Two reports tell you what your menu is costing you. Food Cost Margins shows what each item on your menu should cost based on its recipe. Menu Engineering shows what your items actually cost across the orders you took in a chosen period.
This article explains how the percentages are worked out, why the two reports don't show identical numbers, and how to find the items that need your attention.
Where to find them
- Go to Reports > Menu Reports > Food Cost Margins. This one is only available at Store level — pick a store in the switcher at the top of the screen first.
- Go to Reports > Menu Reports > Menu Engineering. This one works at either Company or Store level.
Both reports need recipes set up first. See How to calculate food cost for your menu.
Food cost % is worked out on your price excluding VAT
This is the single most important thing to understand about these reports.
Food cost % is the share of an item's selling price that goes on ingredients — and the price used is always the price excluding VAT. The VAT you charge is collected on behalf of HMRC and passed straight on. It was never your money, so counting it as sales would make your margins look better than they are.
Take a £9.99 item that costs £2.40 to make, on the standard 20% VAT rate:
Price excluding VAT = £9.99 ÷ 1.20 = £8.33
Food cost % = £2.40 ÷ £8.33 = 28.8%
If VAT were left in, the same item would read 24.0% — which looks healthier but isn't real. Every money column on both reports is labelled (net) to make this explicit.
Note: The rate used is the one recorded against each item, not a blanket 20%. Zero-rated items such as most cold takeaway food are handled correctly, so a menu that mixes rates still adds up.
Why these reports don't match your sales reports
Your sales reports — Weekly Sales, and the figures on your Dashboard — show your takings including VAT by default, because that is what actually went through the till.
So the same week can show a bigger revenue figure on Weekly Sales than on Menu Engineering, and nothing is wrong. They are answering different questions: one is "what did I take", the other is "what did I keep".
If you would rather see your sales reports excluding VAT too, turn on Show net sales:
- Go to Setup > Reports settings.
- Switch on Show net sales.
- Save.
Note: This setting applies to you personally, not to the whole business. Colleagues signed in with their own logins keep their own preference.
Why the two food cost reports differ slightly
Food Cost Margins and Menu Engineering will rarely show exactly the same percentage for the same item. That is expected:
- Food Cost Margins uses the price on your menu. It answers "if I sell this at my list price, what should my margin be?"
- Menu Engineering uses the price the item actually sold at, after any discount. It answers "what did I really make on this last week?"
Run a discount or a meal deal and the two will separate. Food Cost Margins is your pricing tool; Menu Engineering is your trading record.
Your target food cost
Your target is the food cost percentage you are aiming for — 30% by default, meaning ingredients should account for no more than 30% of an item's price excluding VAT.
To change it, go to Setup > Inventory Setup > Setup and update Target Food Cost %. This is set at Company level, so clear the store from the switcher first if you have one selected.
On the Food Cost Margins report, every item is coloured against that target:
| Colour | Meaning |
|---|---|
| Green | At or under your target |
| Amber | Up to 5 points over — worth watching |
| Red | More than 5 points over your target |
| Grey | No cost data — see below |
Finding the items that need attention
At the top of Food Cost Margins you will see a row of counts: how many items are on target, in the watch band, over target, and how many have no cost data. Click any one of them to filter the report down to just those items.
Each row also shows how far off target it is, in both percentage points and pounds. The pounds figure is usually the more useful one — "£1.42 over" tells you what to do about the price in a way that "38%" does not.
You can also search by item name, and expand or collapse all categories at once. Each category header shows its own rolled-up food cost percentage, so you can spot a problem area without opening every category in turn.
"No cost data" — start here
Items show as No cost data when there is nothing reliable to calculate a margin from. This usually means one of:
- The item has no recipe attached, and no Cost Price entered.
- The Cost Price is the same as (or higher than) the selling price. This normally happens when a menu has been imported and the cost column was filled with the menu price by mistake. Rather than report a confident 100% food cost, the report treats that cost as missing.
These items are excluded from your category and report averages entirely — they are not counted as zero-cost, because that would quietly flatter every figure around them.
Note: On most menus this is the biggest group, often more than half the items. It is worth clearing before you read too much into the rest of the report: until an item has a cost, neither report can tell you whether it makes money.
To fix them, add a recipe under Management > Stock Control > Menu Recipes, or enter a Cost Price against the item in your menu.
Troubleshooting
"The percentage on the Menu Recipes screen doesn't match the report." The live food cost % shown while you are building a recipe is currently calculated on the VAT-inclusive price, so it reads lower than the reports for VAT-rated items. The reports are the correct figure. This is being brought into line.
"An item shows 100% food cost." The item sold at £0.00 — usually as part of a meal deal or as an included side. The cost is real but there is no price to measure it against, so the report shows 100%. Look at the parent item instead.
"My suggested selling price looks wrong." Check your target food cost under Setup > Inventory Setup > Setup. If it has been set to 100% by mistake, suggested prices come out far too low.
"A product appears twice on Menu Engineering." It shouldn't any more. If you still see it, the two rows are genuinely different items that share a name — check whether one is an attribute or option value rather than the product itself.