The formula
COGS = stock at the start of the period + purchases in the period − stock at the end of the period. What you had plus what came in, minus what is left, is what went out: sold, given away, thrown out or missing.
That is why real COGS is usually higher than the sum of the recipe costs: it includes waste and stock differences.
A one-month example
This month COGS was $9,800.00 on sales of $32,000.00: 30.6% of what was sold went on ingredients.
| Item | Amount |
|---|---|
| Stock on the 1st | $4,000.00 |
| Purchases in the month | $9,500.00 |
| Stock on the last day | −$3,700.00 |
| COGS for the month | $9,800.00 |
What it should be
There is no single number: a steakhouse, a café and a pizzeria have very different costs. As a general reference, many restaurants aim for COGS between 25% and 35% of sales.
More useful than comparing yourself with others is comparing yourself with yourself: if real COGS is well above what the recipes say, there is waste, bigger portions or missing stock.
What pushes it up
Supplier price rises you didn't pass on to the menu, portions that grow, products that expire, unrecorded freebies and missing stock. Counting stock regularly is how you see which one it is.