Restaurant costing glossary

The words behind food cost and menu pricing, each in a sentence or two, and where Mezbano uses a different name.

Food cost percentage: What the ingredients cost as a share of what the food sold for: ingredient cost ÷ sales before tax × 100. For one dish it uses the recipe and the menu price; for a month it uses what you bought and what you sold.
Recipe food cost %: Mezbano’s name for one dish’s food cost percentage: the cost of its published recipe as a share of its menu price before tax. It is shown per dish and per size on the Menu costs page.
Plate cost: The cost of the ingredients in one serving of a dish, in dollars. Plate cost ÷ menu price is the dish’s food cost percentage.
Prime cost: Food cost plus labour cost, usually shown as a share of sales. They are a restaurant’s two largest controllable costs, so many owners watch them together.
Contribution margin: A dish’s menu price minus its food cost: the dollars it leaves to pay for labour, rent and profit. A lower food cost percentage does not always mean more dollars per sale.
Gross margin (per dish): The same dollars as contribution margin, often also shown as a percentage of the price: (price − food cost) ÷ price × 100.
Purchase unit: The unit a supplier sells an ingredient in, such as a case, a bag, a can or a kilogram. Its price has to be converted before a recipe can use it.
Recipe unit: The unit a recipe measures an ingredient in, such as grams, millilitres, cups, tablespoons or slices.
Unit conversion: A rule that turns one unit into another, such as 1 kg = 1000 g, 1 case = 6 cans, or 1 cup of shredded cheese = 100 g. Weight-to-weight and volume-to-volume conversions are universal; anything between a count or a volume and a weight is specific to the ingredient.
Density (cup weight): How much a volume of one ingredient weighs, such as 1 cup of flour = 125 g. It lets a recipe measured in cups be costed from a price per kilogram.
Yield: The share of an ingredient you can actually use after trimming, peeling or cooking. With 85% yield, every kilogram bought gives 850 g for recipes.
Waste percentage: The share of an ingredient that is trimmed or thrown away, the opposite of yield. Mezbano divides an ingredient’s price by (1 − waste) so recipes pay for what is lost.
As-purchased (AP) cost: The price of an ingredient as it arrives from the supplier, before any trimming.
Edible-portion (EP) cost: The cost of the usable part of an ingredient after trimming: AP cost ÷ yield. Recipes should be costed at EP cost.
Sub-recipe (prep recipe): A recipe made in a batch and used inside other recipes, such as pizza sauce or dough. Its cost per gram comes from the batch’s total cost divided by the batch’s yield.
Batch yield: How much one batch of a prep recipe makes, such as 4 kg of sauce. It is what turns the batch cost into a cost per gram or per portion.
Brand ingredient price (baseline): In a franchise, the standard price the brand sets for an ingredient. Every store’s costs start from it until the store records what it really pays.
Store’s own cost: In Mezbano, the price one store records for an ingredient when it differs from its deliveries or the brand’s price. While it is in effect it prices that store’s recipes.
Theoretical food cost: What food should have cost for what was sold, if every dish was made exactly to recipe. It is the sum of each dish’s recipe cost times the number sold.
Actual food cost: What food really cost over a period. Measured with inventory counts it is opening stock + purchases − closing stock; without counts, owners often use the food bills for the period, which is what Mezbano’s profit and loss uses.
Food cost variance: The gap between actual and theoretical food cost, caused by waste, over-portioning, spoilage, theft or price changes. Measuring it needs inventory counts, which Mezbano does not record.
FIFO (first in, first out): Using the oldest stock first so nothing expires at the back of the fridge. Labelling prepped food with its prep date makes it work.
Cold holding: Keeping cold food cold enough to slow bacteria. Canadian guidance commonly uses 4 °C (40 °F) or colder; follow your province’s food code.
Hot holding: Keeping cooked food hot enough to stay safe until served. Canadian guidance commonly uses 60 °C (140 °F) or hotter; follow your province’s food code.
Month close: Checking a month’s sales, expenses, deliveries and hours are complete, then locking them so the month’s profit and loss stops changing. In Mezbano only the store owner can reopen a closed month.

Put the terms to work in the food cost percentage guide or the food cost calculator.