Food Cost Percentage
Ingredient cost as a share of menu price — the key restaurant profitability metric.
Formula
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Example
Cost $6, price $20: FC = 30%
How it works
Food cost percentage compares what you spend on the ingredients for a dish to what you charge the customer for it. It works by dividing the ingredient cost by the selling price, then multiplying by 100 to convert the fraction into a percent. A lower percentage usually means more room to cover labor, overhead, and profit.
When to use it
Use this formula when pricing menu items, checking whether a dish is profitable, or comparing the cost efficiency of different recipes. It is especially useful in restaurants, cafes, catering, and bakery businesses.
Worked example, step by step
Ingredient cost, C = $4.50 Selling price, P = $15.00 FC = (C / P) × 100 FC = (4.50 / 15.00) × 100 FC = 0.30 × 100 FC = 30% So, the food cost percentage is 30%.
Common mistakes to avoid
- Using total meal cost instead of just ingredient cost
- Dividing price by cost instead of cost by price
- Forgetting to multiply by 100 to turn the decimal into a percentage
Did You Know?
Most restaurants target a food cost around 28-35% to stay profitable after labour and rent.
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