If you want to run a profitable restaurant, café, or catering business, understanding your food cost percentage is non-negotiable. It’s one of the most powerful metrics in hospitality—and when tracked consistently, it gives you the insight needed to price properly, reduce waste, and grow sustainably.

In this blog, we’ll break down how to calculate your food cost percentage in restaurants, what a good benchmark looks like, and practical ways to improve it.

What Is Food Cost Percentage?

Your food cost percentage shows how much of your revenue is spent on food and ingredients. It helps you see whether you’re pricing your dishes properly and managing inventory efficiently.

The formula is:

Food Cost % = (Cost of Goods Sold / Food Sales) x 100

Let’s break that down.

• Cost of Goods Sold (COGS): The total value of ingredients used in a specific period.

• Food Sales: Total revenue from food (not drinks or other services).

Example:

If your COGS for the week is $6,000 and your food sales are $18,000:

($6,000 ÷ $18,000) x 100 = 33.3%

Your food cost percentage is 33.3%.

What’s a Good Food Cost Percentage?

In most restaurants, a target food cost percentage is between 28–35%, but this can vary depending on your concept, cuisine, and service style.

• Fine dining: Often higher due to premium ingredients

• Quick service or takeaway: Usually lower due to volume and simpler menus

The key is consistency. If you’re not measuring it weekly or fortnightly, you’re flying blind.

5 Ways to Improve Your Food Cost Percentage

1. Standardise Recipes and Portion Sizes

Inconsistent portions are one of the fastest ways to lose profit. Use recipes with precise weights and measurements. Train your team to follow plating guides and portion control.

💡 Tip: Create a “portion table or legend” for staff and run random spot checks.

2. Review Your Menu Engineering

Not all dishes are created equal. Analyse which menu items have the highest margin and sell well. Remove or reprice underperformers.

💡 Use a menu engineering matrix: Stars (high profit, high popularity) are your money-makers.

3. Track and Reduce Waste

Start logging daily waste—everything from overcooked steaks to spoiled produce. Identify patterns and act fast.

💡 Set up a simple waste sheet by section and review it weekly.

4. Build Strong Supplier Relationships

Negotiate better deals by consolidating orders, asking about bulk discounts, or switching to seasonal produce.

💡 Don’t chase the cheapest price—chase consistent quality and minimal waste.

5. Count Stock and Update COGS Weekly

The biggest mistake venues make? Guessing instead of measuring. Weekly stocktakes give you up-to-date COGS figures so you can stay in control.

💡 Use tech or spreadsheets that calculate usage per ingredient based on sales.

Managing your food cost percentage isn’t just about saving money—it’s about creating a smart, sustainable business. By understanding the numbers and taking action, you’ll have the tools to make confident decisions about pricing, portioning, and purchasing.

Want a free food cost calculator or a ready-to-use stocktake sheet?

👉 Click here to grab our free resources and start improving your margin today.