By Menu & Margin editorial team · Published · Updated
Food Cost Percentage
Calculate what percentage of food sales goes toward ingredients for the same period. Compare against your own last four closed weeks—not a generic industry round number.
How to Calculate Food Cost Percentage
The food cost percentage formula is:
Where Cost of Goods Sold (COGS) is calculated as:
Worked example
Beginning inventory $5,000 + purchases $10,000 − ending inventory $4,500 = COGS $10,500. Food revenue $35,000 → food cost % = 10,500 ÷ 35,000 × 100 = 30.0%. Compare that figure to your prior closed weeks, not an unsourced “industry average.”
How to read the result
We do not publish unsourced “industry standard” percentage bands here. Set a target from your concept, pricing, and recent actuals; investigate week-over-week spikes with waste tags, invoice prices, and portion checks. See Running better → Food cost.
Tips to Reduce Food Cost
- Track inventory regularly: Weekly counts help identify waste and theft
- Standardize recipes: Ensure consistent portioning across all dishes
- Negotiate with suppliers: Compare pricing and consolidate orders
- Reduce waste: Proper storage, FIFO rotation, and careful prep
- Menu engineering: Promote high-margin items
- Monitor variance: Compare theoretical vs. actual food usage
- Use inventory software: See our inventory software comparison