Food cost is a core restaurant management metric, but it does not tell the whole profitability story. Menu pricing, portioning, purchasing and waste must be evaluated alongside labor and overhead.
How do you calculate food cost?
Food cost (%) = cost of ingredients consumed / net food sales × 100.
For a period, ingredient consumption is generally opening inventory + purchases − closing inventory, adjusted consistently for waste, staff meals and transfers. Use comparable values with consistent tax treatment.
Worked example
If a dish has a recipe ingredient cost of €4.20 and sells for €14.00 net, its theoretical food cost is 30%. That does not include labor, energy, rent or other overhead. These figures are illustrative.
Why does actual food cost differ from theoretical cost?
- Recipe portions differ from what is served.
- Supplier prices changed without updated costing.
- Trimming and cooking losses are underestimated.
- Inventory counts or stock issues are inaccurate.
- Overproduction, spoilage and unrecorded consumption occur.
Ten actions to improve control
- Standardize recipes by weight and reference photos.
- Recalculate recipes after meaningful price changes.
- Measure trim and cooking yield.
- Check high-value ingredients daily.
- Apply FIFO/FEFO stock rotation where appropriate.
- Record waste and staff meals separately.
- Analyze menu items by contribution and demand.
- Simplify low-volume, inventory-heavy dishes.
- Reconcile POS sales with stock movements.
- Review the three largest variances every week.
Frequently asked questions
What is a good food-cost percentage? There is no universal target. Concept, labor, beverage mix and positioning all matter.
Is buying cheaper ingredients enough? No. Lower quality can harm repeat visits. Track contribution margin alongside guest satisfaction.
Where should I start? Re-cost five high-volume dishes and compare planned consumption with actual usage.
Štefan Czibor — Hospitality & F&B Consultant, Komárno, Slovakia.
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