Glossary
Food costing glossary
The words chefs, caterers and food business owners use when they talk about costs and prices, each explained in a sentence or two, with a link to where it is used.
Updated: 11 October 2026
- As-purchased (AP) and edible portion (EP)
- As-purchased is food as you buy it; edible portion is what is left after trimming, peeling, boning or cooking. The edible portion costs more per kilo: EP cost = AP cost ÷ yield.
- How to calculate food cost
- Break-even point
- The level of sales at which income exactly covers every cost, with no profit and no loss. Monthly break-even sales = fixed costs ÷ the share of each sale left after its own costs.
- How to price a menu item
- Contribution margin
- What each sale leaves towards fixed costs and profit once its own costs are paid: the price minus the food, packaging and other costs that rise with each sale.
- How to price a menu item
- Cost of goods sold (COGS)
- The cost of the food you actually used in a period: opening stock + purchases − closing stock. Divide it by food sales for your actual food-cost percentage.
- What food-cost percentage to aim for
- Fixed and variable costs
- Fixed costs stay the same whatever you sell, like rent and salaries. Variable costs rise with every sale, like ingredients and packaging.
- How to price a menu item
- Food cost
- What the ingredients in a dish or recipe cost you, worked out from the prices you actually paid, usually with an allowance for waste.
- How to calculate food cost
- Food-cost percentage
- Food cost per portion as a share of the selling price: food cost ÷ selling price × 100. A dish with 3 of ingredients that sells for 10 runs at 30%.
- What food-cost percentage to aim for
- Gross profit
- Sales minus the cost of the food sold. For one dish, the selling price minus its food cost; before labour, overheads and tax.
- Markup vs margin
- Labour cost
- What you pay people to prepare, cook and serve food, including your own time if you want your prices to pay for it.
- How to price a menu item
- Margin
- Profit as a percentage of the selling price: (price − cost) ÷ price × 100. The same dish at 40 cost and 100 price has a 60% margin. Margin can never reach 100%.
- Markup vs margin
- Markup
- Profit as a percentage of cost: (price − cost) ÷ cost × 100. A dish that costs 40 and sells for 100 has a 150% markup.
- Markup vs margin
- Sorting the dishes on a menu by how popular and how profitable each one is, to decide what to promote, rework, reprice or drop.
- How to price a menu item
- Overheads
- Running costs that are not tied to any one dish, such as rent, electricity, internet, insurance and repairs. They are covered by your overall sales rather than by a single recipe.
- How to price a menu item
- Plate cost
- The cost of one portion as it is served, sides and garnish included. Also called portion cost: the cost of the batch divided by the number of portions it makes.
- How to calculate food cost
- Portion control
- Serving the same measured amount every time, so what a dish really costs matches its recipe cost. Over-portioning is one of the quietest ways food cost creeps up.
- What food-cost percentage to aim for
- Price per head
- What a caterer charges per guest for an event: the total cost of the job divided by the number of guests, plus profit.
- How to price food per head
- Prime cost
- Food cost plus labour cost. They are the two biggest costs for many kitchens, so they are often watched together.
- What food-cost percentage to aim for
- Recipe cost
- The cost of one full batch of a recipe, before it is divided into portions.
- How to calculate food cost
- Theoretical and actual food cost
- Theoretical food cost is what your recipes say food should cost; actual food cost is what the stock and purchases say it did cost. The gap shows waste, over-portioning or out-of-date prices.
- What food-cost percentage to aim for
- Unit cost
- What one unit of an ingredient costs: the pack price divided by the pack size, such as the price per kilo, per litre or per egg. Multiply it by the amount a recipe uses to cost that line.
- How to calculate food cost
- Waste factor
- An allowance for food that is bought but never sold, such as trimmings, spoilage and leftovers. With 10% waste, divide the food cost by 0.9 to cover what is lost.
- How to calculate food cost
- Yield
- How much usable food you get from what you buy, as a weight or a percentage: a kilo of fish that gives 650 g of fillet has a 65% yield. Also the number of portions a recipe makes.
- How to calculate food cost
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