Restaurant Menu Costing UK 2026: GP%, Recipe Costs and Pricing

Food cost percentage is the cost of ingredients as a proportion of the selling price (excluding VAT).

Formula: Food cost % = (Ingredient cost / Selling price ex-VAT) × 100

A dish where ingredients cost £4.20 and the menu price is £14.00 (ex-VAT) has a food cost of 30%.

UK benchmarks by segment:

• Quick service / café: 25–32%
• Casual dining: 28–35%
• Gastro pub: 30–38%
• Fine dining: 32–42% (offset by higher selling price)

Food cost percentage alone does not tell you whether a dish is profitable. A 28% food cost on a £9 main course contributes £6.48 gross profit per cover; a 35% food cost on a £28 main contributes £18.20. The absolute gross profit (£) matters as much as the percentage when building a menu.

Accurate recipe costing requires accounting for every input, including trim waste:

1. List every ingredient with its purchase unit price. Use your actual invoice prices, not catalogue prices, and update them quarterly or when prices change. The most common costing error is using outdated prices.
2. Calculate the yield for each ingredient. A 1 kg chicken breast bought at £6/kg may yield only 780g after trimming (78% yield). The usable cost per kg is £6 / 0.78 = £7.69. Not accounting for yield systematically understates food cost.
3. Cost each ingredient at the recipe quantity using the yield-adjusted price. If the recipe uses 150g of trimmed chicken breast, the cost is 0.150 × £7.69 = £1.15.
4. Sum all ingredient costs for the dish. This is your recipe cost.
5. Add a portioning cost. For dishes with variable portions (salads, pasta), add 3–5% to cover over-portioning variance.
6. Determine the target food cost percentage. Work back: if you want a 30% food cost and your recipe costs £4.50, the selling price ex-VAT should be £4.50 / 0.30 = £15.00.

Practical shortcut: set a standard multiplier for your segment (e.g. 3.3x for 30% food cost) and multiply recipe cost by it to get a starting point for the selling price. Then adjust for market positioning.

VAT significantly affects menu pricing decisions and margin calculations. The UK VAT rules for food and drink:

• Hot food and hot drinks: 20% VAT. Any food served hot, or food supplied in a heated state, is standard-rated. This includes most restaurant main courses, hot sandwiches, hot drinks and takeaway food supplied hot.
• Cold takeaway food: 0% VAT. Cold sandwiches, cold salads and most cold takeaway items are zero-rated, which is why a cold sandwich costs less VAT than a hot one.
• Alcoholic drinks: 20% VAT. Beer, wine, spirits and cider are standard-rated regardless of temperature.
• Soft drinks: 20% VAT. Standard-rated, including packaged juices and smoothies. Some pure fruit juices can be zero-rated depending on how they are supplied.

When calculating food cost percentage for menu pricing, always use the selling price excluding VAT. A dish priced at £16.80 on the menu includes 20% VAT; the ex-VAT price is £14.00. Calculating food cost against £16.80 understates the food cost percentage by 14%, which compounds significantly at scale.

The temporary VAT reduction to 5% (during Covid) has ended. All hospitality services returned to 20% in April 2022.

Gross profit per cover (GP per cover) is the revenue remaining after food cost, per customer. It is the most useful single metric for menu engineering because it accounts for both price and cost.

Formula: GP per cover = Average selling price ex-VAT − Average food cost

Example: a restaurant with an average cover ex-VAT of £22 and an average food cost of £7 has a GP per cover of £15. That £15 must cover labour, rent, utilities, and profit.

Improving GP per cover:

• Raise prices where demand is inelastic (popular dishes, premium items). A £1 increase in a dish sold 300 times per week is £15,600 per year at no additional cost.
• Increase food cost accuracy by reducing over-portioning and waste, rather than by compromising ingredient quality. Customers notice quality reduction before they notice a 5% price increase.
• Shift the mix toward higher-GP dishes through menu design (position, description, photography). A dish with a £7 GP contribution is better for the business than one with a £5 GP contribution at the same price, even if food cost % is similar.

The mistakes that most often compress margins:

• Pricing to the competitor, not to the cost structure. Two restaurants in the same street may have very different rent, labour and ingredient costs. Matching a competitor's prices without knowing their cost structure may price your dishes below break-even.
• Not updating costs regularly. Ingredient prices change. A recipe costed in January at £4.20 may cost £5.10 in September after commodity price movements. Without quarterly reviews, margins erode silently.
• Forgetting yield. A salmon fillet listed at £12/kg yields approximately 85% after skinning and trimming (usable cost: £14.12/kg). Missing this step understates food cost across every fish dish on the menu.
• Including drinks in the food cost calculation. Food cost percentage should be calculated on food alone. A 70% GP margin on wine distorts the metric if blended in. Keep food and beverage costs separate.
• Applying the same multiplier to all dishes. A 3.3x multiplier works as an average target, but individual dishes can vary. A high-cost dessert may need 2.8x; a pasta dish with low ingredient cost can sustain 4x. The multiplier is a starting point, not a rule.

What is a good food cost percentage for a UK restaurant?

Most UK casual dining restaurants target 28–35% food cost. Fine dining can go to 40% because the selling price is higher. The right number depends on your overall cost structure: prime cost (food + labour) should be below 65–68% to leave room for rent, utilities and profit.

Is VAT included in food cost percentage calculations?

No. Food cost percentage is always calculated on the selling price excluding VAT. Calculating against the VAT-inclusive menu price understates food cost by around 17% for standard-rated items, which leads to systematically underpriced menus.

How often should a UK restaurant update its menu costs?

At minimum quarterly, and whenever there is a significant move in a key ingredient price (oil, protein, dairy). With current food price volatility, many operators are reviewing monthly. An unreviewed recipe cost is almost always an understated one.

What is the difference between food cost percentage and gross profit percentage?

Food cost % is the ingredient cost as a percentage of selling price. Gross profit % is 100% minus food cost %. A dish with 30% food cost has 70% gross profit on that dish. GP% is commonly used in UK restaurant accounting; food cost % is more common in operational cost discussions.