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How do I calculate food cost percentage correctly?
Food cost percentage is the cost of food used divided by food sales, multiplied by 100. Cost of food used equals opening stock plus purchases minus closing stock. Using purchases alone gives a misleading figure whenever stock levels change.
It matters because food cost is a major driver of restaurant margin.
Commonly misread:
- Comparing actual with theoretical food cost without understanding the gap. Theoretical cost comes from recipe costs and items sold; the gap reflects waste, over-portioning, theft or errors.
- Ignoring staff meals and comps.
- Using outdated recipe costs when supplier prices have changed.
Cost each recipe, update prices often, count stock on a regular schedule, and investigate gaps between actual and theoretical cost by category.
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