How to Calculate Recipe Cost: The Complete Guide for Restaurants & Food Businesses

If you run a restaurant, food truck, bakery, or catering business, recipe costing is the single most important habit that separates profitable operators from those who wonder where the money went.

Yet most operators skip it—or do it once and never update it. This guide will walk you through the exact formulas, a real worked example with US grocery prices, and a method to turn recipe costs into profitable menu prices.

What Is Recipe Costing?

Recipe costing is the process of calculating the exact ingredient cost to produce one batch (or one serving) of a dish. It answers the fundamental question: “How much does it actually cost me to make this?”

Once you know your recipe cost, you can:

• Set menu prices that hit your target food cost percentage
• Identify which items make money and which ones lose it
• React quickly when ingredient prices change
• Compare supplier quotes with real impact on your bottom line

The 5 Core Formulas

Every recipe cost calculation follows these five steps:

1. Usable Amount (after trim/waste)

Usable Amount = Purchase Weight × (1 − Loss Rate)

A 10 lb case of chicken thighs with 15% trim loss gives you 8.5 lbs of usable meat.

2. Unit Cost

Unit Cost = Purchase Price ÷ Usable Amount

If that case costs $28.00: Unit Cost = $28.00 ÷ 8.5 lbs = $3.29/lb

3. Ingredient Cost (per recipe)

Ingredient Cost = Unit Cost × Amount Used in Recipe

If your recipe calls for 1.5 lbs: $3.29 × 1.5 = $4.94

4. Total Recipe Cost

Total Recipe Cost = Sum of all Ingredient Costs

Add up every ingredient in the recipe—including oil, seasoning, and garnish.

5. Cost Per Serving

Cost Per Serving = Total Recipe Cost ÷ Yield (number of servings)

If the recipe makes 6 portions: Total Cost ÷ 6 = cost per plate.

Step-by-Step Example: Chicken Alfredo

Let’s cost out a batch of chicken alfredo that yields 6 servings.

Ingredient Costs

Cost Per Serving

$16.90 ÷ 6 servings = $2.82 per plate

What This Means for Pricing

A $2.82 cost turned into a $9 menu item gives you a healthy 31% food cost—right in the sweet spot for casual dining.

Food Cost Percentage: What to Target

Food cost percentage tells you what share of your menu price goes to ingredients:

Food Cost % = Ingredient Cost ÷ Menu Price × 100

Benchmarks by Restaurant Type

These ranges come from industry benchmarks. Your actual target depends on your labor costs, rent, and operating model. What matters most is your prime cost (food + labor) staying under 60%. See our Prime Cost Guide for the full breakdown.

The Pricing Formula

Once you know your cost per serving, use this formula to set your menu price:

Menu Price = Cost Per Serving ÷ Target Food Cost %

Example: $2.82 cost ÷ 0.30 (30% target) = $9.40 menu price

Or use the margin-based formula:

Menu Price = Cost Per Serving ÷ (1 − Target Margin)

$2.82 ÷ (1 − 0.70) = $2.82 ÷ 0.30 = $9.40

⚠️ Food cost percentage and profit margin are related but different concepts. 30% food cost = 70% gross margin (before labor and overhead). Learn the distinction in our Margin vs Markup Guide.

Why Loss Rate Matters

Many operators skip trim loss and get surprised when actual costs exceed their spreadsheet. Here’s the impact:

Beef tenderloin example:

• Purchase price: $32.99/lb
• Trim loss: 35% (fat, silver skin, scraps)
• Usable amount per lb: 0.65 lbs
• True unit cost: $50.75/lb (not $32.99)

That’s a 54% difference from the sticker price. If you’re costing recipes without loss rate, every premium ingredient is understated.

Common loss rates:

For a full reference, see our Trim Loss Guide.

Common Recipe Costing Mistakes

1. Forgetting “cheap” ingredients

Salt, oil, spices, and garnish seem insignificant per dish—but at 100+ plates per day, they add up. A typical plate has $0.08–$0.25 in “invisible” seasoning costs.

2. Using package price instead of unit cost

“A bag of flour costs $4” means nothing until you know how much of that bag goes into one recipe.

3. Not updating costs when prices change

Egg prices fluctuated dramatically in 2023–2025. If your recipe cost spreadsheet still says “$0.25 per egg” when the real price is $0.40, every dish using eggs is undercosted.

4. Ignoring yield variations

Does your recipe make 6 servings or 5.5? That half-serving gap changes your per-plate cost by 9%.

5. Calculating once and never again

Recipe costing isn’t a one-time event. Review costs monthly—or immediately when you get a price increase from your supplier.

Spreadsheets vs. Dedicated Apps

Most operators start with Excel or Google Sheets. It works at first, but problems emerge:

Studies show that 88% of spreadsheets contain errors (University of Hawaii research). When your margins are already tight, a formula mistake on a high-volume item can cost hundreds per month.

For a detailed comparison, see our Excel vs. App Cost Management Guide.

Getting Started

If you have 5 minutes

Pick your top-selling menu item. Look up the current prices for each ingredient. Run the math from this guide. You’ll likely find your real cost is different from what you assumed.

If you have 30 minutes

Cost out your top 5 menu items. Calculate the food cost percentage for each. You’ll probably find at least one item that’s losing money—and one that’s more profitable than you thought.

If you want to do it right

Enter all your ingredients into a recipe costing tool (spreadsheet or app), include loss rates, and calculate costs for your full menu. Then set target margins and adjust pricing.

Related Guides

• Free Recipe Cost Calculator App Guide — Quick-start workflow for teams moving from spreadsheets to mobile
• Food Cost Percentage Guide — Target benchmarks by restaurant type
• Trim Loss Guide — Yield percentages for common ingredients
• Prep Item Costing — Tracking house-made sauces and doughs
• Margin vs Markup — The pricing mistake that costs you money
• Prime Cost Guide — Why food + labor matters more than food cost alone
• Labor Cost Percentage Guide — What to include and how to set a target
• Menu Engineering — Find which items make money and which don’t
• New Menu Cost Simulation — Test new dishes before adding them to the menu
• Pizza Cost Calculator — Ingredient costing for every pie type
• BBQ Restaurant Cost Guide — Brisket, ribs, and smoked meat costing
• Steakhouse Cost Guide — Ribeye, filet, and prime cut costing
• Bakery Cost Calculator — Flour, butter, and bake-off economics
• Ice Cream Shop Cost Guide — Scoop, sundae, and soft serve costing
• Juice Bar Cost Guide — Juice, smoothie, and acai bowl costing
• US Churro Cart Cost Guide — Dough, fry oil, and topping control
• US Empanada Shop Cost Guide — Dough yield and filling portion math
• Catering Cost Guide — Per-person costing for catering events
• Breakfast & Brunch Cost Guide — Egg, pancake, and brunch menu costing
• Ramen Cost Calculator — Broth, noodles, and toppings costing per bowl
• Mexican Restaurant Cost Guide — Tacos, burritos, and bowl costing with batch prep economics
• Indian Restaurant Cost Guide — Curry base, biryani, and naan costing workflows
• UK Menu Pricing Guide — VAT-aware pricing math for UK operators

Key Takeaways

1. Recipe cost = sum of (unit cost × recipe amount) for every ingredient, adjusted for trim loss
2. Target 28–35% food cost for most restaurant types, but your model determines the right number
3. Trim loss can increase your true cost by 10–50% over sticker price—always account for it
4. Update costs regularly — ingredient prices change, and outdated costing leads to underpriced menus
5. A dedicated recipe costing tool saves time and reduces the spreadsheet errors that eat into margins

Track ingredient costs, calculate recipe costs, and set profitable prices in one place. Try KitchenCost — it’s free to start.

Sources

• USDA FoodData Central — Nutrient and yield data for ingredients
• USDA Food Price Outlook — Food price inflation data
• Toast Restaurant Menu Price Monitor — Industry food cost benchmarks
• Lightspeed — How to Calculate Restaurant Food Costs — Food cost percentage formulas
• The Culinary Pro — Calculating Food Cost — Chef-oriented costing methodology