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LearnNumbers4 min read

Re-cost your menu and drinks before December

Use current invoices, usable yields and ex-VAT sales to check food and drink GP before December bookings lock in your menu.

Photo: Vlada Karpovich / Pexels (photo page on Pexels, opens in a new tab)

A December menu can look profitable using last season's recipe costs. Before you order stock, check it against current invoices, actual portions and the price guests will pay. Start with the dishes and drinks you expect to sell most, then work through the rest.

Gross profit is net sales less the cost of the goods sold. Recipe GP is a theoretical guide: it does not pay wages, rent or energy before those costs have been deducted. Read GP pounds alongside GP percentage.

Get the cost basis right

Use the latest invoice price and pack size for every ingredient, mixer and garnish. Divide by usable portions, allowing for trimming or other preparation losses. Keep purchase units and recipe units consistent.

The standard VAT rate is 20%. All examples below are illustrative and assume a VAT-registered venue making standard-rated sales, with recoverable input VAT excluded from ingredient costs. Check the VAT treatment of your own products; do not apply this assumption to every sale automatically.

Illustrative yield calculation: a 2 kg pack costs £20 excluding recoverable VAT, and measured usable yield is 80%.

  1. Usable weight: 2 kg × 0.80 = 1.6 kg.
  2. Cost per usable kg: £20 ÷ 1.6 = £12.50.
  3. A 160 g portion is 160 ÷ 1,000 = 0.16 kg.
  4. Portion cost: 0.16 × £12.50 = £2.00.

Do not charge the trimming loss again elsewhere in the same recipe: this usable-yield cost already includes it.

Worked food GP: the full plate

Illustrative dish: the menu price is £18 including 20% VAT. Its current recipe costs, excluding recoverable VAT, are:

ComponentCost per plate
Main ingredient, using the yield above£2.00
Potatoes£0.65
Vegetables£0.70
Sauce£0.55
Oil, seasoning and garnish£0.60
  1. Total recipe cost: £2.00 + £0.65 + £0.70 + £0.55 + £0.60 = £4.50.
  2. Remove VAT from the selling price: £18 ÷ 1.20 = £15 net sales.
  3. VAT included: £18 − £15 = £3.
  4. GP pounds: £15 − £4.50 = £10.50.
  5. GP percentage: £10.50 ÷ £15 × 100 = 70%.

Dividing by 1.20 removes VAT. Subtracting 20% of the menu price does not: the tax was added to the net price.

Now suppose the same recipe costs £5.10, with the selling price unchanged. These are still illustrative figures.

  1. New GP: £15 − £5.10 = £9.90.
  2. New GP percentage: £9.90 ÷ £15 × 100 = 66%.
  3. GP lost per plate: £10.50 − £9.90 = £0.60.
  4. At an assumed 400 plates, GP lost is 400 × £0.60 = £240.

To restore an illustrative 70% GP target through price alone:

  1. Cost share at the target: 1 − 0.70 = 0.30.
  2. Required net price: £5.10 ÷ 0.30 = £17.
  3. VAT: £17 × 20% = £3.40.
  4. Menu price including VAT: £17 + £3.40 = £20.40.

That is a calculation, not an instruction to raise the price. You could accept a lower margin, redesign the dish or review purchasing. Honour prices already agreed for bookings and check any recipe change before putting it into service.

Worked drinks GP: count the whole serve

Illustrative mixed drink: a 700 ml bottle costs £21 excluding recoverable VAT. The recipe uses 50 ml, plus a £0.70 mixer and £0.20 garnish. Its selling price is £9 including 20% VAT. This example assumes no bottle loss; measure waste separately.

  1. Theoretical serves per bottle: 700 ml ÷ 50 ml = 14.
  2. Spirit cost per serve: £21 ÷ 14 = £1.50.
  3. Full recipe cost: £1.50 + £0.70 + £0.20 = £2.40.
  4. Net selling price: £9 ÷ 1.20 = £7.50.
  5. VAT included: £9 − £7.50 = £1.50.
  6. GP pounds: £7.50 − £2.40 = £5.10.
  7. GP percentage: £5.10 ÷ £7.50 × 100 = 68%.

A bottle price alone cannot tell you the drink's GP. Include everything in the recipe, and compare theoretical usage with stock movements to find spills, over-pouring and unrecorded drinks.

Sign off a menu the team can deliver

  • Date each costing and identify the invoice behind it.
  • Check usable yield and portion size with the kitchen or bar lead.
  • Include sides, sauces, mixers and garnishes.
  • Calculate net sales, GP pounds and GP percentage for each item.
  • Use expected sales mix to estimate total GP pounds; do not simply average item GP percentages.
  • Record the decision: retain, reprice, change specification or remove.
  • Check that menus, booking confirmations, till prices and recipe sheets agree before launch.

Once trading starts, compare theoretical recipe costs with actual stock usage. A sound costing still depends on portions and waste being controlled during service.

Sources

  1. GOV.UK: VAT rates (opens in a new tab)

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