (70%). These yield ratios must be factored into your calculation. If you pay 12 euros per kg of meat and the yield is 75%, the actual cost of the material used is 12/0.75 = 16 euros per kg net.

Step 4 - Calculating the total cost: Add up the cost of each ingredient in the recipe to obtain the material cost per serving. Add 10-15% for losses and waste, and 5% for additional ingredients not listed. For example, for a burger: steak 200g (€3.20) + brioche bun (€0.50) + cheddar 30g (€0.45) + lettuce and tomato (€0.35) + sauce (€0.20) + additional ingredients (€0.15) = total cost of €4.85. The target food cost of 30% implies a minimum selling price excluding tax of €4.85 / 0.30 = €16.17.

Step 5 - Integrating indirect costs: the food cost only represents one part of your cost structure. Staff costs, rent, utilities, packaging, and platform commissions must also be covered. If you aim for a net margin of 10-15% on delivery (after everything), the selling price needed is often 30 to 40% higher than what the simple food cost indicates. Do this calculation for your 5-10 best-selling dishes: you may be surprised to discover that some of your “popular” dishes are actually unprofitable.