Food cost percentage is the share of your food sales that goes back out the door as ingredients. Spend $8,000 on ingredients in a month, sell $25,000 of food, and you ran a 32% food cost. It is the largest expense you control from inside the building, and it moves each week: a supplier raises chicken by 3%, a new cook plates 15 g heavy, a case of salmon goes in the bin.
What is food cost percentage?
Food cost percentage is the ratio of what you paid for the ingredients you used to what you sold them for, over the same period:
Food cost % = cost of goods sold ÷ food sales × 100
Cost of goods sold (COGS) means ingredients used, which differs from ingredients bought; the inventory count corrects the difference.
A 2-point improvement on $500,000 of annual revenue puts $10,000 on the bottom line without a single extra cover.
The formula: period-based and per-dish, with a worked example
Period-based (actual food cost)
Count inventory at the start and end of the period and add up purchases in between:
Actual food cost % = (beginning inventory + purchases − ending inventory) ÷ food sales × 100
A 60-seat bistro over four weeks:
| Line | Amount |
|---|---|
| Beginning inventory (day 1, before deliveries) | $9,200 |
| Purchases (food invoices in the period, less credits) | $17,600 |
| Ending inventory (day 29, before deliveries) | $8,400 |
| Cost of goods sold | $18,400 |
| Food sales (net of tax and comps) | $57,500 |
| Food cost percentage | 32.0% |
Per dish (plate cost)
Price each ingredient at its latest invoice cost, add the lines, divide by the menu price:
| Ingredient | Quantity | Cost |
|---|---|---|
| Beef patty at $9.50/kg | 180 g | $1.71 |
| Brioche bun | 1 | $0.45 |
| Cheddar slice | 1 | $0.30 |
| Lettuce, tomato, onion | 1 set | $0.28 |
| House sauce | 30 g | $0.12 |
| Fries at $2.10/kg | 150 g | $0.32 |
| Plate cost | $3.18 |
At a $12.50 menu price the burger runs 25.4%. Yield (trim, cooking loss) raises ingredient cost before it reaches the plate; a recipe costing template with a worked example builds that into each line.
What is a good food cost percentage? Benchmarks by concept
Most restaurants land between 28% and 35%. Your place in that band depends on concept, menu and what the bar contributes:
| Concept | Typical food cost |
|---|---|
| Fine dining | 30 to 35% |
| Casual dining | 28 to 32% |
| Quick service | 25 to 30% |
| Bars (food menu) | 30 to 35% |
| Cafés | 28 to 32% |
A restaurant at 40% food cost with 80% gross margin on beverages can out-earn a 28% kitchen with a weak bar, because rent gets paid from gross profit in dollars. Compare with your own target and last quarter before you compare with a table.
Actual vs ideal (theoretical): the gap that matters
Actual food cost comes from counts and invoices: what you spent. Theoretical (ideal) food cost comes from recipe cards and the sales mix: what you would have spent if each plate matched its recipe and nothing went in the bin.
Theoretical food cost % = sum of (units sold × recipe cost) ÷ food sales × 100
If the bistro sold a mix that cost $16,700 by the recipe cards, theoretical food cost is 29.0% against an actual 32.0%. The 3-point gap is $1,700 a month of waste, over-portioning, unrecorded comps or theft. Without the theoretical number you cannot tell a supplier price rise from a portioning problem. The variance guide covers actual vs theoretical food cost with a diagnosis sequence and a 2% target.
How to get the inputs right: counts, purchases, credits and transfers
The formula is three numbers, and each can be wrong in a way that makes the percentage lie.
Counts. Count at the same point each period, after close or before the first delivery. An ending inventory overstated by $1,000 (a case counted twice) understates COGS by $1,000, which on $57,500 of sales reads as 30.3% instead of 32.0%. Next period the error reverses and food cost jumps 1.7 points.
Purchases. Book by delivery date. A late invoice posted next month moves 1 to 2 points of food cost between periods.
Credits. Short deliveries and price corrections come back as credit notes weeks later. Net them against the period the original invoice belongs to.
Transfers. Limes, cream and garnish that move to the bar leave the kitchen with no sale against them. Transfer them out of food purchases or they inflate food cost and hide bar cost.
Staff meals and comps. Record them on their own line. Eight staff a day at $4 a head puts $960 a month into COGS, about 1.7 points on this bistro’s sales.
How often to measure: weekly beats monthly
At $57,500 a month, a 2-point leak costs the bistro $1,150 a month. Measured monthly, it runs four to six weeks before anyone sees it, since the books close a week or two after the count. Measured weekly, you see it inside seven days.
| Cadence | Leak found after | Cost before anyone acts |
|---|---|---|
| Monthly, books closed two weeks later | 4 to 6 weeks | $1,150 to $1,700 |
| Weekly | 7 days | $290 |
A weekly measure does not need a full count. Count the top 50 items by value, carry the rest from the monthly count, and you have a number in 30 minutes.
Five strategies to lower food cost
1. Track supplier prices on each invoice
A 5% increase on one high-volume ingredient wipes out the margin on several dishes before the menu changes. Capture each invoice line with its unit price and flag any line up more than 5% on the last purchase.
2. Weigh portions
Portion drift is the quietest leak in a kitchen. A $20 scale on the pass and ten random plates weighed each week catch it; left alone, drift can cost $2,000 a month.
3. Log waste daily
Item, quantity, reason, written at the pass. Five minutes a day shows you the causes behind most of it: over-prep, spoilage from poor rotation and plate returns.
4. Engineer the menu
Plot each dish by popularity and margin:
- Stars (popular, high margin): best spot on the menu, first recommendation from the server.
- Plowhorses (popular, low margin): re-cost, trim the expensive component, or add a dollar to the price.
- Puzzles (unpopular, high margin): rename, reposition, or run as a special.
- Dogs (unpopular, low margin): remove.
5. Negotiate with price history
Take your top 20 items by spend, show the supplier twelve months of line prices and a competing quote, and ask them to match. A 3% improvement on those 20 items beats most menu changes.
Common mistakes
- Measuring monthly. By the time the number arrives, four weeks of margin have gone.
- Ignoring the theoretical number. Actual food cost alone cannot separate a price increase from waste.
- Pricing recipes once. A recipe card costed at opening is wrong within a quarter.
Tools that help
A spreadsheet handles the formula. The work is in feeding it: invoice lines, recipe prices, stock counts, POS sales matched to recipes. That feeding stops when the manager also runs service, which is why so many restaurants measure monthly.
We built bilz to do the feeding. AI invoice OCR reads each line and unit price at delivery, recipe cards pick up the new prices, a stock count runs from a phone, and the food cost number updates daily instead of at month end. The features page lists what is included; pricing is one flat rate per location, see pricing.
Frequently asked questions
What is the formula for food cost percentage?
Food cost % = cost of goods sold ÷ food sales × 100, where cost of goods sold is beginning inventory plus purchases minus ending inventory. On $18,400 of COGS and $57,500 of food sales, food cost is 32%.
What is a good food cost percentage for a restaurant?
Between 28% and 35% for most full-service and casual restaurants, and 25% to 30% for quick service. Set your own target from your P&L and track the trend against it.
How do you calculate food cost per dish?
Price each ingredient at its latest invoice cost, adjust for yield, add the lines, then divide the plate cost by the menu price. A $3.18 burger sold at $12.50 runs 25.4%.
Is 40% food cost too high?
For most concepts, yes: at 40% you need a strong bar or very low labor to make a margin. Some steakhouse and seafood concepts run there on purpose, so judge it on gross profit per cover as well.
How often should a restaurant calculate food cost?
Weekly, with a count of the top 50 items by value, and a full count monthly. Daily works once invoices and POS sales feed the number without manual entry; our FAQ explains how bilz calculates food cost.
