Articles · Hospitality
How to Calculate Food Cost: Formula, Example and Benchmarks for Restaurants
Food cost shows how much you spend on the ingredients you actually sell. Two simple formulas tell you whether your prices work – for the whole business and for every single dish.
What is food cost?
Food cost is the value of goods used in a period – the ingredients in dishes sold plus spoilage and waste. It is not the same as purchases: what is still in storage only counts once it is used.
Formula for the whole business
At month end you need three numbers: opening inventory, purchases and closing inventory from your stock count.
Food cost = Opening inventory + Purchases − Closing inventory
Food cost % = Food cost ÷ Net sales × 100
Worked example
A restaurant has these values for October (all net of VAT):
| Item | Amount |
|---|---|
| Opening inventory 1 October | €4,200 |
| Purchases in October | €18,600 |
| Closing inventory 31 October | €3,900 |
| Food cost | €18,900 |
| Net food sales | €62,000 |
| Food cost % | 30.5% |
€18,900 ÷ €62,000 = 30.5%. Of every euro of sales, just over 30 cents goes into ingredients.
Food cost per dish – with yield
For pricing, every dish counts on its own. Yield matters: trimming loses weight, so the purchase price is divided by the usable share.
Ingredient cost = Quantity × Price per kg ÷ Yield
| Ingredient (Wiener Schnitzel) | Quantity | Price | Yield | Cost |
|---|---|---|---|---|
| Veal escalope | 0.17 kg | €34.00/kg | 92% | €6.28 |
| Butter | 0.05 kg | €9.80/kg | 100% | €0.49 |
| Potatoes | 0.28 kg | €1.30/kg | 80% | €0.46 |
| Bread for crumbs | 0.35 pc | €1.20 | 100% | €0.42 |
| Egg, flour, lemon | – | – | – | €0.51 |
| Total per portion | €8.16 |
At a net price of €21.90 the food cost is 37.2% – well above a 30% target.
Set the selling price from a target
The other way round, you can calculate the price you need:
Net price = Food cost per portion ÷ Target %
€8.16 ÷ 0.30 = €27.20 net. If that is too high, a smaller portion, a cheaper side or another supplier helps.
Benchmarks
As a rough guide in hospitality: food 28–35%, soft drinks and coffee 10–20%, overall usually 25–32%. What matters most is the trend in your own business: if the rate rises three months in a row, take a closer look.
Five practical tips
- Always calculate net – sales and purchases without VAT.
- Measure the yield for meat, fish and vegetables once and record it.
- Update purchase prices monthly, not once a year.
- Count stock on the same day at every month end.
- Check dishes above target first – it is often only two or three.
Free Excel template
The Restaurant Profit Analyzer calculates food cost per dish with yield, the monthly food cost percentage, and uses menu engineering to show which dishes to adjust.