Savvy food business owners know that recipes are not created or chosen just for flavour, attractiveness, or business theme – recipes should not break the bank.


For most owners or managers, their three significant expenses are staff, rent and food. And because it is the area of food where many variables are at play, this is usually the source of profit loss. When you understand your menu’s actual cost, you can come up with a reasonable profit margin. You don’t need to make any guesswork whether your food business is making a profit or not. 

Food costing or plate costing is where money action happens. 


Here are three quick tips for costing recipes to ensure profit:


1. Know how ingredients on a recipe cost and track them

Food prices change, whether you source it from the same suppliers or not. Factors such as food production cost and weather directly affect food prices. 

Review your recipes and find out what it costs you in ingredients to create your menu items. 

  1. Start with a recipe and make a list of the ingredients.
  2. List down the price of each component
  3. Create a database of all of the critical ingredients you purchase.
  4. Create a pricing history of the items so that you know when item prices spike


2. Compute for the cost of the dish

Now that you have a list of all the ingredients and their costs, the next steps are to:

  • Write down the unit of measurement of each ingredient per recipe
  • Divide ingredient’s  total cost by the ingredient’s unit of measurement 

For example:

A recipe calls for 100 grams of rice. The rice you purchase comes in a 10-lb bag, costing $ 15 which is  $1.5 per pound. A pound is equivalent to 453 grams – this is a given. 

Divide $1.5 by 453  and multiply the product by 100 to get $0.33

This means that it costs you$0.33 of rice on each plate.  

  • Do the same for the rest of the ingredients and get the total. 


This is the cost of the dish as per ingredients. Remember that the ideal food cost is 28% to 35% of the menu price. Use that information to price your dish appropriately to cover your other overheads such as utilities, cook costs and server costs. It also allows for a 7% fluctuation in prices.

You are not limited to manual computation for each dish. You have other important things to do, which is why many food businesses opt to use restaurant inventory management software to provide specific and accurate numbers and systemize their whole food costing procedures. 

Professional chefs know how to compute for food costs, and even they, know that any help to improve efficiency in the kitchen can positively impact the business.

If you are a food business owner in Perth or anywhere in Western Australia struggling with this challenge, give Anytime Chefs a call. Whether you need a professional chef, in need of a helping hand to guide you in food costing and creating recipes for your business, Anytime Chefs can support you on this challenge. Anytime Chefs has helped venues create cost-effective recipes and workflow systems to ensure consistency in your service, and bring your restaurant or cafe to the next level.


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3. Review and act accordingly

Updated recipe costs keep end-of-month surprises to a minimum.

When you do pricing checks monthly or even weekly, you can take preemptive measures should the cost per plate goes above the 35% margin. 

Food prices fluctuate, and even if you computed your food cost today, you know that the food cost can easily change tomorrow. 

For some, it is not important to do weekly adjustments in their menu pricing due to fluctuating prices but when prices are too high ( meaning the menu item is no longer profitable), you may want to:

  • Adjust your pricing slightly and do not surprise your guests with this increase.  Most guests do not mind minimal price adjustments, especially if you let them know of this information. You can do this by posting through your social media accounts, website, updated menus with your order taker, gently pointing this out. Your regular guests may not even ask for the menu and will have no way of knowing about it. Instruct your servers to alert your guests of any price increase.
  • Remove the item from the dish and create a new recipe.
  • Remove the dish from the menu.
  • However, if that dish is the prominent star of your restaurant, keep it. You don’t want to lose the item that most of your guests come to you for. Take this as an opportunity to focus on other cost-saving measures or correct issues like incorrect portion sizes, theft or excess waste. 


Remember, it is essential to monitor your ingredient costs to ensure that a menu item remains profitable.


In Summary:

Every food business owner or manager should apply some form of recipe cost calculation to make a profit. In this way, you can quickly identify which of the dishes you serve are profitable and which are not. Armed with this information, you can then act accordingly to achieve your sales goals and minimize costs. 


That’s it for this week.
As always, Professional Chefs on Call at Anytime!

Ciao for now,

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