Food cost percentage is the single most used number in a kitchen's finances. It tells you how much of every dollar a guest pays goes on ingredients. There are two versions of the formula, one for a single dish and one for a whole period, and they answer different questions.
The food cost percentage formula for a dish
Use the menu price excluding tax. Sales tax or VAT is collected for the government, so including it makes every dish look cheaper to make than it is.
If your target is 25%, this dish is slightly over. The price that hits the target is the cost divided by the target: $4.47 ÷ 0.25 = $17.88. You can try your own numbers in the food cost calculator.
The food cost percentage formula for a period
A dish-level food cost is theoretical: it assumes every portion is made exactly to the recipe and nothing is wasted. To see what really happened over a week or a month, use your stock counts and purchases.
Only include food purchases and food sales. Keep drinks separate, and leave out non-food items such as cleaning supplies and packaging unless you count packaging as part of food cost for delivery (many cloud kitchens do, and that is fine as long as you are consistent).
Theoretical vs actual: the gap is the story
The difference between your theoretical food cost (what your recipes say it should be, weighted by what you sold) and your actual food cost (from inventory) is where money disappears:
- Waste: over-prep, spoilage, dropped plates, staff meals that are not recorded.
- Portioning: a heavy hand on proteins, sauces and garnish.
- Price drift: recipes costed with old ingredient prices.
- Theft and errors: deliveries not checked against invoices, stock walking out.
A gap of a point or two is common. A gap of five points on $68,000 of food sales is $3,400 a month.
What is a good food cost percentage?
Many full-service restaurants aim for an overall food cost around 28–32%, and set different targets by category so the menu averages out: proteins and seafood run higher, pasta, sides and desserts lower. Bakeries and cloud kitchens often target 25–30%. Fine dining may accept a higher food cost if prices and labour make it work.
Treat these as starting points. The right number for you depends on rent, labour and your prices. A dish with a higher percentage can still be a great seller if it earns more cash per plate: compare gross margin (menu price minus cost) as well as the percentage.
How to lower your food cost percentage
- Re-cost with current prices. Old prices are the most common reason menus are costed too low. Re-cost whenever a key supplier price moves.
- Cost the usable weight. Use yield percentages for anything you trim, peel or debone. The yield calculator shows the real cost per usable kilo.
- Fix portions. Scales, ladles and recipe cards beat eyeballing. Check a few plates on a scale during service.
- Order to par. Over-ordering creates waste. Use the par level calculator to set sensible stock levels.
- Price deliberately. Use the menu price calculator to see the price at your target, and decide dish by dish.
Common mistakes
- Dividing by the price including tax.
- Forgetting small ingredients: oil, butter, salt, garnish.
- Mixing drinks and food in one percentage.
- Comparing a theoretical dish cost with an actual monthly cost without understanding the gap.
- Calculating once and never again.
Keeping it right without a spreadsheet
The formula is easy. Keeping hundreds of recipes in line with weekly price changes is the hard part. BrigadeKit re-costs every recipe and sub-recipe when a supplier price changes and flags the dishes that crossed your target, so the number on your screen is the number in your kitchen.