2026-10-06 · 2 min read

How to Calculate Food Cost Percentage

Learn the food cost percentage formula, a worked example, a healthy target range by type of business, and the mistakes that make the number lie.

Food cost percentage tells you how much of every rupee, dollar or pound of food sales goes on ingredients. It is the first number most owners check, and the easiest to get wrong.

The formula

There are two versions, and they answer different questions.

• Theoretical food cost = cost of the ingredients in a dish / selling price of the dish x 100
• Actual food cost = (opening stock + purchases - closing stock) / food sales x 100

Theoretical cost is what a dish should cost if every portion is made to the recipe. Actual cost is what really left your store in the period. The gap between the two is your waste, over-portioning, theft and counting errors.

A worked example

A paneer wrap sells for 220. The paneer, wrap, vegetables and sauce cost 66 in total.

• Theoretical food cost = 66 / 220 x 100 = 30 percent

Now take a month. Opening stock is 90,000, purchases are 310,000 and closing stock is 80,000. Food sales are 1,200,000.

• Actual food cost = (90,000 + 310,000 - 80,000) / 1,200,000 x 100 = 26.7 percent

If your recipes say 30 percent but the month shows 26.7, check your counts and your recipes before celebrating. A figure that is too good usually means a missed purchase, an overcounted closing stock or recipes that no longer match what the kitchen cooks.

What is a good target?

Most full-service restaurants aim for roughly 28 to 35 percent. Cafes with high-margin drinks often run lower, bars track pour cost instead, and caterers cost event by event. Treat any range as a starting point and set your own target from your menu and prices.

Why the number lies

1. Stock counts are late or rough. Count on the same day and time each period.
2. Recipes are out of date. A supplier price moves and nobody updates the plate cost.
3. Yield is ignored. Peeling, trimming and cooking loss change what one kilo really gives you.
4. Staff meals, tastings and waste are not recorded, so they hide inside the gap.

Making it automatic

A spreadsheet works for a small menu but breaks as soon as prices move weekly. DineTide keeps recipe cost live from supplier prices and compares it with what your stock counts say you actually used, so the gap shows up while you can still act on it. See recipe costing or start a free trial.