What Is the Food Cost Percentage Formula?

If you've ever wondered why two restaurants selling the same $18 pasta dish can have completely different profit margins, food cost percentage is usually the answer. The formula itself isn't complicated. Food Cost divided by Total Food Sales, then multiply by 100.

Say your kitchen spent $9,000 on food last month and brought in $30,000 in food sales. That's a 30 percent food cost. Thirty cents of every dollar a guest spends went straight into what's on their plate, and the remaining 70 cents has to stretch across rent, wages, utilities, and hopefully some profit at the end.

Most owners talked to keep this number somewhere in the back of their mind at all times, right up there with covers and labor hours. The general range people aim for is 28 to 35 percent, but that's not a rule carved in stone. A steakhouse buying prime cuts every week is going to run hotter than a taco spot working with rice, beans, and tortillas. Chasing someone else's number instead of your own concept's number is a fast way to make bad decisions.

That's really the whole point of watching this number. It's an early warning system. Catch it moving in the wrong direction this month, and you're fixing a small problem. Catch it six months from now, and you're explaining to your accountant why margins fell off a cliff.