Food Cost Percentage
Ingredient cost as a share of menu price — a core restaurant metric.
Formula
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Example
$4.50 cost / $18 price ⇒ 25%
How it works
Food cost percentage tells you how much of a menu item’s selling price is consumed by the ingredients on the plate. It works by comparing the ingredient cost to the final menu price and converting that ratio into a percentage, so you can see the cost share in an easy-to-compare form. A lower percentage usually leaves more room to cover labor, rent, utilities, and profit, while a higher percentage means the dish is more expensive to produce relative to what customers pay.
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, catering, food trucks, and any setting where ingredient costs need to be balanced against selling price.
Worked example, step by step
Ingredient cost = $6.30 Menu price = $21.00 FC = (c_ingredients / p_selling) × 100 FC = (6.30 / 21.00) × 100 FC = 0.30 × 100 FC = 30% So, 30% of the menu price goes toward the ingredients.
Common mistakes to avoid
- Using the total meal revenue instead of the price of one menu item
- Forgetting to multiply by 100, which leaves the result as a decimal instead of a percentage
- Including labor, rent, or overhead in ingredient cost instead of only the food ingredients
Did You Know?
Most restaurants target a food cost of 28–35%; the rest covers labour, rent and (hopefully) profit.
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