Food cost percentage: formula, plate costing and menu pricing

How do you calculate food cost percentage?

Divide the cost of the ingredients by the selling price before tax, then multiply by 100. That is all the formula is.

Food cost % = ingredient cost ÷ selling price (before tax) × 100

If a pasta dish uses 2.70 of ingredients and sells for 11.00 before tax, the food cost is 2.70 ÷ 11.00 × 100 = 24.5%. In other words, about a quarter of what the guest pays goes on the food on the plate.

You can work it out two ways, and you need both:

• Per dish (theoretical): what the recipe says the plate should cost.
• For a period (actual): what the kitchen really used, from stock and purchases.

The gap between the two is where the money goes missing. Work out the per-dish figure when you write or change the menu, and the period figure every week or month, from the same counts each time.

How do you work out actual food cost for a week or a month?

Use your stock and your purchases. Count opening stock, add everything you bought, subtract closing stock, and you have the cost of food used.

Cost of food used = opening stock + purchases − closing stock

Actual food cost % = cost of food used ÷ food sales (before tax) × 100

Worked example for one week:

If your recipes say the menu should run at 27%, the extra 3.2 points is 3.2% of 23,500, which is 752 in that week alone. That is the money to look for in portions, waste, theft and staff meals. A proper count is the only way to see it, so our stocktake guide is worth reading alongside this one.

How do you cost a plate?

List every ingredient, weigh the amount that goes on the plate, and multiply by the cost per unit of usable ingredient. Include the small things: oil, garnish, sauce, the side.

The step most people miss is yield. You buy a whole fish or a case of onions, but you trim, peel and bone it. The cost per usable kilo is higher than the cost per kilo bought.

Usable cost per kg = price paid per kg ÷ yield

If whole salmon costs 14.00 a kg and you get 60% usable fillet after trimming, the fillet really costs 14.00 ÷ 0.60 = 23.33 a kg.

Worked example: a salmon main course

On a menu price of 18.00 before tax, the food cost is 5.14 ÷ 18.00 × 100 = 28.6%.

Notice how much the salmon yield matters. If you costed it at the bought price of 14.00 a kg, the fish would look like 2.24 instead of 3.73, and the whole plate would look 1.49 cheaper than it is.

How do you price a menu item from a target food cost?

Turn the formula round. Divide the plate cost by your target food cost percentage.

Selling price (before tax) = plate cost ÷ target food cost %

For the salmon at 5.14 with a 30% target: 5.14 ÷ 0.30 = 17.13. You would probably round to 17.50 or 18.00 before adding any tax your country charges.

The same plate at different targets:

Use the food cost calculator to try your own numbers.

What is a good food cost percentage?

There is no single right number. Many restaurant owners use roughly 25% to 35% as a rule of thumb, but treat that as a starting point for questions, not a target to hit at any cost.

Why it varies:

• Menu type. Dishes built on expensive proteins usually run higher. Dishes built on flour, rice, pasta or potatoes often run lower.
• Labour. A dish that takes a lot of prep can justify a lower food cost; a dish you simply plate can carry a higher one.
• Rent and location. Higher fixed costs need more margin from each plate.
• Service style. A quick-service counter and a full table-service room have very different cost shapes.

A useful habit is to look at food cost and labour cost together, because cheap ingredients that take hours to prepare are not really cheap.

Is a lower food cost percentage always better?

No. Percentage is not money in the till. A higher-cost dish can put more cash in your pocket per plate.

The pasta has the better percentage. The steak earns almost twice as much per plate. If both sell equally well, pushing the steak harder is the better move. This is the core idea behind menu engineering, which we cover in how to run a restaurant. The same logic applies in shops; see markup vs margin.

Why is my actual food cost higher than my recipe cost?

Usually because of portions, waste or recording, not prices. Check these in order:

1. Portions. A cook who adds an extra 20 g of cheese to every pizza is quietly raising your food cost.
2. Waste. Food that spoils, is dropped, is over-prepped or comes back from the table.
3. Unrecorded use. Staff meals, tastings, free items and comps that never hit a till.
4. Supplier prices. A price rise that nobody put into the recipe costs.
5. Receiving. Paying for 10 kg and getting 9.
6. Counting errors. A sloppy closing count makes the week look wrong.

How much does a small portion error cost?

More than it looks. Say a burger should carry 150 g of beef at 9.00 a kg, which is 1.35. If cooks routinely use 170 g, each burger costs 1.53, an extra 0.18.

At 400 burgers a week, that is 72 a week, or about 3,700 over a year, from 20 g of meat nobody noticed.

How do you control waste and portions?

Make the right amount easy and the wrong amount visible. Practical steps:

• Write a spec for each dish: weights, the scoop or ladle size, and a photo of how it should look.
• Use scales and portioned tools at the station, not by eye.
• Prep to a par level based on what you usually sell that day, not a guess.
• Label and date everything, and use the oldest stock first.
• Keep a waste sheet at each station: item, amount, reason. Review it weekly.
• Record staff meals and comps as their own lines so they do not hide in waste.
• Check deliveries against the order, by weight, before the driver leaves.
• Re-cost recipes whenever a supplier price changes noticeably.

A simple weekly review of the waste sheet against your stock counts will tell you more than any target percentage.