Key points
- COGS per serving adds up the cost of every ingredient and piece of packaging used in one serving, waste included.
- Unit price = purchase price ÷ pack size. Cost per serving = unit price × amount used.
- Work out dine-in and takeaway separately, since takeaway packaging adds to COGS.
- Set an average gross profit target per serving from your operating costs and the profit you want.
Say you sell Kopi Susu Aren, iced coffee with milk and palm sugar, for Rp22,000 a cup. How much of that goes to the coffee, milk, palm sugar, ice, and cup? How much is left for rent, wages, and your own profit? The answer starts with your COGS per menu item.
The example below uses one cup of Kopi Susu Aren. The same method works for food, baked goods, and other drinks.
COGS stands for cost of goods sold. In a food and drink business, COGS per menu item usually means what you spend on the ingredients and packaging used up to make one serving: one cup of coffee, one plate of Nasi Goreng, or one slice of cake.
What goes into COGS per menu item:
- The ingredients in the recipe, at the amount used for one serving.
- Single-use packaging, such as plastic cups, lids, straws, boxes, or bags.
- Ingredients lost to waste or spills while you make the item.
What you don't count per serving: rent, staff wages, electricity, water, internet, and equipment payments. You still have to pay these, but they don't belong to any one cup. Track them separately as operating costs. You'll use them again when you set a target.
Write down each ingredient and amount
Start from the recipe your bar or kitchen actually uses. Ask your barista to make one cup the usual way, then weigh and measure every ingredient. Eyeballed amounts vary from one person to the next, and the difference ends up in your costs.
For each ingredient and piece of packaging, write down three things:
- The purchase price from your latest receipt. If you pay for delivery, add it to the purchase price.
- The pack size you buy, such as 1 kg, 1 liter, or 50 pieces.
- The amount used in one serving.
Then use two formulas:
- Unit price = purchase price ÷ pack size
- Cost per serving = unit price × amount used
Convert to the same unit before you divide: 1 kg = 1,000 g and 1 liter = 1,000 ml. Add up the cost per serving of every ingredient and piece of packaging, add waste, and you have the COGS of one serving.
In Kazeer, COGS per item can be calculated from the item's recipe. Working it out by hand, as in the example below, still helps you see where the number comes from and check the amounts in the recipe.
Costing one cup of Kopi Susu Aren
This example uses rounded prices so it's easy to follow. Swap in the prices from your own receipts.
The sample recipe: espresso from 18 g of coffee beans, 150 ml of UHT milk, 35 ml of palm sugar syrup, and 150 g of ice. Takeaway adds a plastic cup, a lid, and a straw.
| Item | Purchase price | Unit price | Amount | Cost per cup |
|---|
| Coffee beans | Rp200,000/kg | Rp200/g | 18 g | Rp3,600 |
| UHT milk | Rp18,000/liter | Rp18/ml | 150 ml | Rp2,700 |
| Palm sugar syrup | Rp40,000/liter | Rp40/ml | 35 ml | Rp1,400 |
| Ice | Rp20,000/10 kg | Rp2/g | 150 g | Rp300 |
| Ingredients total | | | | Rp8,000 |
| Waste and spills (5% of ingredients) | | | | Rp400 |
| COGS, dine-in | | | | Rp8,400 |
| Plastic cup | Rp30,000 for 50 | Rp600 each | 1 | Rp600 |
| Lid | Rp7,500 for 50 | Rp150 each | 1 | Rp150 |
| Straw | Rp5,000 for 100 | Rp50 each | 1 | Rp50 |
| COGS, takeaway | | | | Rp9,200 |
How to read the first row: coffee beans cost Rp200,000 per kg. Since 1 kg = 1,000 g, the unit price is Rp200,000 ÷ 1,000 = Rp200 per gram. One cup uses 18 g, so the beans cost Rp200 × 18 = Rp3,600.
Takeaway COGS is the dine-in COGS plus packaging: Rp8,400 + Rp600 + Rp150 + Rp50 = Rp9,200.
In this example, dine-in orders are served in a glass that gets washed and reused, with no straw, so there's no packaging cost. If your dine-in orders come with a disposable straw, add it to your dine-in COGS.
Account for waste and spills
Not everything you buy ends up in a customer's cup. Some beans go into dialing in the grinder, some milk stays at the bottom of the carton, palm sugar syrup gets spilled, and drinks get remade when an order is wrong. You pay for all of it. Leave out the waste line and the COGS on paper comes out lower than what you really spend.
The 5% in the table is only an example. Find your own number by comparing what you actually used with what the recipe says you used:
- Pick one ingredient that's easy to track, such as UHT milk.
- Work out what you actually used in a month: opening stock plus deliveries, minus closing stock.
- Work out what the recipe says you used: servings sold × amount per serving. If several menu items use it, add them all up.
- The difference between the two is your waste. Divide it by the recipe amount.
Example: Last month you sold 400 milk drinks with 150 ml of milk each. By the recipe, you used 400 × 150 ml = 60 liters. Your stock records show 8 liters at the start of the month, 62 liters delivered, and 7 liters left at the end, so you really used 8 + 62 − 7 = 63 liters. The difference is 3 liters, and 3 ÷ 60 = 5%.
Use that percentage for all ingredients as an estimate, or work it out per ingredient if you have time. For a routine to record and check ingredient stock, read the guide to ingredient stock.
In Kazeer, ingredient stock goes down automatically with each sale. So the gap between the stock Kazeer shows and your physical count at the end of the month already shows your waste: ingredients thrown out or used without being recorded.
If your waste is high, don't just add it to COGS. Find the cause: amounts that change from cup to cup, ingredients that expire before you use them, or orders that keep getting remade.
Compare COGS with the selling price
Once you have the COGS, work out two numbers:
- COGS percentage = COGS ÷ selling price × 100%
- Gross profit per serving = selling price − COGS
Use the selling price before tax. The tax your customer pays goes to the government, so it isn't income for your business. If your menu prices already include tax, take the tax out first.
| Per cup | Dine-in | Takeaway |
|---|
| Selling price | Rp22,000 | Rp22,000 |
| COGS | Rp8,400 | Rp9,200 |
| COGS percentage | 38.2% | 41.8% |
| Gross profit | Rp13,600 | Rp12,800 |
The percentages are rounded to one decimal place. At the same price, each takeaway cup earns Rp800 less gross profit, the cost of its packaging. You can accept that gap or set a different takeaway price.
Set your own target
No single COGS percentage fits every business, because rent, wages, and customer numbers differ from place to place. A useful target comes from your own numbers:
- Add up your monthly operating costs: rent, wages, electricity, water, internet, and equipment payments.
- Decide how much net profit you want each month.
- Estimate how many servings you sell in a month across the whole menu, ideally from the last few months of sales records.
- Divide the total of steps 1 and 2 by the number from step 3. The result is the average gross profit each serving needs to earn.
Example: Operating costs are Rp15,000,000 a month, your net profit target is Rp5,000,000, and you sell 2,000 servings a month. Each serving needs to earn an average gross profit of (Rp15,000,000 + Rp5,000,000) ÷ 2,000 = Rp10,000.
That figure is an average across the whole menu. For Kopi Susu Aren at Rp22,000, it means COGS should stay at or below Rp22,000 − Rp10,000 = Rp12,000 a cup. The example's COGS of Rp8,400 and Rp9,200 are both under that limit.
Cheap items, like iced tea, can earn less than the average as long as the rest of the menu makes up for it. The ones to look at are best sellers whose gross profit falls well below the target: check their price, their recipe amounts, or their packaging.
Once you have a target, the COGS percentage is useful for keeping watch. If it goes up while the price stays the same, a cost has gone up, the amounts have drifted, or waste has grown.
When to recalculate
Recalculate COGS whenever one of its numbers changes:
- A supplier's price goes up or down, delivery charges included.
- You switch brands, buy a different pack size, or change suppliers.
- The recipe changes: more milk, a different cup size, or a new topping.
- Your takeaway packaging changes, such as plastic cups to paper cups.
- Your waste number changes after you check it again.
Small changes per cup add up fast. Say UHT milk goes from Rp18,000 to Rp20,000 a liter. The milk in each cup goes from Rp2,700 to Rp3,000, a difference of Rp300. At 400 cups a month, that's Rp120,000 a month, before waste.
Even when nothing seems to have changed, check the prices in your costing against your latest receipts once a month.
Track the results in your reports
Costing per cup helps you set prices and targets. To see how things actually go from day to day, you need sales reports.
In Kazeer, COGS and tax are recorded from every sale, for each outlet, and you can set up both VAT (PPN) and regional tax (pajak daerah). Check with your tax office or a tax consultant which taxes apply to your business. Reports show sales, COGS, gross profit, net profit after the operating costs you record, and tax. Today's sales report updates itself, with no manual recap. If you run several outlets, they're all in one report. See an example in the reports section.
A routine you can start this week:
- Work out the COGS of your best-selling items with a table like the one above.
- Set an average gross profit target per serving from your operating costs and profit target.
- Check COGS and gross profit in your reports every week.
- Whenever a receipt shows a new price, update the costing for every item that uses that ingredient.