Food & Drink Cost Percentage
How much of every net pound you take goes straight back out on ingredients. The lower it is, the more each sale leaves to pay wages, rent, energy and profit.
4.50 ÷ 15.00 × 100 = 30%
Gross Profit Percentage
The number UK accountants, banks, landlords and investors ask for. GP% and cost% always add up to 100 — know one and you know the other.
Cash GP per plate: £10.50
Formula Cheat Sheet
| Cost % | Cost ÷ Net price × 100 |
| GP % | (Net − Cost) ÷ Net × 100 |
| Net price from GP | Cost ÷ (1 − GP%) |
| Add VAT | Net × 1.2 |
| Remove VAT | Menu price ÷ 1.2 |
| VAT in a price | Menu price ÷ 6 |
| Yield % | Usable ÷ Purchased × 100 |
| True unit cost | Price ÷ Usable qty |
| Period cost % | (Opening + Purchases − Closing) ÷ Net sales × 100 |
UK Benchmarks
| Business type | Cost % | GP % |
|---|---|---|
| Food | ||
| Fine Dining | 28–32% | 68–72% |
| Casual Dining / Gastropub | 28–33% | 67–72% |
| Café / Coffee Shop | 25–30% | 70–75% |
| QSR / Fast Casual | 28–34% | 66–72% |
| Bakery / Patisserie | 22–30% | 70–78% |
| Hotel Restaurant | 28–35% | 65–72% |
| Event Catering | 25–32% | 68–75% |
| Drink | ||
| Spirits & Mixed Drinks | 20–28% | 72–80% |
| Wine | 30–38% | 62–70% |
| Draught Beer & Cider | 35–45% | 55–65% |
| Soft Drinks | 15–25% | 75–85% |
| Wet-led Pub (blended wet GP) | 35–42% | 58–65% |
Indicative ranges only. They move with region, format, footfall and supplier terms. Benchmark against your own trend first.
Costing a Dish · Worked Example
Roast chicken supreme, fondant potato, tenderstem, jus. Cost every component at the portion actually served, using ex-VAT supplier prices.
| Component | Portion | Cost |
|---|---|---|
| Chicken supreme | 1 × 220g | £2.85 |
| Tenderstem broccoli | 80g | £0.72 |
| Fondant potato | 1 piece | £0.38 |
| Chicken jus | 60ml | £0.34 |
| Butter, oil, seasoning, garnish | allowance | £0.21 |
| Total plate cost | £4.50 |
Net price 4.50 ÷ 0.30 = £15.00
Menu price 15.00 × 1.2 = £18.00
Don't forget the "invisible" cost: oil, seasoning, garnish and sauces. Left out, they quietly take one to three GP points off every plate.
Setting a Price · Cost to Menu
- Cost the plate or drink accurately (ex-VAT supplier prices).
- Choose your target GP% for that category.
- Divide the cost by (1 − target GP) to get the net price.
- Multiply by 1.2 to add 20% VAT.
- Round to a price that reads well on the menu, then re-check the GP at that price.
Menu price = Net price × 1.2
Working Backwards · Menu Price to GP
Real pricing rarely starts at the bottom. When a competitor, the market or your gut sets the price, work back to see what it actually earns. Remove the VAT first, then measure the margin.
- Menu price ÷ 1.2 = net price.
- Net price − cost = cash GP.
- Cash GP ÷ net price × 100 = GP%.
Gin: 70cl at £22.00 ÷ 28 measures = £0.79 per 25ml → 50ml £1.57
Premium tonic £0.70 · garnish £0.10 → cost £2.37
Net 9.50 ÷ 1.2 = £7.92 · Cash GP £5.55 · GP 70.0%
Yield Costing · Food & Drink
You pay for what arrives, but you only sell what's usable. Trim, bone, skin, peel, cooking loss and pour all reduce the yield, so the true cost per usable unit is always higher than the invoice price.
True cost = Purchase price ÷ Usable quantity
Food · side of salmon
Usable after pin-boning and skinning 1.35kg
Yield 75% · True cost £16.00/kg
Cost the dish at £16.00/kg, not £12.00. Test your own yields: they vary by supplier, cut and chef.
Drink · standard measures
| Spirits 70cl bottle | 28 × 25ml |
| Wine 75cl bottle | 6 × 125ml · 4.3 × 175ml |
| Keg 11 gallon | 88 pints (nominal) |
28 measures is the calibrated optic standard. Budget for 28; any shortfall is a stock-control issue to investigate, not a loss to accept.
VAT · What Every UK Operator Must Know
If you are VAT registered, 1/6 of every standard-rated menu price belongs to HMRC. It was never your revenue. Measure GP on the gross figure and you overstate your margin by around five points, and you'll price too low without knowing it.
VAT in a price = Menu price ÷ 6
| Sale | VAT |
|---|---|
| Food eaten on the premises | 20% |
| Hot takeaway food | 20% |
| Cold takeaway food (most) | 0% |
| Alcohol, soft drinks, confectionery, crisps, ice cream | 20% |
| Compulsory service charge | 20% |
| Genuinely optional service charge / tips | Outside scope |
- Registration threshold: £90,000 taxable turnover in any rolling 12 months.
- Eat-in vs takeaway: the same sandwich can carry different VAT. Set up your EPOS with separate buttons and tax codes.
- Supplier invoices: if you're registered, cost ingredients ex-VAT because you reclaim the input VAT.
- Not registered? Cost ingredients at the price you actually pay, VAT included, and treat the full menu price as revenue.
Rules and thresholds change. Check gov.uk or your accountant for your situation.
Ten Costing Mistakes to Avoid
- Calculating GP on the VAT-inclusive price. It inflates margin by about five points.
- Confusing markup with margin. Divide by (1 − GP%); don't multiply.
- Costing at invoice price, ignoring yield. Trim and cooking loss are real cost.
- Leaving out the small stuff. Oil, seasoning, garnish and sauces add up.
- Never re-costing. Supplier prices move; review recipe costs at least quarterly.
- No portion control. A recipe cost means nothing if the plate isn't built to spec.
- EPOS not set up for eat-in vs takeaway. Wrong VAT codes cost money and invite HMRC questions.
- Accepting pour loss as normal. Budget 28 measures a bottle and investigate any gap.
- Chasing GP% instead of cash. A 65% dish that sells can earn more than an 80% dish that doesn't.
- Ignoring menu engineering. Know your Stars, Plough-horses, Puzzles and Dogs, and act on them.