How to calculate food cost percentage
Food cost percentage tells you how much of every dollar of food sales goes on ingredients. It is the first number to check when a busy restaurant is not making money.
What food cost percentage means
Food cost % = cost of food ÷ food sales × 100. If you spend $31 on ingredients for every $100 of food you sell, your food cost is 31%. The other 69% has to pay for staff, rent, utilities and everything else, and leave a profit.
Way 1: the cost of a single plate (theoretical)
Cost every ingredient in a dish, add them up, and divide by the menu price.
Example: a burger uses $3.10 of ingredients (bun, patty, cheese, sauce, garnish) and sells for $12.00.
- Food cost % = 3.10 ÷ 12.00 × 100 = 25.8%
- Gross margin = 12.00 − 3.10 = $8.90 (74.2%)
This is your theoretical food cost: what the dish should cost if every portion is made exactly to the recipe and nothing is wasted.
Way 2: your actual cost of goods sold
For the whole business over a period (usually a week or a month), count your stock at the start and the end:
Cost of goods sold = opening stock + purchases − closing stock
Example: opening stock $4,000, purchases $9,500, closing stock $3,500.
- Cost of goods sold = 4,000 + 9,500 − 3,500 = $10,000
- Food sales for the same period: $32,000
- Actual food cost % = 10,000 ÷ 32,000 × 100 = 31.25%
What is a good food cost percentage?
It depends on your concept. Many full-service restaurants aim somewhere around 28–35%, and a place selling lots of premium ingredients will sit higher than one selling pasta. Rather than copying a number, work back from your prices and your margin target: if you need a 70% gross margin on food, your target food cost is 30%.
Why actual is higher than theoretical
If your actual food cost is well above your theoretical one, the gap is where money is leaking. The usual causes:
- Waste: spoilage, over-prepping, dropped plates.
- Over-portioning: a heavier hand than the recipe.
- Unrecorded comps and staff meals.
- Price changes from suppliers that never reached your recipe costs.
- Receiving mistakes: short deliveries nobody checked.
- Theft.
How to bring it down
- Cost every recipe and keep the costs current when prices change.
- Weigh and portion the expensive items (proteins first).
- Count stock regularly, weekly for your costliest items, and investigate the gaps.
- Track waste and comps instead of letting them disappear.
- Look at which dishes have the best margin and make them easier to find on the menu.
- Review prices: a small increase on a popular dish moves your food cost more than most savings.
How Fresh helps
Fresh’s recipes and inventory show the cost, price and margin of every dish. Ingredients are taken out of stock as orders complete, and every adjustment, delivery and stock take is recorded as a stock movement, so the gap between theoretical and actual has a trail you can follow.
Questions
What is the formula for food cost percentage?
Food cost % = cost of food ÷ food sales × 100. For a whole period, cost of food is opening stock plus purchases minus closing stock.
How often should I calculate food cost?
Weekly is a good rhythm for most restaurants, with a count of your most expensive items more often.
What is the difference between theoretical and actual food cost?
Theoretical is what the recipes say a dish should cost. Actual is what you really spent from your stock count. The gap shows waste, over-portioning and errors.