On the Line / Operations / How to Cost a Plate of Food Based on Your Restaurant Recipes

How to Cost a Plate of Food Based on Your Restaurant Recipes

Learn how to calculate plate costs so you can properly price menu items, manage your COGS, and achieve profitability targets.

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You deserve to see the maximum return on your costs and efforts. Understanding plate costs can help.

If you’re like many of your peers, you probably aren’t regularly calculating your plate and portion costs. Perhaps you don’t know how to cost a plate of food. Maybe you think your portion costs are low enough to not worry about. More than likely, you simply don’t have the time to calculate plate costs.

It’s time to make the time. 

Restaurant operators can gain a more precise understanding of their food spending by consistently calculating plate costs. Such insights can help manage supplier price fluctuations, maintain target profitability, and get overall restaurant costs under control.

These are all critical tasks in today's volatile environment with inflation and increased costs, supply chain uncertainty, and ongoing labor struggles. This article breaks down how to cost a plate of food to help you mitigate the impact of this environment and get realistic about your restaurant's profitability. 

Read on to explore everything from determining individual ingredient costs to understanding yields and units of measurement to calculating recipe costs.

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What is restaurant plate costing?

Plate costs, or portion costs, are a calculation of the costs required to prepare a menu item.

Many restaurants track their Cost of Goods Sold (COGS), a great high-level metric that helps visualize the cost to make all the items you sell in a given time. Plate costing is essentially a COGS measure that focuses on individual menu items.

Most dishes contain different recipes, each made up of multiple ingredients. Those ingredients may fluctuate from one week to the next, especially with today’s rising costs and supply chain challenges.

These ingredient price fluctuations create an inseparable bond between invoice processing and plate costing. 

Your invoices are the single truth point for ingredient prices. They’re your reference point for price changes, updating with each new supplier order. Tracking these price changes across invoices is critical for all restaurant costing practices, especially plate costing.

Manually processing all your invoices is a big task. It can add more office hours each week for you and your manager or it can increase payable hours for your bookkeeper or accountant. This is why invoice processing automation tools are so valuable for restaurants.

Learn more about the benefits of restaurant-specific invoice automation.

Read this next
How to Implement a Consistent Recipe Management Process
Accounting

How to Implement a Consistent Recipe Management Process

Recipe management is a must-have capability for operators to achieve dish consistency, monitor and control costs, and successfully set menu prices.

Why is it so important to conduct regular plate costing?

Calculating your plate costs regularly is essential for your operation. Here are a few reasons why:

1. Plate costing helps you be more strict in pricing your menu items. You have to know menu item costs to price each plate according to your target profit margin.

Remember, the margin is simply the difference between costs and price. It is usually expressed as a percentage and calculated using this formula:

Profit margin % = ([Price - Cost]/Price)*100

2. Tracking plate costs requires you to constantly monitor food costs at the individual ingredient level. This enables you to spot price fluctuations over time.

Ingredient pricing data not only informs prices — it can also indicate when you need to swap out ingredients, find a new provider with more competitive prices, or potentially pull an item off the menu until prices come back down.

3. Individual plate and portion costs make for more accurate menu engineering. Menu engineering consists of various actions you take to create a profitable menu, including pricing, physical design, placement, seasonal dish choice, add-ons/modifiers, and more.

With menu engineering, you can find the right balance of low and high-margin dishes. Not all your offerings can be $20+ and 30%+ margin. Menu design can help you place high-margin dishes in the prime real estate area of your physical menu (or QR-coded menu) known as the Golden Triangle. This is the area of the menu where the diner’s eye naturally gravitates to first - middle, top right corner, and top left.

What’s the difference between plate costs and portion costs?

You may see “plate costs” and “portion costs” used interchangeably. Perhaps there’s a semantic argument to make for using them that way. That’s not how we see it. 

Plate costs are the total costs of individual portions of all the recipes in a finished dish. Think hamburger and fries, as you’ll see in the calculation below.

Your portion costs are the cost of a serving of an individual ingredient or recipe. For example, your ground beef portion cost on the hamburger is the total cost of ground beef per burger. Another example is if you sell smoked brisket by the pound, your portion cost is the cost per pound of brisket.

Portion cost is especially important for buffets, cafeterias, by the slice pizzerias, and other businesses where individual portions are served in place of meticulously composed dishes.

How to cost a plate of food using your restaurant recipes

Now that you know what plate cost is, why it’s important, and how it’s different from portion costs, let’s learn what goes into calculating it.

Look, this is an understandably complicated task to complete manually. That’s why we’re going to walk you through it and provide some free resources that will give you the framework you need to be successful. It’ll still be incredibly time-consuming, even with these assets. Don’t let that discourage you!

If you want to accurately track your costs over time without spending many hours each week, you’re going to need a costing platform that’s built for invoice automation. That’s exactly what xtraCHEF by Toast provides. Learn more about that here.

Now, let’s dive into how to cost a plate of food.

Step 1: Standardize your recipes

Your recipes must be standardized. This ensures that each batch of the recipe contains the same quantities (or ratios) of the same ingredients. 

Recipe costs will rise and fall with fluctuating supplier prices. Standardized recipes provide you with certainty regardless of these changes. This way recipes can stay rooted in the exact same collection of ingredients/portions over time regardless of price fluctuations.

For example, maybe one chef prefers fresh vanilla beans whereas another uses vanilla extract. Both result in similar end products, but vastly different recipe costs due to the skyrocketing price of fresh vanilla beans.

It’s not that the more expensive vanilla bean is a bad choice. If that’s the ingredient you want to use to have a higher quality dish, then by all means go for it. 

The issue is that you have to standardize it and factor the increased costs into your recipe. These discrepancies in recipe costs follow each portion on the plate, thus reducing the accuracy and effectiveness of your plate costing.

A key tip for standardizing your recipes is having recipe cards for all your dishes that look like what you’d find in a cookbook. Keep these cards stored in a widely accessible place so that anyone can reference them during the prep cooking process. These cards should include:

  • Ingredient list

  • Ingredient quantities

  • Cooking time

  • Preparation steps

  • Plating directions (if the recipe is for a composed dish)

Step 2: Create a recipe costing template

Create a spreadsheet with the following nine key headings for each recipe:

Ingredient

Purchased  unit

Unit purchase cost

Yield

Actual unit cost

Serving unit

Unit serving cost

Portion size

Portion cost

Here’s a breakdown of what to include for each of these sections:

  • Ingredients - A full list of ingredients used to make the dish.

  • Purchased unit - The unit of measurement that the ingredients were purchased in, anything from pounds and ounces to gallons and cases.

  • Unit purchase cost - The price per unit of measure as displayed on the supplier invoice.

  • Yield - Amount of usable ingredients after processing, expressed as a percentage.

  • Actual unit cost - True costs after subtracting usable yield from purchased units. 

  • Serving unit - The unit of measure used in the recipe.

  • Unit serving cost - Cost per serving unit.

  • Portion/serving size - How much of each ingredient goes into a dish you serve customers (e.g. 1 tablespoon of butter or 5 oz of beef.)

  • Portion cost - The cost of the serving size for that ingredient, calculated using the following formula: Portion size x unit serving cost.

Step 3: Complete the recipe costing spreadsheet

With your table complete, it’s time to cost a plate. We’ll use the example of a burger and fries to articulate how to do it.

First, list all the ingredients for the dish.

Ingredients

Beef (ground)

Bun

Mayo

Butter

Russet Potatoes

Second, list the purchased unit as per the supplier invoice.

Ingredients

Purchased unit

Beef (ground)

Pound

Bun

Dozen

Mayo

Gallon

Butter

Pound

Russet Potatoes

Pound

Third, list the purchase cost of those ingredients as per the invoice.

Ingredients

Purchased unit

Unit purchase cost

Beef (ground)

Pound

$2.75

Bun

Dozen

$5.00

Mayo

Gallon

$11.00

Butter

Pound

$6.00

Russet Potatoes

Pound

$1.50

Fourth, include your yield percentages. Yields differ by ingredients and cooking processes. You’ll want to record your yields overtime to get the specific percentages for your cooking styles and your suppliers' ingredients.  

If you don’t know your yields, a good starting point is the Chef’s Resources Produce Yield Chart. It details average yields for produce - for example, russet potatoes having a typical yield of 81%. We’ll estimate the rest for the sake of the example.

Ingredients

Purchased unit

Unit purchase cost

Yield

Beef (ground)

Pound

$2.75

100%

Bun

Dozen

$5.00

100%

Mayo

Gallon

$11.00

95%

Butter

Pound

$6.00

98%

Russet Potatoes

Pound

$1.50

81%

Fifth, calculate the actual unit cost for each ingredient by applying the yield.

In our example, this means calculating the cost of russet potatoes. To make this calculation, take the cost per pound and divide it by the yield. This brings the actual cost to $1.85 (1.50/.81).

Ingredients

Purchased unit

Unit purchase cost

Yield

Actual unit cost

Beef (ground)

Pound

$2.75

100%

$2.75

Bun

Dozen

$5.00

100%

$5.00

Mayo

Gallon

$11.00

95%

$11.58

Butter

Pound

$6.00

98%

$6.12

Russet Potatoes

Pound

$1.50

81%

$1.85

Sixth, update your table with the serving unit used in your recipe.

Ingredients

Purchased unit

Unit purchase cost

Yield

Actual unit cost

Serving unit

Beef (ground)

Pound

$2.75

100%

$2.75

Oz

Bun

Dozen

$5.00

100%

$5.00

Ea

Mayo

Gallon

$11.00

95%

$11.58

Oz

Butter

Pound

$6.00

98%

$6.12

Tbsp

Russet Potatoes

Pound

$1.50

81%

$1.85

Ea

Seventh, calculate your unit serving cost. This can be tricky as it involves several unit conversions. For example, if you purchase an item by the pound but use it by the cup, you’ll have to weigh a cup to arrive at the correct unit serving cost.

Let’s look at how to calculate the unit serving cost for each ingredient, using a simple formula: 

Cost per measure / Units per measure

Keep in mind that for items with no yield percentage, the cost per measure will be the unit purchase cost. For items with a yield percentage, it will be the actual unit cost. To explain this further, let’s break it down by ingredient below.

  • Beef: Because the serving unit is an ounce and there are 16 ounces in a pound, the serving unit cost is $0.17 ($2.75/16.)

  • Bun: Twelve buns are $5, so each bun is $0.42 ($5/12.)

  • Mayo: There are 128 ounces in a gallon, so one ounce of mayo costs $0.09 ($11.58/128.)

  • Butter: A tablespoon of butter weighs roughly 0.5 ounces. This means there are 32 half ounces (or tablespoons) of butter in a pound. One tablespoon of butter costs $0.19 ($6.12/32.)

  • Russet potatoes: Let’s assume that your average potato is 4 ounces. This means that there are 4 potatoes in a pound, and your unit serving cost is $0.46 ($1.85/4.)


Ingredients

Purchased unit

Unit purchase cost

Yield

Actual unit cost

Serving unit

Unit serving cost

Portion size

Portion cost

Beef (ground)

Pound

$2.75

100%

$2.75

Oz

$0.17



Bun

Dozen

$5.00

100%

$5.00

Ea

$0.42



Mayo

Gallon

$11.00

95%

$11.58

Oz

$0.09



Butter

Pound

$6.00

98%

$6.12

Tbsp

$0.19



Russet Potatoes

Pound

$1.50

81%

$1.85

Ea

$0.46



Eighth, determine the portion size or how much of each ingredient will go into the dish. This is where you will refer back to your standardized recipe.

Ingredients

Purchased unit

Unit purchase cost

Yield

Actual unit cost

Serving unit

Unit serving cost

Portion size

Portion cost

Beef (ground)

Pound

$2.75

100%

$2.75

Oz

$0.17

5 oz


Bun

Dozen

$5.00

100%

$5.00

Ea

$0.42

1 ea


Mayo

Gallon

$11.00

95%

$11.58

Oz

$0.09

0.5 oz


Butter

Pound

$6.00

98%

$6.12

Tbsp

$0.19

1 tbsp


Russet Potatoes

Pound

$1.50

81%

$1.85

Ea

$0.46

1 ea


Ninth, calculate your portion cost using this formula: 

Portion size x Unit serving cost

Ingredients

Purchased unit

Unit purchase cost

Yield

Actual unit cost

Serving unit

Unit serving cost

Portion size

Portion cost

Beef (ground)

Pound

$2.75

100%

$2.75

Oz

$0.17

5 oz

$0.85

Bun

Dozen

$5.00

100%

$5.00

Ea

$0.42

1 ea

$0.42

Mayo

Gallon

$11.00

95%

$11.58

Oz

$0.09

0.5 oz

$0.05

Butter

Pound

$6.00

98%

$6.12

Tbsp

$0.19

1 tbsp

$0.19

Russet Potatoes

Pound

$1.50

81%

$1.85

Ea

$0.46

1 ea

$0.46

Finally, tally the portion cost of all your ingredients. Our hamburger and fries adds up to:

0.85 + 0.42 + 0.05 + 0.19 + 0.46 = $1.97

But wait, we’re not done yet! We have to factor in a waste percentage. There will always be some waste that occurs during cooking, which you should factor in. Unfortunately, there’s no fixed waste factor percentage you can apply. However, by weighing your food waste over a period of time, you can narrow down an average percentage.

For this example, we’ll assume a waste factor of 10% of the portion cost, or 0.197. Adding this 10% waste brings the total plate cost for the burger and chips to $2.17.

Ingredients

Purchased unit

Unit purchase cost

Yield

Actual unit cost

Serving unit

Unit serving cost

Portion size

Portion cost

Beef (ground)

Pound

$2.75

100%

$2.75

Oz

$0.17

5 oz

$0.85

Bun

Dozen

$5.00

100%

$5.00

Ea

$0.42

1 ea

$0.42

Mayo

Gallon

$11.00

95%

$11.58

Oz

$0.09

1 oz

$0.05

Butter

Pound

$6.00

98%

$6.12

Tbsp

$0.19

1 tbsp

$0.19

Russet Potatoes

Pound

$1.50

81%

$1.85

Ea

$0.46

1 ea

$0.46

You can use the dollar amount plate cost to calculate the food cost percentage for that plate. Simply divide the selling price by the plate cost to get the food cost ratio, then multiply the ratio by 100 for the food cost percentage. 

For example, a selling price of $6.50 gives you a food cost percentage of 33.38%: 

($2.17 / $6.50) * 100 = 33.38%

Automate plate costing along with other critical financial and operational measures

Calculating plate costs is a critical practice for restaurant success. The results of the process should inform your menu items, their pricing, and ongoing supplier purchasing strategies.

The process explained above is no doubt a tedious one. That's a lot of complicated math. The unit of measure calculations alone are rife with potential human error — not to mention the manual data entry for collecting ingredient prices from your invoices.

This is why restaurant-focused invoice processing and recipe costing systems are essential tools for operational success. Investing in the right costing software can automate much of this process, help eliminate human error, and deliver the analysis you need in easy-to-read dashboards.

xtraCHEF by Toast can check all the boxes for automating your plate costing. It's built on restaurant-specific invoice processing automation that digitizes critical invoice information — passing the headlines to your accounting system while getting granular on your invoice line-item details to help you take control of costs.

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