Menu costing: knowing which dishes actually make money

Menu costing establishes what a dish costs to put in front of a customer, which is a different question from what the ingredients cost. Most kitchens know their supplier prices and very few know their dish costs, because the gap between the two is made of trim, waste, yield and portion drift — and that gap is where the margin goes.

What menu costing has to include

• Ingredient cost at the current purchase price, not at the price on the recipe card from two years ago.
• Yield after preparation: a kilogram of unprepared vegetables does not produce a kilogram of plated vegetables.
• Actual portion size, weighed rather than assumed, since what leaves the pass is what you are selling.
• Garnish, sauce, oil and the things nobody writes down, which collectively matter more than any single ingredient.
• Wastage at a realistic rate for that dish, higher for anything with a short life.
• Not labour and overheads in the dish cost itself — keep those separate, or the margin figure stops being comparable between dishes.

Doing the calculation

1. Write the recipe as it is actually made, by watching it being made rather than by asking.
2. Weigh the prepared yield of each major ingredient once and record the percentage.
3. Cost each line at current price, then add a wastage allowance per line rather than one figure at the end.
4. Divide by the number of portions the batch genuinely produces, which is usually fewer than the recipe claims.
5. Compare the result with the selling price to get gross margin in both percentage and cash terms.
6. Keep the working, because the useful part is being able to redo it when one price moves.

Look at cash margin as well as percentage. A dish at seventy per cent margin selling for eight is contributing less per plate than one at sixty per cent selling for twenty, and menus optimised purely on percentage end up full of cheap high-margin items that do not cover the rent.

Why the popular dish is often the problem

Because popularity and profitability are unrelated, and the two together give four categories worth naming: popular and profitable (protect it), popular and unprofitable (reprice, reduce portion cost, or accept it as a draw), unpopular and profitable (promote it or move it on the menu), unpopular and unprofitable (remove it). Most menus have a signature dish sitting in the second group, sold in volume at a loss, and nobody notices because the restaurant is busy. Busy and profitable are not the same condition.

How often to redo it

Quarterly for anything where ingredient prices move, and immediately when a supplier price changes materially or a recipe is altered. Costings go stale faster than anything else in a kitchen, and a menu priced on last year's costs is a menu losing money in a way that shows up in the annual accounts rather than in the daily takings. Recosting a dozen main dishes takes an afternoon and is the highest-return afternoon available in most small kitchens.

Ettex Sheets holds the recipe lines, yields, current prices and resulting dish cost, so changing one ingredient price updates every dish that uses it rather than requiring a recalculation by hand. What the kitchen actually holds belongs with the stock count, since costings assume the ingredients are the ones you think they are.