## 2 – Dish and drinks costs

Food and drink are one of the most critical aspects of your restaurant (please notice, I didn’t say it was the most critical). Along with being essential to why your customers return, they’re going to be one of the most significant costs to the business.

Plus if you think about it, it is always going to be a balance between price and quality, a tightrope even, that walked correctly can bring great success, and stepped wrongly can mean falling to your death.

Dish costs are to be calculated in the following way, the total cost of ingredients for a dish are added together, this gives you the dish costs. Example below

**Fish and Chips**

Cost of batter £0.20 + cost of cod £3.00 + cost of chips £0.50 + cost of mushy peas £0.80 + cost of tartar sauce £0.30.

Total = £4.80

You should note, that you’ll be using a % of the total cost of an item. For example, you don’t buy batter by the portion; you’ll either buy it by the tub or make your own. To calculate this cost, you divide the total cost of a container of batter £20.00 by the number of servings contained, 100 giving you £0.20 per dish.

Drinks cost are calculated in the same way. The total cost of a bottle divided by the number of portions it contains and any extra costs associated with that drink. Example below.

**Single Gin and Fevertree Tonic**

25ml Gin £0.53 + Fevertree Tonic £1.00 + Ice £0.05 + Lime slice £0.10 + Paperstraw £0.20

Total = £1.88

Small tip, a 70cl bottle of Gin have 28 shots of gin, so you divide the cost of the bottle by 28 to get the cost of a single shot.

The total costs of all food and drinks served, shouldn’t account for more than 25% of your total restaurant cost. Again, you’ll find out why later in the post.

To measure dish and drinks’ cost as a **KPI**, you want to take the total amount spent on the cost of ingredients in one month and divide it by the number of dishes and drinks that were served that month. Keep drinks and dishes as two separate numbers.

You also want to track the % cost of ingredients vs revenue as a **KPI**.