COGS in Gastronomy: What it is, how to calculate it, and why it can save your restaurant

Understand the true cost of your dishes, learn how to calculate your COGS, and use this key metric to make profitable decisions from day one

When discussing restaurant profitability, many people think about increased sales, better Instagram photos, or finding a great location. But there's one indicator that quietly decides whether your restaurant will survive: COGS.

COGS, which stands for Cost of Goods Sold, is translated as Cost of Goods Sold , and in gastronomy it refers to the total cost of the ingredients you use to prepare the dishes you actually sell.

Understanding your COGS is just as important as cooking well. Because you can have the best ceviche in the world, but if you don't know how much it costs to prepare it, you could be losing money on every sale.

What exactly is COGS?

COGS represents the direct cost of producing what you sell. In the kitchen, this includes:

• Ingredients used (exact portion, not total purchase)

• Complementary ingredients (oil, spices, garnishes)

• Drinks or side dishes included (if part of the price)

  
  

Not included:

• Labor.

• Gas, electricity, or rent.

• Packaging (unless it is an inseparable part of the dish)

That is to say, only what disappears on the plate is calculated, not the indirect operating costs.

What is COGS for?

Knowing your COGS allows you to:

1. Calculate the actual profit margin per dish

• If you sell a taco for $10 and it costs $3 to produce, your gross margin is $7 (70%).

  
  

2. Make pricing decisions based on profitability

• You can tell if you need to raise prices or adjust portions.

  
  

3. Detect invisible leaks

• If a dish sells well but has a high COGS, it could eat into your profits.

  
  

4. Negotiate better with suppliers

• Knowing your cost structure allows you to negotiate prices or look for more profitable inputs.

  
  

5. Project sales needed to cover your expenses

• Know how many dishes you must sell to cover your fixed costs (break-even point).

How is COGS calculated in a restaurant?

COGS = Beginning inventory + Purchases during the period - Ending inventory

But in daily cooking practice, the most common is to calculate the COGS per recipe or per unit sold.

Step by step to calculate the COGS per plate:

1. List all the ingredients in the dish.

   • Includes each element: tortilla, protein, sauces, toppings, etc.

     
     

2. Calculate the unit cost of each ingredient.

   • If you buy 1 kg of meat for $10, and use 100 g, the cost is $1.

     
     

3. Add up all costs per serving.

   • Include everything that goes on the plate, even if it seems small.

     
     

4. The total is your COGS per unit sold

Example: Tuna Toast: Toast $0.30 Tuna 80g = $1.20 Avocado 40g = $0.50 Ponzu Sauce = $0.20 Cilantro, Onion = $0.10 Total COGS = $2.30

What should a healthy COGS be?

In most restaurant models, a healthy COGS is between 25% and 35% of the final price.

• If you sell a plate for $10, ideally, it should cost you no more than $3 to produce.

• This leaves room to cover other expenses (personnel, rent, commissions, marketing).

If your COGS is over 40%, your prices are low, or your recipe needs adjustments.

Common mistakes when calculating COGS

• Not measuring actual portions (using “eyeball” instead of weighing)

• Forgetting minor ingredients (lemon, sauces, herbs)

  
  

• Calculate on the total purchase price instead of the cost per use.

  
  

• Not updating prices when supplier costs change.

  
  

• Not separating COGS from other operating costs.

Tools to help you calculate and control your COGS

• Google Sheets / Excel: A good spreadsheet with formulas is enough.

  
  

• Notion or Trello: To organize technical sheets.

  
  

• Specialized software (Poster, Square, MarketMan): Automate records, inventories, and costs.

  
  

• Digital scales: Essential for calculating actual portions.

Conclusion: COGS is not just another piece of data but the pulse of your profitability.

The COGS is more than a formula: it's a tool for making wise decisions. You can't improve what you don't measure and grow if you don't know how much you're earning on each dish.

Calculating your COGS isn't optional if you're starting a restaurant. It's your business life insurance.

And if you're already operating, reviewing it every month can make the difference between survival and growth.