How do I work out the food cost of a dish in New Zealand?
Food cost is the cost of the ingredients in a portion, divided by the selling price excluding GST. You work it out from the recipe card, at net weight, and express it as a percentage. The formula and a complete example, with illustrative figures, follow.
Short answer
- List every ingredient at its net weight, exactly as it lands on the plate.
- Multiply each weight by its purchase price per unit and add up all the lines.
- Add the technical loss from cleaning, trimming and cooking, which is usually a few per cent.
- Take GST out of the menu price: at 15%, divide a GST-inclusive price by 1.15.
- Food cost % = production cost ÷ price excluding GST × 100, then compare it with your own target for the dish.
A complete example: one portion of carbonara
Recipe card with net weights, purchase prices and plated cost (illustrative)
| Ingredient | Net weight | Purchase price | Plated cost |
|---|---|---|---|
| Spaghetti | 120 g | $9.00/kg | $1.08 |
| Guanciale | 60 g | $45.00/kg | $2.70 |
| Egg yolks (2) | 40 g | $0.55 each | $1.10 |
| Pecorino | 30 g | $90.00/kg | $2.70 |
| Pepper, salt, oil | — | — | $0.25 |
| Final cost (incl. 5% technical loss) | 250 g | — | $8.22 |
The calculation, step by step
The raw materials add up to $7.83. With 5% technical loss, the production cost of the portion is $8.22.
The menu price is $36.00 including GST. At 15%, the price excluding GST is 36.00 ÷ 1.15 = $31.30.
Food cost = 8.22 ÷ 31.30 × 100 = 26.3%. That means $8.22 of every $31.30 excluding GST goes on ingredients.
What the rules say
- Restaurant meals carry GST at 15%, so food cost is always measured against the price excluding GST.
- The recipe card underpins your allergen information for food you serve, under the Australia New Zealand Food Standards Code.
- Menu prices and portion sizes must be clear and not misleading. The Fair Trading Act 1986 applies to what you tell customers.
Common mistakes
- Dividing by the GST-inclusive price, which makes the result about 13% lower than reality.
- Using the gross weight from the supplier invoice instead of the net weight on the plate.
- Forgetting the side, the sauce and the packaging, which add up across a menu.
- Looking only at the percentage and ignoring how many dollars remain from each portion sold.
How 4restaurants.net helps
- Production cost is calculated from the recipe card, using your own weights.
- Net weights on the recipe card let trimming enter the cost correctly.
- Food cost sits next to each dish, in the same application as the reports by dish.