Recipe costing is the systematic process of calculating the exact cost of every dish by analysing all its ingredients, quantities, wastage and sub-recipes. It is the basis for setting profitable prices.
Recipe costing (in Spain, costeo de recetas or escandallado) is the technical and financial process of working out precisely what each dish on the menu costs to produce. Although conceptually similar to the traditional Spanish recipe costing sheet, the escandallo, the English term recipe costing puts the emphasis on a systematic method and on using tools (software or structured templates) to keep costs up to date. The recipe costing process has several stages: first, standardising recipes, where each dish is documented with exact ingredients, quantities per portion and method; second, calculating the yield of each ingredient, establishing what percentage of the product bought is actually usable after cleaning, peeling, boning or cooking; third, assigning unit costs to each ingredient (purchase price divided by a standard unit of measure); fourth, including sub-recipes when a dish uses intermediate preparations (sauces, stocks, garnishes with their own calculated cost); and fifth, updating regularly when supplier prices change. The key difference between costing recipes by hand (in Excel or on paper) and using specialist software is the ability to keep up to date: when the price of olive oil goes up, software automatically recalculates the cost of the 50 dishes that use it, whereas by hand you would have to go through them one by one.
A good recipe costing system also automatically calculates the food cost percentage of each dish and alerts you when it goes over the thresholds you have set, so you can make pricing decisions or rework recipes before they hit profitability.
Recipe cost = Σ (Ingredient quantity × Unit cost × Wastage factor) + Sub-recipe costs
The total cost of a recipe is calculated by adding up the cost of each ingredient multiplied by its quantity, adjusted by the wastage factor (1 / yield percentage), plus the cost of any sub-recipe used. For example, if an ingredient has a yield of 80% (20% wastage), the wastage factor is 1/0.80 = 1.25, which means you need to buy 25% more than you actually use. For a dish with 150 g of beef tenderloin (cost €28/kg, yield 85%), the calculation is: 0.150 kg × €28/kg × (1/0.85) = €4.94 for the tenderloin in that dish. You repeat this for each ingredient and add up all the costs.
If the dish also has a sauce whose cost per portion has already been worked out on its own recipe card (e.g. €0.45), you add it directly.
You want to cost your 'Beef tenderloin with wild mushroom sauce'. Ingredients per portion: tenderloin 180 g gross (yield 85%, cost €26/kg), baby potatoes 100 g (yield 90%, cost €2.50/kg), green beans 60 g (yield 95%, cost €4/kg), olive oil 15 ml (cost €7/litre), salt and pepper (€0.05 estimated), plus the mushroom sauce (a sub-recipe costed separately at €0.85 per portion). Calculations: tenderloin = 0.180 × 26 × 1.176 = €5.50; potatoes = 0.100 × 2.50 × 1.111 = €0.28; beans = 0.060 × 4 × 1.053 = €0.25; oil = 0.015 × 7 = €0.11; salt/pepper = €0.05; sauce = €0.85. Total cost: €7.04.
If you sell the dish at €24 (excluding VAT), your food cost is 29.3%. After the price of tenderloin rises to €30/kg, the new cost is €7.80 and food cost rises to 32.5%, a sign that you should review the menu price.
Recipe costing is the foundation of restaurant profitability. Without knowing what each dish really costs, pricing is guesswork. The most common mistakes without a recipe costing system are: underestimating wastage (costing on gross rather than net weight), forgetting the 'small' ingredients that add up (oil, seasonings, garnishes), not updating costs when supplier prices rise, and ignoring the cost of sub-recipes. These mistakes can mean a gap of 15-25% between the food cost you think you have and the real one.
Recipe costing also lets you compare alternatives: what happens if I change meat supplier? What if I swap fresh green beans for frozen? How much do I save if I cut the protein portion by 20 g and increase the garnish? Decisions like these, taken with data, optimise margin without sacrificing the customer's experience.
Zindra automates the whole recipe costing process: it imports your suppliers' prices, calculates yields and wastage, lets you create reusable sub-recipes and automatically updates the cost of every dish when an ingredient changes.
Tools and content to go deeper into this concept.
Food cost is the percentage of a dish's selling price that goes on the cost of its ingredients. It is the single most important indicator of how profitable your menu is.
Wastage is the product lost between buying a raw ingredient and the customer finally eating it. It covers natural losses, processing losses and service losses.
A recipe costing sheet (escandallo in Spanish) is the technical document that breaks down every ingredient in a dish with its exact quantity, unit cost and total cost per portion. It is the foundation of cost control in a restaurant.
Prime cost (coste primo in Spanish) is food cost plus staff cost. It is the most complete measure of a restaurant's direct operating cost and should stay between 55% and 65% of turnover.
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