Cost a dish from its ingredients and price it properly
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Food cost is what the ingredients cost you. Gross margin is the share of the selling price you keep after those ingredients. Markup is how much you added on top of cost. People use the words interchangeably and then wonder why the numbers do not agree.
A dish costing £3 and selling at £12 has a 25% food cost, a 75% gross margin and a 300% markup. All three describe the same plate.
Only the amount you actually used. If a recipe takes 200 g of a 1 kg bag that cost £4, the cost is 80p, not £4. Where waste is unavoidable — trimming, peeling, bones — cost the weight you bought rather than the weight that reached the plate, because the trimmings still came out of your pocket.
Gross margin deliberately ignores staff, rent, gas and everything else. That is what makes it useful for comparing dishes against each other, and useless on its own for deciding whether the business works.
| Setting | Typical gross margin |
|---|---|
| Casual restaurant main course | 65–70% |
| Fine dining main course | 70–75% |
| Café food | 60–70% |
| Hot drinks | 85–90% |
| Outside catering, per head | 60–70% |
These are starting points, not rules. A signature dish that fills the room can justify a thinner margin; a side that takes ten seconds to plate can carry more. What matters is the margin across the menu as a whole, weighted by what people actually order.
Cost your dishes again whenever a key ingredient moves more than about 10%. A menu costed two years ago is describing a business that no longer exists, and it is almost always the cheap staples — oil, flour, eggs — that quietly move the most.
Most kitchens price a dish by looking at what everyone else charges. Costing it properly takes a couple of minutes: total the ingredients, divide by the number of portions, then work backwards from the margin you need to survive.
