Recipe costing software to know what every dish really costs you

Pricing by guesswork is expensive

Most menu prices in Pakistani restaurants are set by looking at the place next door. That is fine for staying competitive, but it tells you nothing about your own margin. Two restaurants can charge Rs 1,600 for a half chicken karahi and one can be making good money while the other loses on every plate, because portions, suppliers and wastage are different.

Recipe costing means writing down what goes into each dish, putting a price on each ingredient, and adding it up. The result is your plate cost. Divide it by the selling price and you get your food cost percentage. If you want the theory in full, read our guide on food cost percentage.

A worked example: half chicken karahi

At a selling price of Rs 1,600, the food cost is Rs 525 out of Rs 1,600, which is about 32.8%. Many restaurants aim for somewhere around 30 to 35%, so this dish is in a reasonable place.

Now chicken goes from Rs 700 to Rs 800 a kilo. The chicken line becomes Rs 400 and the plate cost becomes Rs 575. At the same Rs 1,600 price, food cost is now about 35.9%. On 300 half karahis a month, that one rate change takes Rs 15,000 out of your margin (Rs 50 extra per plate times 300). You can raise the price, trim the portion slightly, or push other dishes, but you can only choose once you see the number.

How ArfaPOS does it

1. You enter your ingredients as inventory items, with the unit you buy them in.
2. Purchase orders and supplier records hold what you paid for each ingredient.
3. For each menu item, including variants like half and full, you enter a recipe: which ingredients and how much of each.
4. When the cashier bills the item, the recipe quantities deduct from stock.
5. Product and sales reports show what sold, so you can compare cost against selling price dish by dish.

Because the same recipes drive stock deduction, the costing is tied to real kitchen activity. That also makes restaurant inventory software more accurate: if recipes say you used 78 kg of chicken and you count less, you know where to look.

Dishes that usually need a second look

• Deals and combos. A burger, fries and drink at a round price often hides a high food cost. Cost each part and add them up.
• Mutton dishes. Mutton rates move a lot, and a price set last winter may now be too low.
• Cheese-heavy items. Pizza and loaded fries can carry more cheese cost than the owner expects.
• Free sides. Raita, salad and extra naan given free still cost money on every table.
• Large portions. A family platter priced as four singles minus a discount can end up below cost.

Using the numbers for menu decisions

Once every main dish has a plate cost, sort your menu into four groups: items that sell a lot and earn well, items that sell a lot but earn little, items that earn well but rarely sell, and items that do neither. The first group is your strength. The second group needs a price or portion fix. The third needs promotion, for example on the customer display or the offers tab of your ordering app. The fourth can probably go. Our guide on menu engineering explains this method in detail.

Recipe costing is not a one-time exercise. Ingredient rates in Pakistan move with fuel, season and the rupee. Linking recipes to your purchases means the cost picture stays close to what you are actually paying, and you can review it every month instead of once a year. Business plan owners also get financial reports with a profit and loss statement, which shows whether the menu changes reached the bottom line.