Food Costing
Food Costing refers to the process of calculating the total cost of ingredients used to prepare a dish, in order to set the right selling price and maintain profitability.
In Filipino MSME terms: ito yung “pagkuwenta ng gastos sa bawat ulam o produkto” — kasama ang ingredients, condiments, oil, gasul, at iba pang direct costs.
Food costing is essential for carinderias, restaurants, bakeries, and food carts.
Why Food Costing Matters
For Filipino food businesses, food costing is important because it:
- Ensures profitable pricing for every dish
- Controls waste and prevents overspending
- Improves inventory planning
- Helps maintain consistent quality
- Protects margins during inflation
Without proper food costing, a business may unknowingly sell dishes at a loss.
Basic Food Costing Formula
Food Cost = Total Cost of Ingredients per Dish
Food Cost Percentage = (Food Cost ÷ Selling Price) × 100
Ideal food cost percentage for MSMEs: 25%–35%
Example Food Costing (Carinderia Dish)
Dish: Pork Adobo (1 serving)
- Pork: ₱22
- Soy sauce: ₱2
- Vinegar: ₱1
- Garlic & onion: ₱3
- Oil & gasul allocation: ₱2
Total Food Cost = ₱30
If selling price is ₱90:
Food Cost % = (30 ÷ 90) × 100 = 33%
Pasok sa ideal range.
What to Include in Food Costing
- Main ingredients (meat, vegetables, seafood)
- Minor ingredients (spices, condiments)
- Cooking oil (allocated per dish)
- Gasul or electricity (allocated per batch)
- Packaging (for takeout)
Labor and rent are not part of food cost — they fall under overhead.
Food Costing Best Practices
- Use a standard recipe for consistency
- Weigh ingredients for accuracy
- Track price changes from suppliers
- Review costing monthly during inflation
- Use batch costing for stews, soups, and bulk dishes
Example / Context
Example 1 (Carinderia):
You compute the cost of each ulam to ensure your daily menu remains profitable.
Example 2 (Bakery):
You calculate ingredient cost per piece of pandesal to set the right retail price.
Example 3 (Food Cart):
You compute cost per serving of fries or milk tea to maintain margins.
Example 4 (Catering):
You use food costing to price per‑head packages.
Related Terms
FAQs
1. How often should food costing be updated?
At least monthly, or weekly during periods of price volatility.
2. Should labor be included in food cost?
No. Labor is part of overhead, not food cost.
3. What is a good food cost percentage?
Most MSMEs aim for 25%–35% depending on the dish and concept.
4. Why do some dishes have higher food cost?
Premium ingredients, meat cuts, or imported items naturally increase food cost.