gross margin = ex-tax price − ingredient cost
Gross margin
$19.20
80.0% · $24.00 ex-tax collected
Benchmarks: kitchen 65–75%, bar 76–82%. And this number is theoretical — the actual one drifts. See why ↓
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Gross margin calculator — the margin you post isn't the margin you bank
The gap between the margin on your specs and the margin you bank widens with every supplier hike you don't pass on — on a 5–10% net margin, 3–5 points of drift wipe out 30–50% of profit. The formula, the benchmarks, and a free calculator to place yours in 30 seconds.
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Définition
Gross margin is what's left of the ex-tax selling price once ingredient cost is deducted — what's left to pay the floor, the kitchen, the rent and you. In dollars or percent, it's the flip side of food cost: on an ex-tax price, the two always add up to 100%.
Gross margin (%) = (ex-tax selling price − ingredient cost) ÷ ex-tax selling price × 100
The method
What's left to pay for everything else
Gross margin is what's left to pay the floor, the kitchen, the rent, you. Two rules the calculation often skips: it's figured ex-tax (tax collected was never margin), and ingredient cost is taken on the quantity actually served, waste included. It's the flip side of food cost — on an ex-tax price, the two always add up to 100%.
What margin should you target?
In the kitchen
65–75%
That's a food cost of 25 to 35%. But the menu average says nothing: it's the best-seller, not the highest-margin dish, that decides the month.
Behind the bar
76–82%
The best margins in the house — on paper. Pour drift chips away at it silently, points at a time, in the glass.
The trap
30–50%
of profit that evaporates on a 5–10% net margin
The margin in your spreadsheet is theoretical. The real one leaks. Kitchens run 3–5% drift between theoretical and actual cost (Restaurant365, MarginEdge); a bar can lose up to 20% of its liquor stock to uneven pours (Sculpture Hospitality). Specs sit in a binder, purchase prices go stale, and no one can name the real margin mid-service.
This is exactly the leak Methodus plugs. See how ↓
The math
The gap is small. The leak isn't.
The gap between what you think a plate costs and what it really costs runs 5–20%. Drag your numbers and watch what it quietly takes off your margin.
You're leaking about
$18,000
Yearly revenue$600,000
Ingredient cost30%
Cost gap — perceived vs. real10%
Most venues sit around 10%.
Net margin7%
F&B runs thin — often 5–10%.
You're leaking about
$18,000
a year — ≈ 42.9% of your net profit.
Margin you already earned — you just can't see it yet.
Gap range: Sculpture Hospitality · Restaurant365
The fix
Methodus plugs the leak
Not another spreadsheet, not a binder in the office: an app the kitchen, the bar, and the floor use morning to night — and that does the data entry for you.
- 1
“The purchase prices are stale”
Your invoices are read automatically
Drop the supplier invoice — PDF, photo, even an email attachment. Methodus reads every line and updates your purchase prices. The hike shows up the same day, not at month-end.
- 2
“The specs sleep in a binder”
Every spec recalculates the moment a price moves
The real margin on every plate and every cocktail, current today. You see which dish pays the rent — and which one eats it. Recipe spec sheet template →
- 3
“No one can name the cost mid-service”
The whole team sees the same numbers
The line and the bar see what a plate or a glass costs, from their phones. The pour holds itself — no policing.
You stop chasing the drift: what used to evaporate every month becomes net profit again.
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In action
Margin, live in the product
On a real spec, Methodus prices the ingredients, shows the margin, and keeps it current the moment a purchase price moves.
Holding margin day to day
- 1
One spec sheet per recipe
Measures, pours, cost — per dish and per cocktail. Without a spec, margin gets recalculated from memory every service. Recipe spec sheet template →
- 2
Price deduced from cost, not the other way around
Setting price from a target food cost beats pricing by gut feel: menu price calculator →
- 3
Cross margin with sales
A beautiful margin on a dish nobody orders pays for nothing. It's volume × margin that counts.
FAQ
Frequently asked questions
Subtract ingredient cost from the ex-tax selling price, then divide by that ex-tax price and multiply by 100. A dish sold at $20 ex-tax with $5 of ingredient cost yields $15 of margin, or 75%. Always ex-tax: tax collected isn't margin.
They're two sides of the same calculation, on the ex-tax price. A food cost of 30% leaves a gross margin of 70%. Margin is thought of as dollars kept, food cost as share spent — but the two always add up to 100%.
Kitchens generally target 65 to 75% (food cost of 25 to 35%); bars target 76 to 82%. But the menu average says nothing — it's margin × volume, dish by dish, that decides the month's result.
Because the spreadsheet margin is theoretical. Waste, uneven pours, and climbing purchase prices chip away at it: 3–5% drift in the kitchen, up to 20% drift on bar liquor. On a 5–10% net margin, that gap eats 30–50% of profit.
Who builds methodusmethodus is built by an operator. Nathaniel Gilliand, École hôtelière de Lausanne graduate, runs restaurants, bars and beach clubs. This is the tool he built to find the margin that was evaporating in his own P&L.
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The real margin, not the spreadsheet's
Methodus reads your invoices, recalculates every spec, and crosses costs with sales — kitchen and bar. You finally see what each dish really keeps.
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