COGS (Cost of Goods Sold)
The direct cost of the food, drink and consumables a hotel actually sold to guests over a period, the headline number on the F&B P&L.
Cost of Goods Sold (COGS) measures the direct material cost of the food, drink and consumables a hotel’s F&B operation actually sold over a period. It is the line that sits directly under revenue on every restaurant P&L and the input to nearly every cost-control conversation.
COGS is computed from physical inventory counts, not from a theoretical recipe build. That is what makes it powerful, it captures wastage, theft, over-portioning and supplier price drift in a way that recipe costing alone never can.
COGS = Opening Inventory + Purchases − Closing Inventory
A hotel bar starts the month with €4,200 of stock, buys €18,500 more, and counts €3,800 at month-end. COGS = 4,200 + 18,500 − 3,800 = €18,900.
Note — Food cost percentage = COGS ÷ Food Revenue × 100%. Healthy ranges are 28-32% for casual restaurants, 22-28% for hotel breakfast operations, 18-22% for bars (excluding wine).
Where this term shows up in daily operations.
Monthly F&B P&L. COGS and labour are the two biggest cost lines; controlling them controls profitability.
Theoretical vs actual cost, the gap between recipe-cost (theoretical) and inventory-derived (actual) COGS is your shrinkage budget.
Menu engineering, high-COGS dishes need higher menu prices or substitution to lower-cost ingredients without quality loss.
Period closing, a clean stocktake at month-end is the only honest way to compute true COGS.
What people get wrong.
Skipping stocktakes. Without a real count, COGS is just guesswork.
Mixing F&B and non-F&B purchases (cleaning supplies, paper goods) into the same COGS bucket, distorts food cost percentages.
Not normalising for inter-outlet transfers. A bottle moved from the cellar to the restaurant counts in restaurant COGS, not the cellar’s.
Comparing COGS across very different menu mixes. A wine-heavy bar will always have higher absolute COGS than a beer-only one.
HotelBee Inventory Control in HotelBee.
HotelBee tracks recipes, purchase orders, stocktakes and theoretical-vs-actual COGS automatically, across every F&B outlet.
What is a good food cost percentage?
Industry benchmarks: 28-32% for casual restaurants, 22-28% for hotel breakfast operations, 18-22% for bars excluding wine, 30-38% for bars including wine, 30-40% for fine dining. Always benchmark against your own history first.
How is COGS different from food cost?
COGS is the absolute monetary cost of goods sold. Food cost percentage is COGS divided by F&B revenue. COGS is the input; food cost percentage is the ratio you actually compare across periods.
How do I lower COGS?
Three levers: tighter portion control and recipe adherence (cuts shrinkage), supplier renegotiation or substitution (cuts purchase price), menu engineering to push higher-margin items (changes the mix). Inventory and recipe software is what makes those levers visible in the first place.