Restaurant COGS, made simple

What COGS actually means

COGS (Cost of Goods Sold) is what it cost you to produce the food and drinks you sold in a given period. Not what you bought — what you used. In restaurant terms, most operators call it food cost.

The formula

A worked example

Say last month at your café:

• Beginning inventory: $8,200
• Purchases: $19,500
• Ending inventory: $7,100
• Sales: $61,800

COGS = 8,200 + 19,500 − 7,100 = $20,600.
COGS % = 20,600 ÷ 61,800 = 33.3%.

Every $1 of food you sold cost you 33 cents to make. The other 67 cents pays for labour, rent, utilities, and — if there's anything left — profit.

Healthy target ranges

• Full-service restaurant: 28–32%
• Café / QSR: 25–30%
• Bar / beverage program: 18–24%
• Fine dining: 30–35% (higher, offset by higher check averages)

These are guidelines. Your target depends on your rent, wage bill, and price point — but if you're 5+ points above the band for your format, there's real money leaking somewhere.

Ideal vs. actual — where the money hides

Your ideal food cost is what the recipe says a dish should cost. Your actual food cost is what an inventory count says it actually cost. The gap is where operators lose profit without noticing:

• Over-portioning — the 20g extra cheese on every burger
• Waste and spoilage — prep trim, dropped plates, unused specials
• Yield loss — 1kg of raw meat isn't 1kg on the plate
• Theft or comps — off-book pours, staff meals not logged
• Price creep — suppliers raised prices; menu prices didn't

How to lower COGS without cheapening the food

1. Cost every recipe. You can't fix what you don't measure. Build a spec card for each dish with weights and unit costs.
2. Count inventory monthly at minimum. Weekly for high-volume kitchens. This is what turns COGS from a guess into a number.
3. Reprice the top 5 items first. Pareto applies: a small number of dishes drive most of the revenue. Fix those.
4. Swap ingredients on your biggest cost lines. A 10% better price on the item that shows up in half your recipes beats a 30% saving on something you use once a week.
5. Redesign the menu, don't just raise prices. Promote high-margin dishes, retire losers, and rebalance the board so guests naturally order the profitable ones.

How this app helps

The Profit Calculator inside the app costs each recipe, shows you food cost %, gross profit and a recommended price, and flags every item that's sitting above its target. The COGS log lets you close the loop against actual inventory counts, so you can see where ideal and reality drift apart — and price the drift out.