How to Calculate Food Cost Percentage for a Restaurant

What is food cost percentage?

Food cost percentage is the share of your food sales that you spend on the ingredients used to make that food. It is one of the clearest signals of whether your menu pricing, portioning, purchasing, and waste control are healthy.

If your food cost percentage is climbing, it usually means ingredient prices rose, portions grew, waste increased, or menu prices have not kept up. Tracking it on a regular schedule turns a vague feeling that "food is expensive" into a number you can act on.

The food cost percentage formula

There are two numbers you need: your cost of goods sold (COGS) for a period, and your food sales for the same period.

COGS = Beginning inventory + Purchases - Ending inventory

Food cost % = (COGS / Food sales) x 100

Beginning and ending inventory are the dollar value of the food you have on hand at the start and end of the period. Purchases are everything you bought during the period. The difference, adjusted by what you bought, is what you actually used.

Step-by-step example

Imagine one month at a small restaurant:

• Beginning inventory: $12,000
• Purchases: $18,000
• Ending inventory: $11,000
• Food sales: $52,000

First, COGS = $12,000 + $18,000 - $11,000 = $19,000.

Then, food cost % = ($19,000 / $52,000) x 100 = 36.5%.

A 36.5% food cost is above the typical 28-35% target, which signals room to tighten purchasing, portioning, and waste. You can run your own numbers instantly with our food cost & waste calculator, which also estimates waste losses and potential savings.

What is a good food cost percentage?

Most restaurants target a food cost percentage between 28% and 35%. Full-service restaurants often aim for 28-32%, while concepts with expensive proteins or generous portions may run higher by design. Bars and cafes vary widely.

The "right" number depends on your concept, menu mix, and pricing strategy. What matters most is consistency: a stable figure at or below your own target means your controls are working.

Plate cost vs period food cost

There are two useful views of food cost:

• Period food cost uses inventory and purchases over a week or month. It tells you how the whole operation is performing.
• Plate cost (or recipe cost) is the ingredient cost of a single menu item. Dividing plate cost by menu price gives that dish's food cost percentage.

Period food cost catches waste and theft that plate costing alone misses, while plate costing helps you price individual items correctly. Strong operators use both.

How to lower your food cost percentage

• Count inventory consistently, on the same day each week.
• Cost your recipes and reprice or re-engineer low-margin dishes.
• Tighten portion control with scales and standardized recipes.
• Reduce waste from over-prep, spoilage, and trim.
• Track vendor prices and order to par levels instead of by feel.
• Watch receiving, voids, and comps to limit shrinkage.

A free inventory spreadsheet template makes weekly counts repeatable, and dedicated restaurant inventory software automates the math once you outgrow a sheet.

Common food cost mistakes

• Calculating food cost only once a quarter, so problems hide for months.
• Forgetting to count inventory, which makes COGS and the percentage meaningless.
• Ignoring waste and shrinkage, which quietly inflate real food cost.
• Never updating menu prices as ingredient costs rise.
• Mixing food and beverage costs together instead of tracking them separately.