The formula
Food cost % = (plate cost ÷ selling price ex-VAT) × 100. Plate cost is one portion's ingredient cost including garnish, sauce and cooking oil. The costing template builds it line by line with yields.
Remove VAT first
Restaurant food carries 20% VAT, and that money goes to HMRC — it doesn't belong in your food cost maths. Price ex-VAT = menu price ÷ 1.2. A £4.20 plate sold at £16.50: ignore VAT and you think you're at 25.5%; calculated properly (£13.75 ex-VAT) you're at 30.5% — a five-point difference that changes decisions. (Some cold takeaway food is zero-rated; takeaway operators should check per product.)
03Percentage vs cash GP
GP% = 100 − food cost%. Cash GP = price ex-VAT − plate cost. Worked examples (illustrative):
| Dish | Menu | Ex-VAT | Plate cost | Food cost % | GP % | Cash GP |
|---|---|---|---|---|---|---|
| Fish & chips | £17.00 | £14.17 | £4.60 | 32.5% | 67.5% | £9.57 |
| Mushroom risotto | £14.00 | £11.67 | £2.40 | 20.6% | 79.4% | £9.27 |
| Sirloin steak | £28.00 | £23.33 | £9.80 | 42.0% | 58.0% | £13.53 |
The risotto wins on percentage; the steak banks over £4 more per plate. Judge both, alongside sales volume.
04Pricing backwards, and benchmarks
Menu price = (plate cost ÷ target food cost %) × 1.2. A £4.20 plate at a 28% target: £15.00 ex-VAT → £18.00 on the menu. That's a floor — check it against what guests will pay and what competitors charge. Many independents target 25–35% food cost (65–75% GP) against ex-VAT sales; steakhouses run higher than pizza restaurants. Pick your own target and know why any dish sits outside it.
05Actual vs theoretical
Actual food cost % = ((opening stock + purchases − closing stock) ÷ food sales ex-VAT) × 100
Example: £3,200 opening + £11,500 purchases − £2,900 closing = £11,800 used. Against £36,000 ex-VAT sales: 32.8%. A gap between costed and actual usually means waste, over-portioning, staff meals, comps, or supplier rises your costings haven't caught — the waste guide covers the first one.
£850k annual food sales, 30% target, 34% actual = £34,000 a year lost to a four-point drift.
The worksheet
Copy into a spreadsheet; start with your ten best sellers, one row per dish.
| Dish | Menu price | Ex-VAT (÷1.2) | Plate cost | Food cost % | GP % | Target | Action |
|---|---|---|---|---|---|---|---|
| Chicken Caesar | £15.60 | £13.00 | £3.90 | 30.0% | 70.0% | 30% | Hold |
| Actions: hold · reprice · re-spec the portion · swap an ingredient · remove the dish | |||||||
Recost whenever a key price changes, the whole menu at least quarterly, best sellers monthly.
07Questions
Do I include VAT?
No — divide the menu price by 1.2 first for standard-rated items.
What's a good food cost?
Often 25–35%, but it depends on your model. Choose a target and understand your outliers.
Food cost vs GP?
GP% is simply 100 minus food cost%. Watch cash GP too.
How often should I recost?
When key prices or recipes change, at least quarterly — monthly for best sellers.
Know what every dish is really earning
Menu Dev · Suppliers & Finance · Financial Clarity
Costing from recipes and supplier prices, margin-draining ingredients flagged, recosts on demand, dish-level GP rolled into a P&L. From £29/month per zone.