What Is Food Cost Percentage?
Food cost percentage is the proportion of a menu item's selling price that goes toward the raw ingredients used to make it. It's one of the most important metrics in restaurant and food-service management because it directly affects profitability. Most successful restaurants aim for a food cost percentage between 28% and 35%, though the ideal target varies by concept — a fine-dining establishment, a fast-casual spot, and a bar each have different benchmarks.
How to Use This Calculator
Enter two numbers: the total cost of ingredients for one dish (the recipe's plate cost) and the menu selling price you charge customers. The calculator instantly returns your food cost percentage along with the gross profit in dollars and the gross profit margin. Use it to test new menu prices, evaluate whether a dish is worth keeping, or set a price that hits your target food cost.
The Formula Explained
The core formula is simply:
$$\text{Food Cost \%} = \frac{\text{Cost of Ingredients (\$)}}{\text{Menu Selling Price (\$)}} \times 100$$
Dividing the ingredient cost by the price gives the share of revenue consumed by ingredients; multiplying by 100 converts it to a percentage. The remainder is your gross profit, which still has to cover labor, rent, utilities, and overhead before becoming net profit.
Worked Example
Suppose a pasta dish costs $4.50 in ingredients and you sell it for $15.00. The food cost percentage is $$4.50 \div 15.00 \times 100 = 30\%$$ Your gross profit per dish is \(\$15.00 - \$4.50 = \$10.50\), a gross profit margin of 70%. A 30% food cost is healthy for most full-service restaurants.
FAQ
What is a good food cost percentage? Most restaurants target 28%–35%. Lower means higher margins, but pricing too high relative to value can hurt sales.
How do I lower my food cost percentage? Reduce portion sizes slightly, negotiate supplier prices, minimize waste, or raise the menu price.
Does this include labor? No. This metric covers only ingredient cost. Add labor and overhead separately to find true profitability.
