Food Cost Percentage: Formula and Examples

What Food Cost Percentage Tells You

Food cost percentage is the share of your food sales that is spent on the ingredients used to make that food. If it is 32%, then out of every ₹100 of food sold, ₹32 went on ingredients and ₹68 is left for staff, rent, utilities, marketing and profit.

It is one of the first numbers to check when profit falls, because ingredient prices, portion sizes and wastage all change it quickly.

The Formula

There are two ways to calculate it, and both are useful.

Per Dish (Plate Cost)

Food cost % = (ingredient cost of one portion ÷ selling price without GST) × 100

This tells you whether a dish is priced correctly before you sell it.

Per Period (Actual Food Cost)

Food cost used = opening stock + purchases − closing stock

Food cost % = (food cost used ÷ food sales without GST) × 100

This tells you what really happened in the kitchen over a week or a month, including waste and portioning errors.

Worked Example: One Dish

Paneer butter masala, one portion:

• •Paneer 150 g at ₹400/kg = ₹60
• •Butter, cream and oil = ₹18
• •Tomato, onion, cashew and spices = ₹14
• •Ingredient cost = ₹92

Selling price without GST = ₹300

Food cost % = 92 ÷ 300 × 100 = 30.7%

If paneer goes up to ₹460/kg, the paneer cost becomes ₹69, the plate cost becomes ₹101 and the food cost rises to 33.7% without anyone noticing, unless the recipe cost is kept up to date.

Worked Example: One Month

• •Opening stock on the 1st: ₹1,20,000
• •Purchases during the month: ₹4,80,000
• •Closing stock on the 30th: ₹1,00,000
• •Food cost used = 1,20,000 + 4,80,000 − 1,00,000 = ₹5,00,000

Food sales without GST: ₹15,00,000

Food cost % = 5,00,000 ÷ 15,00,000 × 100 = 33.3%

What Is a Good Food Cost Percentage?

There is no single correct number. As a rough guide, many full-service restaurants aim for roughly 28–35%. Cafes with a high share of tea and coffee often run lower. Menus heavy on meat, seafood or imported ingredients usually run higher.

What matters more is:

• •Your target for each category, based on your own pricing
• •The trend month on month
• •The gap between theoretical and actual food cost

Theoretical vs Actual Food Cost

Theoretical food cost is what you should have spent, based on recipes and the dishes you actually sold. Actual food cost is what you really used, based on stock counts.

If theoretical cost is 30% and actual is 35%, five percentage points of sales are being lost to waste, over-portioning, staff meals, unrecorded complimentary items or theft. On ₹15 lakh of monthly sales, that is ₹75,000 a month.

Common Mistakes

• •Including GST in sales, which makes food cost look lower than it is
• •Skipping the closing stock count, which turns the monthly number into a guess
• •Using old purchase prices in recipe costs
• •Ignoring packaging for delivery orders
• •Mixing beverages and food when their margins are very different

How to Bring Food Cost Down

• •Update recipe costs whenever supplier prices change.
• •Standardise portions with scoops, ladles and scales.
• •Track wastage daily, with a reason for each entry.
• •Reprice or remove dishes with high food cost and low sales.
• •Compare purchase prices across vendors every month.

Our guides on waste tracking and food cost control and menu pricing strategy go deeper on each step.

Key Takeaways

• •Food cost % = food cost ÷ food sales without GST × 100.
• •Calculate it per dish to set prices, and per month to see what really happened.
• •Monthly food cost needs opening stock, purchases and an actual closing stock count.
• •The gap between theoretical and actual food cost shows hidden losses.
• •Keep recipe costs updated as ingredient prices change.

How RasoeeCloud Helps

RasoeeCloud links each dish to a recipe with exact raw material quantities, so the cost of every dish is calculated from current purchase prices. Every sale deducts recipe quantities from stock, purchases come in through GRNs, and wastage is recorded with reasons. Stock audits capture the closing count, and the Profit & Loss report shows cost of goods sold against sales for the period.

Related reading: Recipe Costing & Raw Stock for Restaurants and Restaurant Profit and Loss Statement Explained.

Start your 7-day free trial at rasoeecloud.com and see the real food cost of every dish you sell.