Restaurant Guide
How to Calculate Food Cost for a Restaurant
Food cost is one of the most useful numbers for understanding restaurant pricing and profitability. This guide shows how to cost a recipe with yields, read the percentage, set a target that fits your restaurant and compare recipe costs with what your inventory says you used.
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The quick answer
Food Cost Formula
Divide the food cost of the item by its selling price, then multiply by 100. A result of 27.5% means about 27 cents of every sales dollar goes to ingredients. It does not mean that 27.5% of all your costs are food.
The formula
Food Cost divided by Menu Price × 100 = Food Cost %
Example: $3.85 ÷ $14.00 × 100 = 27.5%.
What Is Food Cost?
Food cost is the cost of the ingredients that go into what you sell: the proteins, produce, dairy and dry goods in a dish, before labor, cooking or plating. It can be measured for one dish, for a batch recipe, or for the whole restaurant over a period, and each answers a different question: is this plate priced well, what does this batch cost, did we spend too much on food last month.
Accounting definitions vary, so pick one rule and keep it. Decide, for example, whether takeout containers or staff meals count, and apply it to every dish and every period. Comparisons only mean something when the rule stays the same.
The method
Costing a Recipe,
Step by Step
- Standardize the recipe. Write down every ingredient and the amount that ends up in one batch, in weights where you can. Include oil, garnish and sauce.
- Price each ingredient by the unit you buy. Invoice price divided by the quantity on the invoice, from your latest invoice rather than last quarter’s.
- Apply yield. For anything you trim, peel or cook down, divide the amount in the dish by the yield you measured by weighing before and after.
- Add the line costs and divide by the portions the batch really makes. Work out portions from the batch volume and the portion size, not from the number printed on the recipe card.
- Divide the cost per portion by the menu price and multiply by 100.
- Do it again when an invoice changes.
Here is one plate, a fish taco plate sold at $14.00, costed line by line.
| Ingredient (price paid) | In the dish | Yield | Cost |
|---|---|---|---|
| Cod fillet ($9.80 per lb) | 5 oz | 100% | $3.06 |
| Corn tortillas ($5.20 per 60) | 3 each | 100% | $0.26 |
| Green cabbage ($0.89 per lb) | 2 oz | 80% | $0.14 |
| Sour cream ($4.40 per quart) | 2 tbsp | 100% | $0.14 |
| Limes ($0.25 each) | 1 each | 100% | $0.25 |
| Plate cost | $3.85 |
At $14.00 that is a 27.5% food cost. The cabbage shows the yield step: 2 oz usable at 80% means buying 2.5 oz, which costs 14 cents. The recipe is written in ounces and tablespoons while the invoices use pounds and quarts: converting inside one kind of unit is routine, but weight and volume never convert without the ingredient’s density. To check your own plate the same way, enter its lines in the Food Cost Calculator’s Recipe cost mode.
Same cost, different price
How Menu Price Changes
Food Cost Percentage
The plate costs $3.85 whatever you charge. Only its percentage moves.
| Menu Price | Food Cost % |
|---|---|
| $12 | 32.1% |
| $14 | 27.5% |
| $16 | 24.1% |
| $18 | 21.4% |
Going the other way, from a cost and a target to a price, is a different question: the Menu Price Calculator takes a cost and a target percentage and returns the price.
Use with judgment
Setting a Target That
Fits Your Restaurant
A target food cost is what is left for food after everything else is paid for. Start from a month of sales and subtract the other costs and your profit goal.
| Line | Amount | Share of sales |
|---|---|---|
| Sales | $80,000 | 100% |
| Labor | $25,600 | 32% |
| Rent, utilities and other operating costs | $22,400 | 28% |
| Profit goal | $6,400 | 8% |
| Left for food | $25,600 | 32% |
These are example numbers, not benchmarks: yours will differ. Take your own from your books, with the Labor Cost Calculator and the Restaurant Profit Calculator. A target is usually a goal for the menu as a whole: a dish above it can be balanced by one below it, so also check the average across what you actually sell.
Food Cost vs. Prime Cost
Prime cost adds labor to the cost of the food you sell: (cost of goods sold + total labor) ÷ sales. Because it joins the two costs that production depends on, it shows whether they are in balance with sales in a way food cost alone cannot. What counts as cost of goods sold, and which labor is included, depends on a restaurant’s reporting method, so define both before you compare periods. The Restaurant Profit and Prime Cost Guide states the convention this site uses and reads a worked month.
Watch for these
Common Food Cost
Calculation Mistakes
Skipping yield
Fish bought at $9.80 per lb that loses 30% to trimming makes a 5 oz portion cost $4.38, not the $3.06 the purchased weight suggests.
Guessing the portion count
Four gallons of soup is 512 fluid ounces: 64 bowls at 8 fl oz, not the 40 a recipe card might claim. Divide the batch volume by the portion you actually serve.
Using old prices
A 10% rise on an ingredient that makes up 40% of a dish adds 4% to the cost of that dish. Update from invoices, not memory.
Mixing up ounces
An ounce measures weight and a fluid ounce measures volume. A cup of honey is 8 fluid ounces but weighs more than 8 ounces.
Dropping the small lines
On the taco plate, the lime and the sour cream cost $0.39 together, about a tenth of the $3.85. Garnish, oil and sauce belong in the recipe.
Practical guidance
How to Reduce
Restaurant Food Cost
Work through the cost in this order, so you fix the biggest line first.
1. Rank the ingredients
List a dish’s lines from the most to the least expensive. The top one or two usually decide the result, and a change elsewhere will barely show.
2. Re-check the yield
Weigh a few batches before and after trimming or cooking. A yield that has slipped by five points costs more than it looks.
3. Weigh the portion
Weigh ten portions off the line. If the average is above the recipe, the gap is food you are giving away.
4. Question the price
Compare quotes for the top ingredient, or look at a different cut or pack size that gives the same dish a better yield.
5. Reprice last
If the cost is what it is, change the menu price or the portion, and re-run the numbers to see where the percentage lands.
Two ways to look at it
Food Cost and Inventory
Recipe costs say what you should have used. Inventory says what you did use. Compare the two.
Theoretical food cost is the units sold times the recipe cost of each. Actual food cost is beginning inventory plus purchases minus ending inventory, over food sales for the same period.
| Line | Amount |
|---|---|
| Beginning inventory | $8,200 |
| + Purchases | $21,600 |
| − Ending inventory | $7,400 |
| Food used | $22,400 |
| Food sales | $70,000 |
| Actual food cost | 32.0% |
| Theoretical: items sold × recipe cost | $20,300 (29.0%) |
| Gap | $2,100 (3.0 points) |
The gap is where to investigate, by category: portions larger than the recipe, waste and spoilage, comps and staff meals nobody recorded, recipes costed with old prices, or counting errors. Count at the same time every period, and match purchases and sales to the same dates.
Stay on top of it
How Often Should a Restaurant
Review Food Cost?
There’s no mandatory schedule, but review it whenever any of the following change:
Sources and Method
- USDA Food Buying Guide: published yields, described as averages for planning.
- NIST Handbook 44, Appendix C: the pound and gallon definitions behind the unit conversions.
Prices, yields and monthly totals in this guide are illustrative inputs chosen to show the method, not market data or industry benchmarks.
Keep going
What Should I Calculate Next?
The guide gives the method. These steps put your own numbers through it.
Set a price from the cost you found
Once a portion has a cost, the Menu Price Calculator shows the price that matches a food cost or margin target that you choose, and what rounding it up to a real menu price does to the percentage.
Open the Menu Price CalculatorRead food cost inside the whole month
The guide separates food cost from prime cost. Enter your food cost total in the Restaurant Profit Calculator with labor and your other costs to see prime cost and an estimated operating profit.
Open the Restaurant Profit CalculatorWork out the other half of prime cost
Prime cost is food plus labor. The Labor Cost Calculator separates gross wages, employer costs and overtime, so the labor figure you compare with food cost is built the same way each month.
Open the Restaurant Labor Cost CalculatorAbout this page
Figures in the examples are illustrative inputs, not market data or benchmarks. These are estimates, not accounting, tax or legal advice.
Good to know
Frequently Asked
Questions
How do I find the yield of an ingredient?
Weigh it before and after: the usable (trimmed) or cooked weight divided by the purchased weight. Do it a few times to see the spread, and repeat when the supplier or the cut changes. Published tables, such as the USDA Food Buying Guide, can give a starting estimate, but they are averages.
What is the difference between theoretical and actual food cost?
Theoretical food cost is what your recipes say you should have used for the items you sold. Actual food cost is what you really used: beginning inventory plus purchases minus ending inventory. The gap points to waste, over-portioning, unrecorded comps and staff meals, or recipe costs that are out of date.
How often should I count inventory?
As often as you can count consistently. What matters is that purchases, inventory counts and food sales cover the same period, so weekly and monthly counts both work if you do them the same way every time.
Can I use one food cost target for every dish?
You can, but dishes differ: an item priced for volume may run above your target while a side runs below it. A target usually describes the menu as a whole, so also look at the average across what you actually sell.
RestoCalculator provides calculation tools and educational information for general planning purposes. Results depend on the numbers and assumptions entered and are not a substitute for professional accounting, tax or legal advice.
Calculate Your Food
Cost in Seconds
Cost a recipe from its ingredients, or check a single dish against its menu price.