Food cost percentage is the share of a dish's selling price that goes to ingredients. It is one of the first numbers restaurant and café owners learn to watch, because small changes in ingredient prices or portion sizes add up quickly across hundreds of covers. There are two versions of the formula, and you need both.
Formula 1: food cost % for a single dish (plate cost)
Food cost % = Ingredient cost per serving ÷ Menu price × 100
To find the ingredient cost per serving, cost each ingredient by the amount actually used:
Ingredient cost = (Pack price ÷ Pack size) × Amount used
Worked example: a burger
| Ingredient | Purchase | Used per burger | Cost |
|---|---|---|---|
| Bun | $4.00 for 8 | 1 | $0.50 |
| Ground beef | $12.00 per 1,000 g | 150 g | $1.80 |
| Cheese slices | $6.00 for 24 | 1 | $0.25 |
| Lettuce, tomato, sauce | (costed together) | 1 portion | $0.35 |
| Fries | $7.50 per 2,500 g | 150 g | $0.45 |
| Total plate cost | $3.35 |
At a menu price of $11.50, the food cost % is 3.35 ÷ 11.50 = 29.1%.
Try your own recipe in the free recipe cost & food cost calculator. Add each ingredient with pack price, pack size and amount used.
Pricing a dish from a target food cost %
Flip the formula:
Menu price = Plate cost ÷ Target food cost %
With a 30% target, the burger's price is 3.35 ÷ 0.30 = $11.17. Most operators then round to a price that fits the menu, like $11.50, and check the resulting percentage.
Worked example: what a latte really costs a café
| Item | Purchase | Used | Cost |
|---|---|---|---|
| Espresso beans | $18.00 per 1,000 g | 18 g (double shot) | $0.32 |
| Milk | $1.20 per 1,000 ml | 250 ml | $0.30 |
| Cup + lid + sleeve | $0.20 per set | 1 | $0.20 |
| Total | $0.82 |
Sold at $4.50, the latte's cost % is 0.82 ÷ 4.50 = 18.2%. Beverages often run a lower cost % than food, which is why many cafés depend on drink sales. The numbers above are illustrative. Plug in your own supplier prices, because they vary a lot by region.
Notice the cup: packaging is a real cost per item, and it's easy to forget. If you track it separately, label it "packaging cost %" so you don't mix it with ingredients.
Formula 2: food cost % for a period (actual food cost)
Plate cost tells you what a dish should cost. Period food cost tells you what you actually spent, including waste, spillage, comps, over-portioning and theft.
Cost of food sold = Beginning inventory + Purchases − Ending inventory
Actual food cost % = Cost of food sold ÷ Food sales × 100
Worked example: one month
- Beginning inventory (1st of month): $8,000
- Purchases during the month: $12,000
- Ending inventory (last day): $7,500
- Food sales for the month: $40,000
Cost of food sold = 8,000 + 12,000 − 7,500 = $12,500
Actual food cost % = 12,500 ÷ 40,000 = 31.25%
Theoretical vs actual: the gap is the story
If your menu (weighted by what you actually sold) says food cost should be 28% but inventory says 31.25%, the 3.25-point gap on $40,000 of sales is $1,300 a month of food you paid for but didn't sell. Common causes:
- portions bigger than the recipe card
- waste and spoilage from over-prepping
- staff meals and comps not recorded
- supplier price increases not reflected in recipe costs
- inventory counting errors
Closing even part of that gap usually does more for profit than raising prices.
What's a "good" food cost percentage?
You'll often see ranges like 28–35% quoted for restaurants, but there is no universal target. It depends on concept, location, labor model and prices. A steakhouse and a coffee kiosk shouldn't be compared. A better approach:
- Calculate your current theoretical and actual food cost.
- Combine food cost with labor cost ("prime cost") to see the full picture.
- Use break-even analysis to see how many covers you need at your current margins.
Food cost % vs gross margin
If food cost is 29.1%, the gross margin on ingredients is 70.9%. This is the same idea as product margin in retail. See margin vs markup for converting between the two without mistakes.
Frequently asked questions
Should packaging count as food cost? Track it, but ideally as a separate line ("packaging cost %"), so changes in ingredient prices and packaging prices don't hide each other. What matters most is that you treat it the same way every month.
How often should I recalculate plate costs? Whenever a major ingredient changes price, and as a routine at least every quarter. Proteins, dairy and coffee can move quickly, and a recipe card costed a year ago can be off by several points.
Does yield loss matter? Yes. If you buy a 1 kg piece of meat and only 800 g is usable after trimming, the cost per usable gram is 25% higher than the label price suggests. Cost ingredients on their usable yield.
Menu engineering in one line
A dish with a higher food cost % can still be a great item if it earns more dollars per plate and sells well. Look at contribution in dollars (price minus plate cost) alongside the percentage before you cut or reprice a popular dish.
Keep recipe costs up to date
Ingredient prices change constantly. The fastest way to stay on top is a costed recipe database where you update a price once and every dish that uses it recalculates. The Recipe Cost & Menu Pricing template for Excel and Google Sheets does exactly that and suggests menu prices from your target food cost %.