Calculating and monitoring food cost: how to stay in control of your margin
A dish that looks profitable on paper can still lose money once food cost gets out of hand. If you only check profit at the end of the month, you'll spot an inflated purchase price after the margin is already gone. This article shows you how to calculate the cost price per dish, what food cost percentage is healthy for catering, and how to keep your margin in check before a quote ever goes out the door.
What food cost actually is, and why it's more than an accounting number
Food cost is the percentage of your selling price that goes into buying the ingredients. Charge £15 for a main course and the ingredients cost £5, and your food cost sits at 33%. On paper that often looks healthy. The problem is that food cost rarely stays stable: vegetables get more expensive in winter, a supplier quietly raises its prices, and a portion that's scooped a little more generously eats into your margin without anyone noticing.
If you only look at food cost after the fact, based on the month's total purchase invoice, you mostly see the result. Not the cause. To actually get a grip on it, you need to be able to work it out at the level of the individual dish.
How to calculate the cost price per dish
The basis is simple: add up the purchase price of every ingredient in the exact quantity the recipe calls for.
- 200g chicken: £1.60
- 150g vegetables: £0.90
- Sauce, seasoning, garnish: £0.50
- Total cost price per portion: £3.00
Sell that dish for £12.00, and your food cost percentage is 25% (£3.00 divided by £12.00, times 100). The formula stays the same every time:
Food cost% = (ingredient cost per portion ÷ selling price per portion) × 100
Do this calculation per dish, not just for the whole menu. A popular dish with too thin a margin can quietly eat into the profit of three other dishes without it showing up in your overall total.
What percentage is healthy in catering?
In catering, a healthy food cost usually sits between 25 and 35%, depending on the type of event and the style of service.
- Walking dinners and canapés: often 20–28%. More labour-intensive preparation, so lower ingredient cost is needed to make the margin work.
- Plated dining with table service: 28–33%. More service built into the price, so a slightly wider food cost margin is acceptable.
- Buffets: plan for 30–35%. Larger quantities and more variety raise the risk of leftovers and over-estimated portions.
These figures are guidelines, not law. What matters most is that you know where you stand, per dish and per event type, rather than guessing.
Where food cost quietly leaks away
Most food cost problems don't start when you write the quote, they start in the execution afterwards:
- Purchase prices that rise between quoting and actually buying, without the selling price moving along.
- Portioning that drifts from the recipe, because the kitchen plates by eye rather than by weight.
- Leftovers and waste that never get counted as a cost, even though they really do cost money.
- Menu changes for the client (an extra sauce, a pricier side) that never get charged back into the quote.
Each of these is small on its own. Added up over a whole season, they can be the difference between a healthy margin and a catering business that's busy but barely keeps anything.
Monitoring food cost without it becoming a full-time job
Caterers who genuinely keep food cost under control do two things differently from the rest. First, they work out the cost price per dish properly once, and update it whenever a purchase price changes, instead of recalculating every quote by hand from scratch. Second, they link that cost price directly to the quote, so that when they're putting a menu together, they can immediately see which dish is dragging on the margin and which one is giving them room.
That doesn't need to be complicated. A simple overview per dish, with cost price, selling price and food cost percentage side by side, is already enough to spot patterns: which dishes you should recommend more often, and which ones you'd be better off repricing or dropping from the menu.
Frequently asked questions
What is a healthy food cost percentage for a catering business?
For most caterers, a healthy food cost sits between 25 and 35%, depending on the type of event. Walking dinners and canapés often run lower, buffets with a lot of variety and volume often run higher. More important than a fixed number is knowing where you stand per dish.
Should I calculate food cost per dish or per menu?
Ideally both, but start per dish. An average food cost percentage across a whole menu can hide the fact that one popular dish barely makes any margin, while another dish is quietly making up for the loss. Without that detail, you won't know which dish actually needs repricing.
How do I deal with fluctuating purchase prices?
Update the cost price of your standard dishes periodically, for example monthly or whenever a supplier makes a big price change. For dishes with ingredients that swing a lot (fish, some vegetables), build in a small buffer so small price rises don't immediately push you into the red.
Does labour count towards food cost?
No, food cost specifically covers the cost of ingredients. Staff costs, equipment hire and transport get charged separately in your overall cost build-up and final quote, but they don't belong in the food cost percentage itself.
How do I stop waste from throwing off my food cost?
Track what you actually throw away per dish for a couple of weeks and compare it to your planned portions. Waste usually turns out to be a portioning problem: consistently a bit more gets prepped or plated than the recipe calls for. Adjusting the portion size usually fixes it faster than buying more carefully.
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