How to Calculate Food Cost?

Calculating food cost is to work out what percentage of your revenue goes toward the ingredients used to make everything on your menu. It's one of the numbers restaurant owners check most often, because it says a lot about how well purchasing, inventory, and pricing are actually working together. The formula itself is straightforward take your cost of goods sold, the total value of food used in a given period, divide it by total food sales, and multiply by 100.

Here's what that looks like in practice. A restaurant that spends $9,000 on food in a month and brings in $30,000 in food sales is sitting at a 30 percent food cost. Whether that's good or bad depends on the concept, but most owners have a target range they're trying to stay under.

The tricky part isn't the math; it's getting accurate inputs. You need real numbers for beginning inventory, what came in from purchases during the period, and what's left at the end, because those three figures are what actually determine cost of goods sold. Skip a proper inventory count and the whole calculation gets shaky.