Recipe Costing and Food Cost %: How to Price Dishes for Profit
Calculate cost per portion with yield, remove GST correctly, find your food cost percentage and set a target-based selling price.
6 min read · Updated 8 November 2026
Many dishes are priced by looking at a competitor's menu. Recipe costing replaces guesswork with a number: what each plate really costs you, and what you must charge to make the margin you need.
1. Start with cost per usable unit
If onions cost ₹35 per kg but 10% is lost to peeling, each usable kilogram costs ₹35 ÷ 0.9 = about ₹38.9. Apply yield to vegetables, meat on the bone and anything trimmed.
2. Cost the batch, then the portion
Multiply each ingredient's quantity by its cost per usable unit, add them up for the batch, and divide by the number of portions the batch produces. Include oil, spices, garnish and salt - small items add up.
3. Calculate food cost %
Food cost % = cost per portion ÷ net selling price. If your menu price includes GST, remove it first: net price = menu price ÷ (1 + GST rate). Using the GST-inclusive price makes food cost look better than it is.
4. Price to a target
Choose a target food cost (many full-service restaurants aim somewhere around 28-35%, depending on format). Suggested price = cost per portion ÷ target × (1 + GST), rounded to a menu-friendly number.
Tip: Update ingredient prices whenever a supplier changes them. One price change - paneer, chicken, oil - can move several dishes above target overnight.
5. Check reality weekly
Recipe costs are theory. Actual food cost = opening stock + purchases - closing stock, divided by food sales. If actual is well above theoretical, look at wastage, portions and theft.
This guide is general information to help food businesses improve their practices. It is not legal advice. Always check the current FSSAI requirements that apply to your licence or registration.