Recipe costing 101: Know your true plate cost

Ask most operators what their best-selling burger costs to make, and you'll get a confident answer. Dig into the details, and that confidence evaporates. Most plate costs are underestimated by 15–25%, which quietly destroys menu profitability.

The problem isn't laziness. It's complexity. Recipe costing isn't just adding up ingredient prices. It's accounting for waste, prep yield, fluctuating supplier costs, and a dozen hidden factors that turn a $4 estimated cost into a $5.20 reality.

This guide breaks down true recipe costing: what to measure, how to account for variables, and when to update your numbers. By the end, you'll know exactly what each dish costs, not what you hope it costs.

Why operators underestimate plate costs

Most costing errors fall into three buckets:

1. Ignoring waste and trim loss
You buy 1kg of salmon at $32/kg, but after trimming skin, bones, and blood lines, you yield 750g usable. Your actual cost is $42.67/kg, not $32. Miss this, and you're 33% off before you even start cooking.

2. Using stale prices
Recipe costs are often set when a dish launches, then never updated. Meanwhile, beef goes up 12%, tomatoes spike seasonally, and your actual margins compress month by month. What was profitable in March is losing money by August.

3. Forgetting the small stuff
Oil for frying. Parsley garnish. Sauce portions. Bun. Pickle. Individually tiny, but together they add 15–20% to your plate cost. Ignore them, and your whole pricing strategy is built on fiction.

The components of true plate cost

Accurate costing requires breaking down every component and applying the right adjustments. Here's what to include:

As-purchased (AP) cost
The price you pay per unit (kg, litre, each) from your supplier. This is your starting point, but not your final number.

Yield percentage
The usable portion after trimming, peeling, boning, or cleaning. A whole chicken might yield 65% usable meat. Onions lose 10% to skin and ends. Lettuces lose 20% to outer leaves and core.

Edible portion (EP) cost
AP cost divided by yield percentage. This is your true ingredient cost. Formula: EP cost = AP cost ÷ yield %

Preparation waste
Even after initial yield, you lose more during cooking. A 200g raw steak becomes 150g cooked (25% moisture loss). Rice absorbs water and triples in volume. Always cost the final served amount, not the raw weight.

Indirect costs
These are easy to forget but essential:

• Cooking oil (priced per use, not per 20L drum)
• Garnishes (herbs, microgreens, lemon wedges)
• Condiments (sauces, dressings, butter portions)
• Packaging (if takeaway: boxes, bags, cutlery)

Step-by-step recipe costing: A worked example

Let's cost a Grilled Chicken Caesar Salad with real numbers and proper methodology.

Chicken breast (200g cooked):

• AP cost: $12/kg
• Yield: 100% (buying breast fillets, minimal trim)
• Cooking loss: 20% (200g cooked = 250g raw needed)
• Cost: 0.25kg × $12 = $3.00

Cos lettuce (80g trimmed):

• AP cost: $3.50 per head (avg 600g)
• Yield: 75% after removing outer leaves and core (450g usable)
• EP cost: $3.50 ÷ 0.45kg = $7.78/kg
• Cost: 0.08kg × $7.78 = $0.62

Parmesan (15g shaved):

• AP cost: $28/kg
• Yield: 95% (minimal rind waste)
• EP cost: $28 ÷ 0.95 = $29.47/kg
• Cost: 0.015kg × $29.47 = $0.44

Caesar dressing (40ml):

• House-made cost (eggs, oil, garlic, anchovies, lemon): $8/litre
• Cost: 0.04L × $8 = $0.32

Croutons (20g):

• Cost: $12/kg (using day-old bread, oil, seasoning)
• Cost: 0.02kg × $12 = $0.24

Cooking oil (for grilling chicken):

• Estimated 5ml per portion: $0.08

Total plate cost: $4.70

If you priced this dish at $18, your food cost percentage is 26.1%. If you forgot yield adjustments and just used AP prices, you might have estimated $3.80, giving a false 21.1% food cost and over-inflated margin assumptions.

Handling fluctuating ingredient prices

Proteins, produce, and dairy swing wildly with season, supply chain disruptions, and fuel costs. Costing once and forgetting guarantees eventual margin erosion.

Option 1: Average cost method
Track the last 8–12 weeks of purchase prices and use a rolling average. Smooths out weekly volatility but still reflects long-term trends. Update monthly.

Option 2: Latest cost method
Use the most recent invoice price. More reactive to spikes, but reflects current reality. Update weekly or when you notice a significant price shift (>10%).

Which to use?
Average cost works for stable, high-volume operations. Latest cost suits venues with frequent menu changes or tight margins where precision matters more than smoothness.

Either way, automate the updates. Manually updating 80 recipes every time beef prices change is unsustainable. Systems that import invoice data and auto-adjust recipe costs are worth their weight in saved sanity.

Including indirect costs that add up

The little things kill you. Here's how to account for costs that seem trivial per serve but matter at volume:

Cooking fats and oils: Don't spread a $60 drum of oil across 500 serves. Estimate actual use per dish. A deep-fried item might use 50ml per serve (accounting for absorption and top-ups). A sautéed dish uses 5ml. Measure it once, then apply consistently.

Garnishes and finishing touches: Parsley sprigs, lemon wedges, microgreens, edible flowers. Each costs 5–15 cents. Put them on 200 dishes a week, and that's $520–$1,560 annually per garnish type.

Condiments and sauces: Aioli, ketchup, mustard, hot sauce. If it's on the side or dolloped on the plate, cost it. A 20g sauce portion might cost 12 cents, but multiply by thousands of serves and it's real money.

Packaging (for takeaway or delivery): Boxes, bags, napkins, cutlery, sauce containers. Add these to the recipe cost for delivery items. A $16 burger becomes $17.20 with packaging, which changes your margin math.

When and how often to update recipe costs

Recipe costing isn't a one-time exercise. Prices change, suppliers change, your prep methods improve (or slip). Here's a practical update schedule:

Weekly: Review high-cost, high-volatility items (proteins, seafood). If prices swing >10%, recost those dishes immediately.

Monthly: Update all recipes with latest invoice prices or rolling averages. This keeps your COGS projections accurate and identifies margin compression early.

Quarterly: Audit yields and waste factors. Run a few test preps (e.g., break down a whole fish or trim a beef primal) and compare actual yield to your costing assumptions. Adjust if needed.

Ad-hoc: Recost immediately when you change suppliers, recipes, or portion sizes. Also recost before any menu repricing or seasonal menu updates.

Putting it all together

Recipe costing is the foundation of menu profitability. Get it wrong, and no amount of marketing or operational efficiency will save your margins. Get it right, and you can price confidently, engineer your menu for profit, and actually hit your COGS targets.

The goal isn't perfection. It's accuracy within 5%. That's good enough to make smart decisions about pricing, promotions, and which dishes to push or pull.

Start with your top 10 dishes by volume. Cost them properly: AP to EP, yields, waste, cooking loss, garnishes, everything. Then expand to the full menu. Within a month, you'll have a true cost baseline and confidence that your pricing reflects reality, not wishful thinking.

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About the author: The Equimise team is dedicated to helping hospitality operators run smarter, control costs, and grow profitably with intelligent back-of-house systems.