The formula
For each ingredient, start with an excluding-tax purchase price for a known quantity, convert the recipe quantity within the same unit family, then apply any waste that belongs to that recipe line.
Line cost = purchase price ÷ purchased quantity × gross quantity consumed
Gross quantity includes recipe waste:
Gross quantity = useful quantity ÷ (1 − waste percentage)
Add every line, then divide the batch cost by the number of servings.
From the invoice to the serving actually sold
The hard part is not adding numbers. It is connecting the purchase format to the quantity actually used without losing the unit along the way.
Take a deliberately simple hypothetical example, verified with the Toby engine: a 70 cl bottle of Ricard purchased for €14 excluding tax costs €0.20 per cl. A 4 cl serving therefore costs €0.80 excluding tax. The recipe works in centilitres, while purchasing and inventory may continue to count bottles.
Toby keeps both realities connected. Three bottles in storage remain three bottles to count, representing 210 cl available for calculations. There is no need to re-enter or convert the same stock in another spreadsheet.
Example verified with the Toby engine
One burger serving uses:
- bun: €0.45 excluding tax;
- meat: €1.80;
- cheese: €0.40;
- sauce: €0.25;
- garnish, including waste: €0.30.
Ingredient cost is €3.20 per serving. At a €12 excluding-tax menu price, margin before other costs is €8.80, food cost is 26.7%, and margin on sales is 73.3%.
Mistakes that materially change the result
Mixing mass, volume and units
A price per kilogram must meet a quantity expressed in grams or kilograms. A bottle purchased and consumed by the unit does not automatically become a volume. Without a reliable density or equivalence, mass-to-volume conversion should be refused.
Charging the whole case to one unit
A case of 24 bottles bought for €24 costs €1 per bottle, not €24. Packaging supports purchasing and inventory; the recipe uses the cost of the quantity actually consumed.
Attaching waste to the purchased ingredient
Waste depends on use. The same tomato may be used whole in one recipe and peeled in another. Waste belongs to the recipe line, not the ingredient’s purchase record.
Forgetting yield
A preparation costing €8 and producing 20 servings costs €0.40 per serving. Divide by yield before including it in a sold product.
What ingredient cost does not tell you
This calculation measures consumed ingredients. It is neither net profit nor a complete operating result: labour, rent, energy, commissions, taxes and other overheads require separate analysis.