Food cost percentage tells you how much of every dollar you take in goes to the food on the plate. It's one of the few numbers that tells you quickly whether a menu is making money.
Here's how to work it out for the whole restaurant and for a single dish, plus what a healthy number looks like.
The formula
Food cost percentage = cost of food used ÷ food sales × 100
To get the cost of food you used in a period, usually a week or a month:
Cost of food used = beginning inventory + purchases − ending inventory
Count inventory at the same time each period, ideally before you open or after you close, so the numbers line up.
A worked example
Here's one month at a neighborhood restaurant:
- Beginning inventory on the 1st: $8,000
- Food purchases during the month: $12,500
- Ending inventory on the 31st: $7,500
- Food sales for the month: $42,000
Cost of food used = $8,000 + $12,500 − $7,500 = $13,000
Food cost percentage = $13,000 ÷ $42,000 × 100 = 31%
So for every $1 of food sold, about 31 cents went to ingredients.
Calculate yours
Food cost for a single dish
The monthly number tells you how you're doing overall. Plate cost tells you which dishes are pulling their weight. Add up what goes on the plate, then divide by the menu price.
Here's a burger:
| Ingredient | Cost |
|---|---|
| Brioche bun | $0.45 |
| 5 oz beef patty ($5.20/lb) | $1.63 |
| Cheese | $0.30 |
| Lettuce, tomato, onion | $0.25 |
| Sauce | $0.10 |
| Fries | $0.55 |
| Total plate cost | $3.28 |
At a $14 menu price, food cost is $3.28 ÷ $14 = 23%. That's a healthy dish.
To find the price for a target food cost, flip the formula: price = plate cost ÷ target percentage. If you want this burger at 28%, the lowest price would be $3.28 ÷ 0.28 = $11.71.
What's a good food cost percentage?
It depends on what you sell. These are the typical ranges published by restaurant software companies, including Owner.com:
| Type of restaurant | Typical food cost |
|---|---|
| Quick service and fast casual | 25% to 30% |
| Full service | 28% to 32% |
| Fine dining | 25% to 35% |
| Bars (beverage) | 18% to 24% |
Most restaurants aim for somewhere around 28% to 32% overall. Drinks usually run lower and help balance out pricier mains.
A number that's much higher than your range usually means waste, portions creeping up, theft, or prices that haven't kept up with your suppliers. A number that's much lower can mean you're overpricing, or that your inventory counts are off.
Seven ways to lower food cost
- Recost your menu every quarter. Supplier prices move. A dish that was 26% last spring might be 34% now.
- Portion with a scale. Small overpours on protein add up fast. Spec every plate and train the line on it.
- Track waste for two weeks. Keep a sheet by the trash. You'll see patterns quickly.
- Cross-use ingredients. If the short rib only shows up in one dish, it's more likely to spoil.
- Push high-margin dishes. Put them at the top of the menu, add a photo, and suggest them as add-ons in your online ordering.
- Mark items sold out fast. Taking orders you can't fill leads to substitutions and comps. Update the menu from your phone in the DinerMagnet app.
- Cut commission costs too. Food cost isn't the only thing eating your margin. A 25% delivery-app commission on top of a 30% food cost leaves very little. Here's how commission-free ordering works.
Let your sales data do some of the work
Knowing which dishes sell and when makes costing easier. DinerMagnet's sales reports show orders by day, week or month, and you can ask DinerMagnet AI questions like "what's my best seller this month?" and get an answer in seconds.
FAQ
What is the formula for food cost percentage?
Food cost percentage = (beginning inventory + purchases − ending inventory) ÷ food sales × 100.
What is a good food cost percentage for a restaurant?
Most restaurants aim for about 28% to 32%. Quick service often runs 25% to 30%, and bars run lower on beverages.
How often should I calculate food cost?
Monthly at a minimum. Weekly is better if you're trying to fix a problem, because you'll see the effect of changes faster.
What's the difference between food cost and plate cost?
Food cost percentage covers everything you sold in a period. Plate cost is the ingredient cost of one dish, which you use to set its menu price.