COGS Calculator

Cost of goods sold is the total cost of all food, beverages, and supplies you used to generate sales during a specific period. The formula is: COGS = Beginning Inventory + Purchases − Ending Inventory. COGS tells you how much it actually cost to produce what you sold — not what you bought, but what you used. For example, if you started the week with $8,000 in inventory, purchased $5,000, and ended with $6,000, your COGS is $7,000. This is the foundation of your food cost percentage and overall profitability analysis.

Target COGS varies by restaurant type and product category:

Food COGS: 28-35% of food revenue. Quick-service restaurants typically run 25-30%, casual dining 30-34%, and fine dining 32-38%.
Beverage COGS: 18-24% of beverage revenue. Draft beer runs lowest at 15-18%, liquor 14-20%, and wine by the glass 30-40%.
Blended COGS: Most restaurants with a bar program land at 28-32% blended.

If your total COGS consistently exceeds 35%, investigate waste, pricing, and supplier costs. Even a 2% reduction on $60K in monthly revenue saves $1,200/month. Use our profit margin calculator to see how COGS affects your bottom line.

Food cost is a subset of COGS. COGS includes everything consumed to generate sales — food, beverages, disposables, packaging, condiments. Food cost specifically refers to the ingredient cost of food items only.

For most restaurants, food is the largest component of COGS, but separating food and beverage COGS gives a much clearer picture. A blended 30% COGS could mean great food cost at 28% and terrible pour cost at 35% — or vice versa. Tracking them separately reveals where your actual margin problems are. See our guide on how to calculate food cost for a deeper breakdown.

No. COGS only covers the direct cost of goods — ingredients, beverages, and supplies that go into what you sell. Labor is tracked separately using a labor cost calculator.

The combined metric is "prime cost" (COGS + labor), which should stay under 55-60% of total revenue for a healthy restaurant. If your prime cost exceeds 65%, you are almost certainly losing money regardless of how much revenue you generate. For a full breakdown, see our restaurant profit margins guide.

Weekly is the industry best practice. Monthly works for very stable operations, but weekly counts catch problems before they compound.

Here is why it matters: a supplier price increase or a few shifts of over-portioning can quietly add 3-5 percentage points to your COGS. With monthly counting, that problem runs for 30 days before you spot it — costing you $2,000-$4,000+ on $60K in monthly revenue. Weekly counting catches it in 7 days. Many top operators count their highest-cost items (proteins, seafood, premium spirits) twice per week and do a full count weekly.

The most common causes, roughly in order of frequency:

1. Supplier price increases: Vendors raise prices without notice. If you have not adjusted menu prices, your cost ratio silently climbs.
2. Portion creep: Cooks eyeballing 8 oz of protein and serving 9-10 oz. Just 1 oz of over-portioning on a $12/lb protein adds $0.75 per plate.
3. Food waste and spoilage: Over-ordering, poor FIFO rotation, and excessive prep waste. Track waste separately to quantify it.
4. Unrecorded comps and staff meals: Every free meal that is not deducted inflates your "used" inventory without matching revenue.
5. Short deliveries: If you ordered 50 lbs of chicken but only received 45, that missing 5 lbs goes straight to your COGS.
6. Theft: Less common than operators think, but real — especially with high-value items like premium proteins and spirits.

Our guide on how to control food cost walks through each of these in detail.

Include all items that go into what you sell:

• Raw ingredients (proteins, produce, dairy, dry goods)
• Beverages (alcohol, soft drinks, coffee, juice)
• Cooking oils, spices, condiments, and garnishes
• Takeout containers, bags, napkins, and paper goods
• Disposable gloves and food-service consumables

Do not include equipment, cleaning supplies, office supplies, or maintenance items — those are overhead expenses tracked separately. Also exclude non-sellable items like staff cleaning chemicals or office paper. When in doubt, ask: "Does this item go into something I sell to a customer?" If yes, it belongs in COGS.

Ideal COGS is what you should have spent based on your recipes, standard portions, and POS sales data. It assumes zero waste, zero theft, and perfect portioning.

Actual COGS is what you really spent, calculated from physical inventory counts: Beginning Inventory + Purchases − Ending Inventory.

The gap between them is your variance, and it reveals operational problems:

Under 2% variance: Excellent — tight kitchen operations.
2-4% variance: Acceptable, but worth investigating your highest-cost categories.
Over 5% variance: Needs immediate attention. Pull usage reports for your top 10 items by cost and compare theoretical vs. actual usage. Use our recipe cost calculator to build your ideal cost baseline.