2026-10-13 · 2 min read

Recipe Costing: How to Cost a Menu Item Step by Step

Step-by-step recipe costing for restaurants and cafes: yields, trim loss, portion cost, selling price and the margin check, with a worked example.

Recipe costing turns a recipe into a number: what one portion costs you to make. Without it, menu prices are guesses.

Step 1: list every ingredient with an exact quantity

Weigh or measure what goes on the plate, including oil, garnish and sauces. Small items add up across hundreds of portions.

Step 2: use the cost of the usable part

Raw cost is not plate cost. Peeling, trimming, cooking loss and bones all reduce what you can serve. Divide the purchase price by the yield:

• Usable cost per kg = purchase price per kg / yield percentage

If onions cost 40 per kg and you get 90 percent usable, a usable kilo costs 44.4.

Step 3: add the ingredient costs

Multiply each usable cost by the quantity used and add them up. Include packaging for takeaway and delivery.

Step 4: divide by portions

If the recipe makes 20 portions, divide the total cost by 20 to get the plate cost.

Step 5: check the margin

• Food cost percentage = plate cost / selling price x 100
• Gross margin = selling price - plate cost

If a dish costs 66 to make and sells for 220, food cost is 30 percent and gross margin is 154. Compare with your target and decide whether to reprice, shrink the portion or change an ingredient.

Step 6: keep it current

Prices move. A costing sheet that was right in January is wrong by March. Recosting every dish by hand each time a supplier changes a price is the main reason owners give up on it.

Let the system do the updating

In DineTide recipe cost is calculated from live supplier prices and yields, so a price change flows through to every dish that uses the item. Baker's formulas and sub-recipes such as stocks and sauces are supported too. Start a free trial and cost your first menu in an afternoon.