Every chef and F&B manager knows their food cost percentage. It's the number that gets discussed in every financial review, that determines menu pricing, that triggers alarm when it moves.
But there's often confusion about what it actually measures, how to calculate it accurately, and what you can actually do about it. Let's fix that.
The Basic Calculation
Food Cost Percentage = (Food Purchases ÷ Food Revenue) × 100
If you spend €30,000 on food and generate €100,000 in food revenue, your food cost percentage is 30%.
Simple enough. But the devil is in the details.
The Problems with the Basic Calculation
The formula above works if everything you buy in a period gets used in that period. In reality:
Inventory changes. You might have more or less stock at the end of the period than the start. Purchases don't equal usage.
Waste happens. Some of what you buy never generates revenue. It goes in the bin.
Comp meals and staff meals. Food used but not sold distorts the percentage.
Timing mismatches. A large delivery at month-end can spike that month's percentage even though the food will be used next month.
For accurate tracking, you need:
Adjusted Food Cost = Opening Inventory + Purchases - Closing Inventory - Staff/Comp Meals
Actual Food Cost % = Adjusted Food Cost ÷ Food Revenue
Most POS and inventory systems can calculate this, but you need to do regular stock takes.
Target Ranges by Segment
Different operation types have different acceptable food cost ranges:
| Segment | Typical Target | Acceptable Range |
|---|---|---|
| Fine dining | 30-35% | 28-38% |
| Casual dining | 28-32% | 25-35% |
| Fast casual | 25-30% | 22-32% |
| QSR | 25-28% | 22-30% |
| Hotel F&B | 28-35% | 25-38% |
| Catering | 30-40% | 28-45% |
| Pubs | 25-30% | 22-32% |
These are food-only costs. Beverage is calculated separately and usually runs lower (20-25% for beer/wine, less for spirits).
Why Food Cost Percentage Isn't Everything
Here's something important: a low food cost percentage isn't automatically good, and a high one isn't automatically bad.
A 22% food cost could mean you're running an efficient operation. Or it could mean you're over-portioning, using cheap ingredients, or under-investing in quality.
A 36% food cost could indicate waste problems. Or it could reflect a premium positioning with high-quality ingredients that commands higher prices.
What matters is whether your food cost enables profitable pricing while meeting customer expectations. A steakhouse and a fish-and-chips shop will have completely different percentages and can both be highly profitable.
The Relationship to Menu Pricing
Food cost percentage determines your minimum viable price for each dish:
Minimum Price = Recipe Cost ÷ Target Food Cost %
If a dish costs €4.50 to make and you're targeting 30% food cost, minimum price is €15.
But "minimum viable" isn't "optimal." Many profitable dishes run much lower than target food cost, cross-subsidising items where quality demands higher ingredient spend.
Steaks might run 40-45% food cost. But if your average across the menu is 30%, it works—assuming steaks are priced to reflect their cost.
Menu Engineering and Food Cost
Smart menu engineering uses food cost as one input, not the only input:
Contribution margin (selling price - food cost) often matters more than percentage. A €8 dish at 30% makes €5.60. A €25 dish at 35% makes €16.25.
Popularity affects total contribution. A high-margin dish nobody orders contributes nothing.
Labour intensity varies. A 32% food cost dish that takes 3 minutes to plate is more profitable than a 28% dish requiring 10 minutes of assembly.
The goal isn't lowest food cost percentage—it's maximum profitability given your concept and positioning.
Waste's Impact on Food Cost
Here's where food waste enters the picture directly.
If you're targeting 30% food cost but wasting 10% of purchases, your actual delivered food cost is 33%+. You either accept lower margins or raise prices.
Many operators respond to high food cost percentage by cutting quality or reducing portions. Often the better move is to reduce waste—you get the same improvement without affecting the customer experience.
See how waste affects your specific numbers with our interactive calculator.
Tracking Effectively
To manage food cost properly:
Track weekly, not just monthly. Monthly figures hide patterns and delay response.
Break down by category. Proteins, produce, dairy, dry goods—each behaves differently.
Compare actual to theoretical. Your recipes have calculated costs. Compare them to what you're actually spending.
Monitor waste separately. Food cost percentage alone doesn't tell you why you're over target.
Watch trends, not just snapshots. Is it improving or deteriorating?
The operations with best food cost control aren't doing anything magical. They're just measuring consistently and responding quickly when numbers drift.
When to Worry
Food cost percentage warrants investigation when:
- It rises more than 2 points above target for two consecutive periods
- It's volatile with no obvious explanation
- Theoretical and actual costs diverge significantly
- Waste percentages are increasing
Sometimes there's a benign explanation—ingredient price changes, menu mix shift, seasonal patterns. But often rising food cost indicates operational drift that will only get worse without attention.
For a detailed breakdown of your food cost and waste relationship, request a custom report.