Recipe Costing meaning in hospitality

Recipe costing is the process of working out the exact cost of each ingredient in a dish to calculate the total cost. This means measuring and pricing every component, from main ingredients to spices and garnishes. This way you can price your menu items correctly and maintain your margins. Recipe costing helps you understand the financial impact of every dish you serve.

Accurate recipe costing is key to a profitable hospitality business. You can price your menu items correctly and cover your costs and make a profit. Without recipe costing you may be selling dishes at a loss or missing out on profit opportunities. It will also help you know which dishes are most profitable and which need adjusting. By knowing your costs you can make informed decisions on menu changes, supplier negotiations and portion sizes.

Let’s say you are a chef at a busy café. You have just created a new avocado toast dish and want to add it to the menu. You start by listing all the ingredients: bread, avocado, lemon juice, salt, pepper and microgreens. You weigh each ingredient used in one serving and calculate the cost based on your supplier’s prices. You add up all the ingredient costs and find the food cost for one serving is £2.50. Knowing your target food cost percentage is 30%, you price the dish at £8.33. This way you know the dish will contribute to your café’s profitability and is competitively priced. Recipe costing has helped you make a decision on your new menu item.'