The document outlines a 9-step process for calculating food costs to help culinary specialists keep consistent menus, satisfy customers, and remain profitable. The steps include: 1) listing ingredients for each dish, 2) calculating ingredient costs, 3) adding ingredient costs, 4) calculating food cost percentage, 5) determining overhead costs, 6) deciding on an ideal food cost percentage based on overhead, 7) ensuring menu prices cover costs and provide profit, 8) calculating different percentages for different menus, 9) examining sales to ensure adequate percentages for business viability.

1. Developing a pricing system
for commercial and home
S. Stubbs

2.  The following nine steps outline food
cost calculations to help ensure that
culinary specialists are able to keep a
consistent menu, please customers and
remain profitable.

3. Step 1
 Identify a dish to start and list all of its
ingredients – even condiments and
garnishes.
 Make sure that the portion for each
dish is the same so that it
always costs the same

4. Step 2
 Calculate the cost of each ingredient.
Take a head of lettuce, for example. If
it costs 75 cents and you get 30
leaves, the lettuce cost for a dish that
includes one lettuce leaf would be
about 2.5 cents.
 Include a proportion of any expenses
directly related to purchasing foods,
such as delivery fees or interest

5. Step 3
 Add up the costs of all the ingredients
for the dish, but don’t include costs for
labour or actually serving the dish

6. Step 4
 To start figuring out if you’ve priced the
meal right, divide the menu price by
the food cost to calculate the
percentage of the price that comes
from food. If you charge $10 for a
meal for which food costs are $5, then
your food cost is 50 percent.

7. Step 5
 Determine overhead cost per meal,
which includes everything not related to
food that’s required to run your
restaurant.
 This includes things such as labour,
rent, marketing, taxes, etc.
 So, consider what it will cost to run your
restaurant on a daily basis – then divide
that number by the number of customers
you think you’ll serve every day.
 If your overhead is $1,000 per day and
you have 200 customers each day, your
overhead per person is $5.

8. Step 6
 Using your overhead costs as a guide,
decide your ideal food-cost
percentage. If you charge $10 for a
meal and your overhead cost is $6,
then your food costs can’t be more
than $4 to break even.
 Want a $2 profit per meal? Then you
will have to charge $12 for that
particular dish

9. Step 7
 Take a look at the prices listed in your
menu to figure out if they will cover
your overhead and food costs – and if
you’ll be able to make a profit.
 So if you’ve calculated an ideal food-
cost percentage of 20 percent and a
dish uses $4 of ingredients, you
cannot sell that dish for any less than
$20

10. Step 8
 You may need to calculate different
food-cost percentages for different
services or items, such as a breakfast
menu versus dinner menu, because of
different requirements – some less,
some more – to satisfy each dish.

11. Step 9
 Finally, examine your sales by item to
determine if your food-cost
percentages are adequate to keep
your restaurant in business.
 If it turns out you’re selling at primarily
a low cost, you might need to raise
prices (or lower food costs) to be
profitable.

12. THANK YOU!