The COGS Formula
COGS = Opening Inventory + Purchases − Closing Inventory
Example: Opening $12,000 + Purchases $8,500 − Closing $11,200 = COGS $9,300. If revenue was $32,000, food cost percentage = 29.1%.
The most common error is inconsistent inventory valuation — make sure you value inventory the same way each period (typically at cost, not selling price).
How to Use This Calculator
Enter your beginning inventory value, total purchases during the period, and ending inventory value. The calculator returns your Cost of Goods Sold (COGS) — the actual cost of the food and beverage products you used during that period. This is different from what you purchased, because it accounts for inventory that was bought but not yet used.
COGS is the foundation of accurate food cost calculation. If you only track purchases, you'll overstate food cost in weeks when you stock up and understate it in weeks when you draw down inventory. COGS corrects for this by measuring what was actually consumed.
Why COGS Matters for Restaurant Operators
Your COGS divided by revenue gives you your true food cost percentage — not the purchase-based estimate most operators use. The difference matters: a restaurant buying $8,000 in product but only using $6,500 (because $1,500 went to inventory) has a true food cost 19% lower than the purchase-based number suggests. Tracking COGS monthly gives you the accurate picture you need for menu pricing, vendor negotiations, and waste reduction.
High COGS? Check Your Supplier Prices First
The fastest way to reduce COGS is to reduce what you pay per unit. FrillPick compares your distributor prices item by item.
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Frequently Asked Questions
What is Cost of Goods Sold (COGS) for a restaurant?
COGS is the total cost of all food and beverage items consumed during a period. It is calculated as Opening Inventory + Purchases − Closing Inventory. It represents the direct ingredient cost of everything sold — and is the basis for your food cost percentage.
What is the difference between purchases and COGS?
Purchases are what you bought from your distributors during the period. COGS accounts for what you actually used. If your closing inventory is higher than your opening inventory, your COGS will be lower than your purchases — meaning you built inventory. If closing is lower, you drew down inventory and COGS exceeds purchases.
How often should I calculate COGS?
Weekly is the industry standard for operators who actively manage food cost. Monthly is common but too slow — a problem that starts week one isn't visible until the end of the month. Weekly COGS gives you four data points per month to spot trends and correct quickly.
What should I do if my COGS is higher than expected?
First, verify your inventory counts — miscounts are a common source of error. If counts are accurate, investigate in order: supplier pricing (compare against alternatives), portion control (weigh key proteins during service), and waste (run a waste log for one week).