Introduction

If you run a restaurant, there's one number you need to know better than any other: COGS (Cost of Goods Sold). It tells you exactly how much it costs to make the food you sell.

COGS is the single most important number for restaurant profitability. Get it wrong, and you'll wonder why your busy restaurant isn't making money. Get it right, and you'll know exactly where every pound goes.

What is COGS?

COGS stands for Cost of Goods Sold. It measures the direct cost of ingredients and materials used to produce the food you sold during a specific period.

COGS = Beginning Inventory + Purchases − Ending Inventory

It's that simple. Three numbers, one subtraction, one addition. But this formula reveals everything about your food cost efficiency.

Example: You start the month with 50,000 EGP in stock. You buy 120,000 EGP more during the month. At month-end, you have 45,000 EGP left. Your COGS = 50,000 + 120,000 − 45,000 = 125,000 EGP.

Why COGS Matters

Here's the hard truth: if your COGS is too high, you're losing money even when the restaurant is full. Every table can be occupied, every order flying out of the kitchen, and you still end up in the red.

Healthy COGS for restaurants is typically 28–35% of revenue. If your COGS percentage is above 35%, you have a problem that needs immediate attention.

COGS is the biggest controllable expense in your restaurant. Rent is fixed. Salaries are mostly fixed. But food cost? That's where you have the power to make or break your margins.

How to Calculate COGS Percentage

Knowing your COGS in pounds isn't enough. You need to know it as a percentage of revenue. This is what lets you compare performance across weeks, months, and locations.

COGS % = (COGS / Total Revenue) × 100
Example: Your COGS is 125,000 EGP and your total revenue is 400,000 EGP. COGS % = (125,000 / 400,000) × 100 = 31.25%. That's within the healthy range.

5 Ways to Lower Your COGS

Lowering COGS doesn't mean cutting corners. It means being smarter about how you buy, store, and use ingredients. Here are five proven strategies.

  1. Negotiate better prices with suppliers. Even a 2% price reduction adds up fast when you're buying hundreds of thousands in ingredients every month. Get quotes from multiple suppliers. Use volume as leverage.
  2. Reduce waste. Every wasted item increases your COGS directly. Spoiled tomatoes, over-prepped salads, forgotten inventory in the back of the fridge — it all costs you money.
  3. Optimize portion sizes. Weigh everything. A chef who "eyeballs" 200g of chicken might be serving 250g every time. Over thousands of plates, that's a massive cost difference.
  4. Review recipes and find cheaper alternatives. Can you use a local cheese instead of imported? A seasonal vegetable instead of an out-of-season one? Small recipe tweaks can save thousands without sacrificing quality.
  5. Track COGS weekly, not monthly. Monthly tracking means problems hide for 30 days. Weekly tracking catches issues before they become expensive. Make it a habit every Sunday.

The Danger of Monthly-Only Tracking

Most restaurant owners check COGS at the end of the month. By then, the damage is done. A supplier raised prices two weeks ago, and you didn't notice. A new cook has been over-portioning every dish for 20 days.

Real-time tracking catches problems in hours, not weeks. When you see COGS spike on a Tuesday, you can investigate immediately. Was it a bad delivery? A waste issue? A pricing change?

The difference between a profitable restaurant and a struggling one is often just speed of information. The faster you know, the faster you act.

Conclusion

Know your COGS. It's the foundation of restaurant profitability. Without it, you're flying blind.

Track it weekly. Target 28–35%. Use technology to automate the math so you can focus on running your restaurant. Your profit depends on it.