How to Calculate Food Cost Percentage: A Complete Guide

Understanding your food cost percentage is essential for running a profitable restaurant, food truck, or catering business. This metric tells you exactly how much of your revenue goes toward ingredients, helping you price your menu correctly and identify areas for improvement.

What is Food Cost Percentage?

Food cost percentage is the ratio of your ingredient costs to your menu price, expressed as a percentage. It answers a simple question: for every dollar a customer pays, how many cents go toward the food itself?

The Food Cost Percentage Formula

Here's the basic formula:

Food Cost Percentage = (Ingredient Cost / Menu Price) x 100

For example, if your pasta primavera costs $4 in ingredients and you sell it for $16:

Food Cost Percentage = ($4 / $16) x 100 = 25%

What's a Good Food Cost Percentage?

Most restaurants aim for a food cost percentage between 28% and 35%. Here's a general breakdown:

• **25-30%**: Excellent margin, common for simple dishes
• **30-35%**: Industry standard for most restaurants
• **35-40%**: Acceptable for premium ingredients or specialty items
• **Above 40%**: May need to adjust pricing or portions

For a detailed breakdown by restaurant type, see our guide on ideal food cost percentages by restaurant type.

Calculating Food Cost for a Recipe

Let's walk through a real example using a simple marinara sauce recipe:

Ingredients: - Olive oil (2 tbsp): $0.30 - Garlic (4 cloves): $0.20 - Crushed tomatoes (28 oz can): $2.50 - Fresh basil: $0.40 - Onion (1 medium): $0.35 - Salt and pepper: $0.05

Total Ingredient Cost: $3.80

If this sauce serves 4 portions of pasta, and each pasta dish sells for $14:

• Cost per serving: $3.80 / 4 = $0.95
• Add pasta cost ($0.40) = $1.35 per dish
• Food cost percentage: $1.35 / $14 = 9.6%

That's an excellent margin, leaving room for other components or premium add-ons.

Tips to Improve Your Food Cost Percentage

1. Track Waste Carefully Spoilage and over-portioning eat into your margins. Use consistent portioning tools and rotate inventory properly.

2. Negotiate with Suppliers Even small discounts on high-volume ingredients like flour, rice, or cooking oil add up quickly.

3. Design Your Menu Strategically Balance lower-margin dishes with high-margin items. Vegetables, grains, and legumes typically offer better margins than specialty ingredients. Learn more in our [menu pricing strategies guide](/blog/menu-pricing-strategies-for-restaurants).

4. Update Prices Regularly Ingredient costs fluctuate. Review your costs quarterly and adjust menu prices as needed.

5. Cross-Utilize Ingredients Use the same ingredients across multiple dishes to reduce waste and simplify inventory.

For more detailed cost reduction tactics, check out our guide on 10 ways to reduce food costs without sacrificing quality.

Using a Food Cost Calculator

Manually calculating food costs for every recipe is time-consuming. A food cost calculator automates the math, letting you:

• Quickly price new menu items
• See how ingredient price changes affect margins
• Compare different recipes side-by-side
• Make data-driven pricing decisions

Wondering whether to use a calculator or spreadsheet? Read our comparison of food cost calculators vs Excel.

Start Calculating Your Food Costs

Ready to take control of your food costs? Try our free food cost calculator to analyze your recipes and find your ideal menu prices. No spreadsheets required.