Restaurant food cost percentage: the formula and a worked example

Food cost percentage tells you how much of every rupee of food sales went on ingredients. It is the single most useful number for a restaurant owner after sales.

The formula

Food cost % = (opening stock + purchases − closing stock) ÷ food sales × 100

A worked example

For one month:

• Opening stock (counted on the 1st): Rs 200,000
• Purchases during the month: Rs 500,000
• Closing stock (counted on the last day): Rs 180,000
• Food used: 200,000 + 500,000 − 180,000 = Rs 520,000
• Food sales: Rs 1,600,000

Food cost = 520,000 ÷ 1,600,000 = 32.5%

What is a good number

Many restaurants aim for somewhere around 28% to 35%, but it depends on the menu. A karahi and BBQ place spends more on meat than a chai and paratha corner. Track your own number month by month; a sudden jump matters more than the exact figure.

Where it leaks

• Portions that grow during the rush
• Wastage that nobody writes down
• Staff meals not recorded
• Theft of expensive items such as chicken and oil
• Purchase prices rising without menu prices changing

Recipe cost per dish

For each dish, add up what goes into one plate. If a chicken karahi uses Rs 900 of ingredients and sells for Rs 2,600, its food cost is about 35%. Doing this for your top ten dishes shows which ones really earn.

Munshi's restaurant POS keeps a recipe for each dish, takes the ingredients off stock with every order, and shows a daily food-cost and wastage report.