How to cost a recipe step by step (with a worked example)

What recipe costing is

Recipe costing is breaking down what a dish costs: the price of each ingredient in the quantity the recipe really uses, added up and divided by the portions it makes. With that number you set the menu price, keep your food cost under control and find out in time when a supplier puts a price up. In Spanish kitchens it's called an *escandallo*, and you'll hear the word from chefs, suppliers and consultants alike.

It isn't the same as the recipe card (*ficha técnica*). The recipe card says how the dish is made: ingredients, method, plating, allergens. The costing says what it costs. They usually go together, because they share the same list of ingredients and grams.

What you need before you start

• The recipe weighed, not from memory. Grams and millilitres of everything, including the salt and the oil.
• Your suppliers' invoices or delivery notes, with the price you pay for each product (€/kg, €/L or €/unit), excluding VAT.
• The yield of each ingredient: how much of what you buy ends up on the plate after trimming, peeling or cooking. If you don't know it, measure it once and write it down.
• How many portions the recipe makes, counted when you plate, not what the paper says.

Step by step

1. 1Write down each ingredient with its net quantity, the amount that really goes on the plate.
2. 2Work out the usable price of each ingredient: purchase price ÷ yield. It's the step almost everyone skips, and the one that hides the most money.
3. 3Cost sub-recipes separately (stocks, sauces, doughs) and use them as one more ingredient, with their own cost per kilo or per litre.
4. 4Work out the cost of each line: net quantity × usable price, in the same unit.
5. 5Add up the lines and include a small allowance for what isn't weighed (salt, pepper, oil for the griddle).
6. 6Divide by the portions if it's a batch recipe. That's your cost per portion.
7. 7Set the price: cost per portion ÷ target food cost = price excluding VAT. Add VAT (10% for food served in a restaurant in Spain) and round to a menu price.

A complete example: griddled hake with sliced roast potatoes

An ordinary menu dish with what almost every dish has: an ingredient with a lot of waste, a garnish and a sauce made separately. Purchase prices excluding VAT, as you'd see them on an invoice.

1. What you pay versus what you use

The hake is bought whole, but only the clean loin goes on the plate. If you get 550 grams out of every kilo, the loin doesn't cost you €9.50 a kilo: it costs you €17.27. That jump is the most expensive mistake in recipe costing.

2. The sub-recipe: garlic and parsley oil

The sauce is made in a batch and used in several dishes, so it's costed once and turned into a price per kilo. From then on it goes into any recipe as one more ingredient.

3. The cost of one portion

Look at how it splits: the hake is 81% of the cost. If fish goes up 10%, the dish goes up 31 cents and the rest of the ingredients hardly matter. That's why it pays to watch the two or three expensive ingredients in each dish before you worry about the salt.

4. From cost to menu price

If you put it on the menu at €14.50, that's €13.18 excluding VAT and a food cost of 29%. That's within a sensible range. The costing also tells you the floor: below about €12 including VAT, this dish starts to be a problem.

The missing number: what your kitchen costs

Food cost only looks at the food. But that dish also kept someone busy in the kitchen, kept the stove on and paid its share of the rent. If your kitchen costs, say, €0.50 a minute in wages, premises and bills, and the dish takes 8 minutes of work, that's another €4.00.

With that, the real cost of the hake goes from €3.84 to €7.84, and what each portion leaves you goes from €9.34 to €5.34. It's still a good dish, but it's a different number. It's the gap between the margin you think you have and the one you really have, and it's what the true cost of a dish part of gramo works out.

Common mistakes

• Costing with the purchase price instead of the usable price. The hake in the example goes from €9.50 to €17.27 a kilo. With the purchase price, the dish looks 45% cheaper than it is.
• Using the portions on the paper. If the recipe says 10 portions and you plate 9, each portion costs 11% more.
• Guessing the sub-recipes. A stock or sauce used in six dishes and costed wrong throws all six off.
• Not updating prices. If your supplier puts oil up, yesterday's costing no longer holds. What works best is for it to update itself with every invoice.
• Forgetting what isn't weighed. Salt, spices and griddle oil add up to more than you'd think; a small fixed allowance per portion covers it.
• Mixing prices with and without VAT. Always cost excluding VAT, and add VAT at the end when you set the menu price.

The same method works behind the bar. If you want to see it applied to something cheap that sells by the hundred, read what a cup of coffee really costs.