How to Calculate Food Cost Percentage
A simple, chef-friendly guide to calculating food cost percentage for any dish — including how VAT affects the result.
The formula
Food cost percentage = (ingredient cost of the dish ÷ net selling price) × 100. Net selling price means the price after VAT has been removed. A dish costing £3.00 and selling for £12.00 including 20% VAT has a net price of £10.00, so its food cost is 30%.
Why VAT matters
VAT is not your money. If you calculate against the menu price including VAT, your food cost will look lower than it really is. Always divide the menu price by 1.2 (for 20% VAT) first.
Getting the ingredient cost right
Cost every component, including garnishes, sauces and oil. Use the price you actually pay per gram or millilitre, and allow for trim and waste where it applies.
Do it once, keep it current
The hard part isn't the maths — it's keeping it up to date when supplier prices change. That's exactly what recipe costing software is for.