What figures should you compare?
Use opening stock, purchases, closing stock, recorded portions sold and the recipe cost per portion for one matching period. Opening and closing stock mean what remains at the start and end, valued consistently at cost rather than menu selling price.
For this simplified kitchen-management example, assume one dish uses a dedicated ingredient stock pool. There are no supplier returns, stock transfers or other dishes using those ingredients. Include usable prepared food in the stock counts so that ingredients moved into prepared portions do not disappear from the records.
Assume 100 portions sell for £18.00 each, including an explicitly assumed 20% sales VAT. Recipe ingredients cost £4.00 per portion. Packaging and other direct costs are excluded from both sides of this comparison. Costs exclude recoverable purchase VAT and include non-recoverable VAT. The example isolates ingredient usage; it is not a complete business profit calculation.
How much stock did the kitchen use?
Assume opening ingredient stock is £180.00, purchases received during the period are £420.00 and closing stock is £150.00.
Stock usage = opening stock + purchases − closing stock. Here, £180.00 + £420.00 − £150.00 = £450.00.
Purchases alone are not usage: the kitchen finished with £30.00 less stock than it started with. The Open University's bookkeeping explanation shows why stock remaining at the period end must be separated from the costs used to calculate that period's gross profit: https://www.open.edu/openlearn/money-business/introduction-bookkeeping-and-accounting/content-section-3.5
This is a management reconciliation, not instructions for preparing statutory accounts or a tax return.
What does the recipe predict?
Expected ingredient usage = recorded portions sold × recipe ingredient cost per portion. For 100 portions at £4.00 each, expected usage is £400.00.
The stock-derived usage is £450.00, leaving a £50.00 gap. That is £0.50 per recorded sale, or 12.50% above expected recipe usage.
The gap does not prove that £50.00 was wasted. Possible explanations include larger servings, spoilage, staff meals, complimentary portions, missing sales records, invoice timing, counting errors or an outdated recipe cost. A stock valuation change can also affect a comparison. Reconcile those explanations before treating the difference as a permanent cost increase.
How does the gap change GP?
Net sale = gross customer price ÷ (1 + VAT percentage ÷ 100). At the assumed rate, £18.00 ÷ 1.20 = £15.00 net sale per portion. Total net sales are 100 × £15.00 = £1,500.00.
Using the recipe cost, gross profit is £15.00 − £4.00 = £11.00 per portion. GP margin is £11.00 ÷ £15.00 × 100 = 73.33%. Across the period, that gives £1,100.00 gross profit.
Allocating the £450.00 stock usage across 100 recorded sales gives £4.50 per sale. Gross profit becomes £15.00 − £4.50 = £10.50 per sale, or £1,050.00 for the period. Margin is £10.50 ÷ £15.00 × 100 = 70.00%.
The unexplained usage therefore reduces gross profit by £50.00 and margin by 3.33 percentage points. Neither margin is a recommended target. Gross profit still has to cover remaining wages, rent, energy and other expenses; it is not net or take-home profit.
How can you reproduce this in the calculator?
Open GP Calculator UK at / and choose Check my GP. Enter cost 4.00, customer price 18.00 and assumed VAT 20. Record the GP pounds and margin, then change cost to 4.50 to see the stock-derived comparison.
The £4.50 is an allocated period result under this example's assumptions, not proof that the recipe now costs that amount. For a mixed menu, compare total stock usage with the sum of each dish's quantity sold multiplied by its recipe cost. Do not assign the whole kitchen's stock gap to one dish without supporting records.
Keep full precision during calculations. Money here is displayed to pennies and percentages to two decimal places; all worked numbers were checked using Python 3. Read /methodology/ for calculation assumptions and rounding.
What should you check before changing prices?
Count stock at matching trading cut-offs and include deliveries received within the period. Check units, part packs, prepared food, supplier credits and the costs used in recipe cards. Record complimentary food, staff meals and discarded portions separately so the gap can be explained.
If stock usage already captures an unsold-food loss, do not add that same loss again through a waste allowance. In the calculator's batch tool, waste means unsold portions, not cooking yield loss.
Use the VAT treatment applicable to the actual sale. The assumed 20% does not classify this dish; HMRC's catering and takeaway guidance explains the relevant distinctions: https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091
Purchase VAT recovery has conditions and exceptions. Keep costs on the applicable basis using HMRC's guidance: https://www.gov.uk/charge-reclaim-record-vat/reclaim-vat-business-expenses
Once the records reconcile, decide whether the response is a recipe correction, better portion control, reduced losses or a price review. This guide explains arithmetic, not personalised tax advice.
Sources
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Use the free GP calculator to check selling prices, compare margins and save menu items on your device. Gross profit is before remaining business expenses.
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