Apicbase Glossary

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food and beverage industry glossary

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Cost of Goods Sold (CoGS)

In a restaurant or food service operation, the Cost of Goods Sold refers to the total expenditure made on ingredients to produce a menu item from start to finish. The CoGS includes raw materials and other meal components like condiments and garnishings. It is also referred to as Actual Food Cost.

Typically, one-third of a restaurant’s gross revenue goes towards paying for COGS but can differ greatly from operation to the other.

The COGS and other restaurant expenses (labour, utility bills and other overhead expenses) are subtracted from the gross revenue to determine the net profit.

Costs of Goods Sold can vary wildly from week to week, season to season, or from one location to the other. It is crucial to control and monitor the CoGS at all times because they play such an important role in the profitability of restaurants. 

Recommended reading: How to calculate food costs?

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