You know that pasta dish costs you something to make. But do you know the exact number?
Most restaurant owners and home bakers have a rough idea — maybe $3, maybe $5 — but they’ve never sat down and calculated it ingredient by ingredient. That’s how a dish you think earns $8 in profit is actually earning $3. Or losing money entirely when tomato prices spike in winter.
Recipe costing isn’t complicated. It’s just addition and division. But you need to do it once, properly, to set prices that actually work.
This guide walks through the full process — from tracking ingredient prices to calculating per-serving cost to setting a menu price that covers your overhead and leaves real profit.
The Basic Formula
Here’s the entire recipe costing process in three lines:
Ingredient cost = Purchase price ÷ Total quantity × Amount used
Recipe cost = Sum of all ingredient costs
Cost per serving = Recipe cost ÷ Number of servingsThat’s it. Everything else is detail.
A Real Example: Chicken Alfredo
Let’s say you’re costing a chicken alfredo that makes 4 servings.
Ingredients and costs:
| Ingredient | Purchase price | Package size | Amount used | Cost in recipe |
|---|---|---|---|---|
| Fettuccine | $1.89 | 1 lb | 1 lb | $1.89 |
| Chicken breast | $9.99 | 3 lbs | 1.5 lbs | $5.00 |
| Heavy cream | $4.49 | 1 quart | 1 cup | $1.12 |
| Parmesan | $6.99 | 8 oz | 3 oz | $2.62 |
| Butter | $4.99 | 1 lb | 3 tbsp | $0.58 |
| Garlic | $0.50 | 1 head | 3 cloves | $0.15 |
| Salt, pepper, oil | — | — | — | ~$0.20 |
| Total | $11.56 |
Cost per serving: $11.56 ÷ 4 = $2.89
If you sell this for $16, your food cost percentage is $2.89 ÷ $16 = 18%. That’s solid.
If you sell it for $12, food cost is 24%. Still workable for most restaurants.
The point isn’t hitting a specific percentage. It’s knowing the number so you can make a conscious pricing decision instead of guessing.
The Part Most People Skip: Loss Rate
Raw ingredients aren’t the same as usable ingredients. You peel onions. You trim fat from chicken. You lose the stems of herbs. The stuff you throw away still cost money.
This is called waste or loss rate, and ignoring it makes your recipe costs look lower than they actually are.
Some common loss rates:
| Ingredient | Approximate loss rate |
|---|---|
| Onions (peeling) | 10% |
| Chicken breast (trimming) | 5-10% |
| Fresh herbs | 20-30% |
| Fish fillets | 15-20% |
| Lettuce (outer leaves) | 15-20% |
| Potatoes (peeling) | 15% |
How to account for it: Divide the usable cost by (1 - loss rate).
Example: You buy 3 lbs of chicken breast for $9.99. With 10% loss, your usable amount is 2.7 lbs. The effective price per pound is $9.99 ÷ 2.7 = $3.70 instead of $3.33.
On one recipe, that’s a small difference. Across 200 servings a week, it adds up to hundreds of dollars.
Setting a Menu Price from Your Recipe Cost
Once you know the cost per serving, you need a selling price. There are two common approaches.
Method 1: Target food cost percentage
Pick a food cost target (say, 30%) and divide:
Menu price = Cost per serving ÷ Target food cost %Chicken alfredo at $2.89 with a 30% target: $2.89 ÷ 0.30 = $9.63
You’d round to $9.99 or $10.
Method 2: Margin-based pricing
Decide how much profit margin you want after all costs (food, labor, overhead):
Menu price = Cost per serving ÷ (1 - Desired margin %)$2.89 with a 15% net margin and roughly 55% going to labor + overhead: $2.89 ÷ (1 - 0.70) = $9.63. Similar result.
The math is the same either way. Pick the approach that feels more natural to you.
When Recipe Costs Shift Under Your Feet
Ingredient prices aren’t stable. Here’s what actually causes recipe costs to change:
- Seasonal shifts: Tomatoes cost $1.50/lb in August, $3.50/lb in January. A tomato-heavy recipe can swing 40% in cost.
- Supplier changes: Switching to a different brand or vendor changes your baseline.
- Portion creep: Your team starts adding a little extra cheese, a few more shrimp. Small additions compound fast.
- Package size changes: Your supplier starts selling garlic in 2 lb bags instead of 3. Same price per bag, but your cost per clove just went up 50%.
The fix isn’t constant recalculation. It’s a system that flags when costs change significantly. Check your top 10 highest-cost recipes monthly. Spot-check the rest quarterly.
Tracking Recipe Costs by Hand vs. Using an App
Spreadsheets work fine for 5-10 recipes. You set up ingredient prices in one tab, recipes in another, and link them with formulas.
The problem shows up when you have 30+ recipes and ingredient prices change. Updating the price of chicken means checking every recipe that uses chicken. If you use a recipe as a sub-ingredient in another recipe (like making a sauce base that goes into three dishes), the spreadsheet gets tangled fast.
Recipe costing apps solve this specific problem. You update an ingredient price once, and every recipe using that ingredient recalculates automatically. Sub-recipes (a sauce used in multiple dishes) stay connected too.
The trade-off is data entry. You need to input all your ingredients and recipes upfront. After that initial setup, ongoing maintenance is just updating prices when they change.
What To Do This Week
- Pick your top 5 best-selling dishes and calculate the exact cost per serving
- Check the food cost % for each one — anything above 35% needs a second look
- Look at waste: Are you accounting for trimming, peeling, and spoilage?
- Compare your current menu prices to what the math says they should be
If the gap between your current price and the calculated price surprises you, you’re not alone. Most restaurant owners find at least one dish that’s been underpriced for months.
KitchenCost is a free recipe cost calculator for iOS and Android. Enter your ingredients, build recipes, and see per-serving costs instantly — no spreadsheet formulas required.