Recipe costing vs food costing: which do you need?

A chef prices a new dish carefully. The beef, the sauce, the vegetables and the garnish come to a little under a third of the menu price, which looks healthy. A month later, the accountant reports that the kitchen's food cost for the month was well above a third of food sales. Both numbers are right. One describes what a single plate should cost; the other describes what the kitchen actually spent. The gap between them is where the money went.

Recipe costing and food costing are often confused, and many kitchens do only one of them. Recipe costing works from the bottom up: what each dish costs to make, ingredient by ingredient. Food costing works from the top down: what the kitchen spent on food over a period, compared with what it sold. Each answers a different question, each misleads when used alone and the comparison between them is one of the most useful numbers a kitchen can have.

This guide covers the comparison of recipe costing vs food costing, what each involves, what each answers, where each goes wrong and how to use the two together without a cost controller on the payroll. Every venue and figure in it is an example.

Recipe costing calculates what a single dish should cost to make, from the price and quantity of every ingredient in it. It gives a plate cost for each dish, which can be set against the menu price.

Food costing calculates what the kitchen actually spent on food over a period, from purchases and stock counts, and sets it against food sales for the same period. It gives a food cost percentage for the kitchen as a whole.

Recipe costing answers: what should this dish cost, and is its price right? It is a planning tool, used when designing dishes, setting prices and deciding what to promote.

Food costing answers: what did the kitchen actually spend, and is it in line with what it should have been? It is a control tool, used every week or month to check that the kitchen is running as planned.

Recipe costing starts with a recipe written down precisely: every ingredient, in the quantity used, including garnishes, sauces, oil and the bread on the side. Each ingredient is priced from the current invoice, adjusted for what is lost in preparation, such as trimming, peeling or cooking.

Add up the ingredients and you have the plate cost. Our guide to recipe costing: one dish, from box price to plate works through the method with a single dish.

The step most often missed in recipe costing is yield: how much of an ingredient is actually usable after preparation. A whole fish loses its head, bones and skin; a case of lettuce loses its outer leaves; a joint of meat shrinks in the oven.

Cost each ingredient on what reaches the plate, not on what was bought. A recipe costed on raw weights looks cheaper than it is, and the difference shows up later as a food cost that never matches the recipes.

The plate cost is the total cost of the ingredients in one portion of a dish. Set against the menu price, before tax, it shows the dish's food cost percentage and the amount each portion contributes towards the kitchen's other costs and profit.

Plate costs are most useful compared with each other. A dish with a low percentage but a small contribution may earn less than one with a higher percentage and a larger contribution, which is why the money matters as much as the ratio.

Food costing starts with three figures for a period: the value of food stock at the start, the value of food purchased during the period and the value of food stock at the end. Opening stock plus purchases minus closing stock gives the cost of food used.

Divide that by food sales for the same period and you have the food cost percentage. Our guide to how to calculate food cost percentage, step by step covers the method in detail.

In accounting terms, the food cost of a period is part of the cost of goods sold: what the business spent on the goods it sold in that period, as opposed to its other costs such as rent and labour. For a restaurant, it usually covers food and drink, often reported separately.

The accountant calculates it from the same three figures: opening stock, purchases and closing stock. That is why an accurate stock count at the end of each period matters so much.

Recipe costing alone misleads because it describes an ideal kitchen. It assumes every portion is exactly the recipe, nothing is wasted, nothing is stolen, nothing is given away and every delivery is at the invoiced price. Real kitchens are never like that.

A kitchen that only costs its recipes will believe its food cost is what the recipes say, and be surprised when the accounts say otherwise. The recipes are right; the kitchen is simply not following them perfectly.

Food costing alone misleads in a different way. It tells you the kitchen's overall food cost, but not why. A rising food cost could come from price rises, waste, over-portioning, theft, a change in what guests order or a stock count done badly, and the single percentage cannot tell them apart.

A kitchen that only measures its food cost knows something is wrong but not what. It is like knowing a car uses too much fuel without knowing which part is faulty.

Together, the two give the most useful comparison in kitchen costing. Recipe costs multiplied by the number of each dish sold give the theoretical food cost: what the kitchen should have spent. Food costing gives the actual food cost: what it did spend.

The gap between theoretical and actual is the variance, and it shows how far the kitchen is from running as its recipes say. Our guide to food cost variance: reading the number without panic covers how to read it.

Food cost percentage is the figure most owners know: food cost divided by food sales. It appears in both methods: recipe costing gives it per dish, food costing gives it for the kitchen. Comparing the two is often the quickest way to see whether the kitchen is on track.

A sensible target depends on the venue's style, prices and menu, and there is no single right figure. What matters is knowing your own target, from your recipes, and watching how far the actual figure drifts from it.

Recipe costing matters most when the menu is being designed or prices are being set. A new dish, a price change, a supplier price rise or a decision about which dishes to promote all need plate costs to be made well.

It also matters when the margin is tight. A kitchen whose overall food cost is high can use recipe costs to find the dishes that drag it up and decide whether to reprice, change or remove them.

Food costing matters most as a regular check. Weekly or monthly, it tells the owner whether the kitchen is running as planned, and it is the figure the accounts depend on.

It matters especially when something has changed: a new chef, a new supplier, a new menu or a busy season. A sudden rise in actual food cost is often the first sign that something in the kitchen needs attention.

Recipe costs go out of date as soon as prices change. A dish costed in the spring may cost noticeably more by the autumn if its main ingredient has risen in price. Kitchens that cost their recipes once and never again are working from old numbers.

Update the costs of the main dishes whenever a key supplier's prices change, and review all of them at least twice a year. Start with the dishes that sell most and the ingredients that cost most.

Food costing is only as accurate as its inputs. A stock count done carelessly, purchases recorded in the wrong period or credits from suppliers forgotten can all move the percentage by several points.

Count at the same time each period, record every delivery in the period it arrived and match the food sales to exactly the same dates as the stock counts. Consistency matters more than perfection.

Ingredient prices move with the seasons. Soft fruit, some vegetables and certain fish can cost far more out of season, and a dish costed in the summer may cost much more in the winter if its ingredients stay the same.

Recost seasonal dishes when the season changes, or change the dish to use what is in season. A menu that follows the seasons often keeps its plate costs steadier than one that insists on the same ingredients all year.

Portion control is where recipe costing meets food costing most directly. The recipe says how much goes on the plate; the kitchen's actual food cost shows how much really went. If portions creep up, the actual cost rises above the theoretical, even with perfect recipes.

Scales on the line, portioned containers for sauces and garnishes and photographs of each plate at the pass keep portions close to the recipe. They are among the cheapest ways to bring actual food cost back towards the theoretical.

Keep drinks separate from food in both methods. Drinks usually carry very different margins, and mixing them into food cost hides how each is doing. A bar's pour cost, worked out per drink, is the drinks equivalent of recipe costing.

Report food cost and drinks cost separately, each against its own sales, so a problem in one is not hidden by the other.

Neither recipe costing nor food costing includes labour. A dish with a low plate cost may take a great deal of prep time, and a dish that looks expensive in ingredients may be quick to make. Both matter to the dish's true cost.

Some kitchens add an estimate of prep labour to their recipe costs for dishes made in batches, such as stocks or desserts. It is useful when deciding whether to make something in house or buy it in.

A small kitchen can do both without a cost controller. Cost the twenty dishes that sell most, carefully, and update them when prices change. Count the stock at the end of each week or month, record purchases and work out the actual food cost.

Compare the two each period. If the gap is small and steady, the kitchen is running well. If it grows, the recipe costs show where to look first: the dishes with the most expensive ingredients and the highest sales.

Items bought in ready-made, such as desserts, bread or ice cream, are the easiest to cost: their plate cost is simply the purchase price per portion, plus any garnish or sauce the kitchen adds. They still belong in both numbers.

Include them in the recipe costs, so the theoretical food cost is complete, and in the stock counts, so the actual cost is too. A bought dessert left out of the count makes the month's food cost look better or worse than it was.

Share both numbers with the kitchen team, not only the head chef. Cooks who know what a portion of the steak costs, and how far the kitchen's actual cost is from the recipes, take more care with portions, waste and storage.

Keep it simple: a monthly note on the theoretical cost, the actual cost and the main reason for the gap. A team that understands the numbers helps to move them.

Recipe costing and food costing can both be done in a spreadsheet, and many good kitchens do exactly that. Dedicated software can link invoices to recipes, update plate costs automatically when prices change and compare theoretical with actual without the arithmetic.

Software helps only if it is kept current: every recipe entered, every invoice recorded, every count done. A spreadsheet kept up to date is worth more than software that is not.

Recipe costing usually belongs to the chef, because it depends on knowing exactly what goes into each dish and how much is lost in preparation. Food costing often belongs to the manager or the owner, because it depends on the invoices, the stock counts and the sales.

They should meet each period to compare the two. The chef explains the recipes; the manager explains the figures; together they find where the gap comes from.

Recipe costs are the starting point for menu prices, not the whole answer. A price set only from the plate cost ignores what guests will pay, what competitors charge and how the dish fits the menu.

Use the plate cost to check that a price leaves a healthy contribution, then set the price with the guest and the market in mind. Our guide to menu pricing: six methods and when each works covers the methods in more detail.

Recipe costs also feed menu engineering: combining each dish's contribution with how often it sells, to decide which dishes to promote, reprice, change or remove. A dish that sells well and contributes well deserves a prominent place on the menu; one that sells little and contributes little may not deserve a place at all.

Without plate costs, menu engineering is guesswork. With them, it becomes one of the most effective ways to improve the kitchen's margin without changing prices.

A new menu is the moment both numbers matter most. Before it goes live, cost each new dish so the prices are right. In the weeks after, watch the actual food cost closely, because new dishes bring new waste, new portions and new mistakes until the kitchen settles.

Expect the variance to widen for a few weeks after a menu change, and to narrow as the team learns the dishes. If it does not narrow, the new recipes or their costings need a closer look.

A simple monthly page can show both numbers together: the theoretical food cost from the recipes and the sales, the actual food cost from the stock counts and purchases, and the gap between them, with a line on what explains it.

Owners who see only the actual figure worry when it rises without knowing why. Owners who see all three can tell whether the problem is prices, waste, portions or something else, and decide what to do.

An invented brasserie's chef has costed every dish, and the recipes say the kitchen's food cost should be around thirty per cent. The accountant's monthly figure is thirty-five. The chef and manager compare the two and work through the gap. Two high-selling dishes have risen in cost since they were costed, which explains part of it.

A waste log shows that a garnish is prepared in large batches and much of it thrown away, and portion checks show the steaks are being cut slightly large. The chef updates the two costings, reduces the garnish batch and adds a portion scale to the grill. Within two months, the actual figure is back within a point of the recipes.

servearound holds neither recipe costs nor food costs today: there is no field for a dish's cost, no stock counts and no purchases in it, and inventory tracking is coming. So both plate costs and the actual food cost are worked out in your own spreadsheet or costing tool for now.

What servearound holds is the sales side of both sums. The menu report shows how many of each dish sold and their revenue for any range of dates, on the venue's own clock, by dish and by category, so multiplying those units by your own plate costs gives the theoretical food cost, and the food sales for the same dates are the base for the actual percentage. See Analytics.

Recipe costing works out what a dish should cost; food costing works out what the kitchen actually spent.

Neither on its own. Together, they show the gap between how the kitchen should run and how it does.

The cost of the ingredients in one portion of a dish.

Opening stock plus purchases minus closing stock, divided by food sales for the same period.

Recipe costs multiplied by the number of each dish sold.

When key prices change, and fully at least twice a year.

Not in food cost, but estimating prep labour helps when deciding to make or buy.

Yes, by costing its top dishes and counting stock regularly.

Recipe costing vs food costing is bottom up against top down. Recipe costing works out each dish's plate cost from its ingredients and yields, which is the basis for pricing and menu engineering. Food costing works out what the kitchen actually spent from opening stock, purchases and closing stock, which gives the real food cost percentage and feeds the cost of goods sold in the accounts.

Each misleads alone: recipes describe an ideal kitchen, and the overall percentage cannot say why it moved. Use both, compare theoretical with actual every period, keep recipe costs current and count stock consistently, and the gap between the two will show where the kitchen's money is going.