Restaurant food cost in Pakistan: working out what a plate actually costs

What is food cost percentage?

Food cost percentage is what a dish's ingredients cost you, divided by its selling price, times 100. If a chicken karahi costs Rs 420 in chicken, ghee, tomatoes, onions and spice, and you sell it for Rs 1,200, the food cost is 420 ÷ 1,200 × 100 = 35%. The other 65% (Rs 780) is your gross profit on that plate, and it has to cover the rent, the gas and the wages before any of it is yours. You work it out for each dish, which is what makes it useful.

You can do this on paper tonight. List every ingredient in one plate and how much of each, price each at what you last paid per kilo, and add them up. Do it for your five best sellers and you will learn more in an hour than a month of sales totals told you.

What is a good food cost percentage?

Most kitchens work to 28 to 35%, the range NexusTill's own costing treats as healthy. Below it you may be under-portioning or over-pricing. Well above it, the dish is eating your margin. A tandoor roti and a mutton dish will never sit at the same percentage, so treat the range as a starting point. What matters more is knowing where each dish sits and whether it moved.

Why does a single average food cost hide the problem?

An average can look healthy while the business loses money. A kitchen averaging 32% is made of dishes at 22% and dishes at 48%, and the good ones pay for the bad ones. The 48% dish is often a popular one, so the more you sell, the more margin you give away. An average tells you the kitchen is roughly fine, never which dish to fix.

Where does the money actually go in a Pakistani kitchen?

Into four ordinary places: portions that drift, waste and spoilage, staff meals, and theft. Price rises the menu never caught up with are covered further down. Most kitchens have all of these at once, and three of them are nobody's fault.

The heavy hand

This is the biggest leak and the hardest to see. Your recipe says 40g of ghee. Your cook has fifteen years in, cooks by feel, and uses 55g because that is how his hand moves, and the dish tastes right. Over sixty karahis those fifteen grams come to nearly a kilo of ghee a day that was never in the costing. The meat portion drifts the same way.

Waste, spoilage and the trim

Vegetables go off before they are used, a degh of daal doesn't sell, and chicken gets trimmed harder than the recipe assumed, so a 250g portion started as 320g of purchased weight. None of that is in your recipe, and you paid for all of it.

Staff meals

The kitchen eats, and it should. But if eight people eat twice a day from the stock you sell from, that is a real ingredient cost with no sale attached. You don't have to cut it. Count it, so you know whether your 38% comes from portioning or from a staff lunch you never priced.

Theft

It happens, it is usually small and steady, and it is the last thing to look for. Most owners suspect theft when the real cause is a heavy hand and a six-month-old menu price. Rule out the others before you accuse anybody.

Why does food cost drift after you've set the menu?

Most restaurants cost a dish once, the week they set the menu, while chicken, ghee, onions and tomatoes keep changing price. A dish costed at 30% in January can be at 45% by June with the same recipe and menu price. The dish still sells and the kitchen still looks busy, so nothing in your day tells you. The first sign is a month where the sales were fine and the bank balance wasn't. The only way to catch it is to re-cost the plate against what you paid this month.

How do I find which dish is losing money?

Cost every dish, sort by food cost percentage with the highest at the top, and work on the worst five. The fix is nearly always one of three things, and you will see which within a minute: the main ingredient's price moved, the portion in the kitchen isn't the portion in the recipe, or the menu price was copied from the restaurant down the road instead of worked out from your own costs.

1. 1Write a real recipe for each dish, with the quantities the kitchen actually uses. A recipe with wishful quantities is worse than no recipe.
2. 2Price each ingredient at what you paid most recently, then work out the plate cost and the percentage against your current menu price.
3. 3Sort by percentage, highest first, and ignore the average.
4. 4For each of the worst five, choose: raise the price, change the portion, or keep it as it is on purpose because it brings people in. Run the list again whenever buying prices move, which in Pakistan means monthly.

What does a nightly closing count tell you that a recipe can't?

A recipe tells you what should have been used. A closing count tells you what actually went. The gap between the two (the heavy hand, the waste, the staff meals, the theft) is the part of food cost no recipe explains. If the recipes account for 18kg of chicken and 22kg left the fridge, those 4kg are the conversation to have, and you can only have it if somebody counts.

You don't have to count everything. Count the expensive, fast-moving items at the same time every night. Some nights the gap is noise. A gap that always goes the same way is not.

Who does not need any of this?

A small dhaba with six dishes and one cook who buys fresh every morning does not need a costing system. If you buy today what you cook today and keep the menu in your head, this morning's market spend against tonight's drawer already tells you enough. Costing starts to matter when the menu outgrows your head, when someone else is portioning, or when a second kitchen means you can't be in both.

What can software do about food cost, and what can't it?

Software can measure food cost and put a rupee figure on the gap. It cannot stop a heavy hand. Closing the gap takes a conversation with the cook and a scale in the kitchen, and that part is the manager's job.

In NexusTill, you build a recipe once and it shows the plate's unit cost, selling price, gross profit and food cost percentage, worked out again whenever ingredient costs move. Selling a dish takes its raw materials off the shelf, and wastage is recorded with a reason. The nightly count prices the leak in rupees: where a cook-to-order sale used more than was booked in, it values the shortfall at cost and shows the gap against what was counted.

Restaurant mode is on Growth at Rs 6,999 a month. It covers recipes, food cost %, cook-to-order stock, raw materials, wastage and the nightly leak count, plus tables, the kitchen display and modifiers. It is not on Starter. Kitchen inventory per branch and stock transfers are on Scale at Rs 11,999.

Before you pay for any of it, cost your five best sellers by hand this week. If the numbers land where you expected, your kitchen is well run. If two are above 40%, you have found the money, and the question is whether you want to redo that arithmetic by hand every month. The trial is 7 days, needs no card, and does not turn into a paid plan on its own.

Written by The NexusTill team.