Food cost percentage is the ratio of what you spend on food to what you earn selling it. One number. It tells you more about how a kitchen is running than almost anything else.
The formula: (Cost of Goods Sold ÷ Revenue) × 100 = Food Cost %
If you spent $3,000 on food this week and sold $10,000 worth of food, your food cost is 30%.
What the benchmarks actually mean
Full-service restaurants typically run between 28–35%. Fast casual tends to land lower, around 25–31%, because the menu is simpler and portion control is tighter.
These aren’t targets — they’re ranges. Your actual target depends on your menu, your market, and your labour model. A high-end restaurant running 38% food cost might be profitable because their revenue per cover is high. A casual diner running 28% might still be losing money because their volume is too low.
The number needs context. But it’s the starting point for every conversation about kitchen profitability.
How to calculate it properly
Food cost percentage isn’t what you paid for deliveries this week. It’s the cost of the food you actually sold — which requires tracking inventory.
Cost of Goods Sold (COGS) = Opening inventory + Purchases − Closing inventory
If you started the week with $5,000 in inventory, bought $4,000 more, and ended the week with $6,000 remaining, your COGS is $3,000 ($5,000 + $4,000 − $6,000).
Divide that by your revenue and multiply by 100. That’s your food cost percentage.
Kitchens that skip the inventory step are guessing. They might have an intuition about where money is going, but they can’t find the leak.
Why most kitchens get it wrong
Portion drift. Line cooks don’t deliberately over-portion, but without regular checks, portions creep. A protein that was specced at 6oz starts going out at 7oz. That’s a 16% increase in cost on that item, invisible in real time.
Waste that isn’t tracked. Spoilage, trim waste, and mistakes all cost money. The industry estimates 4–10% of food purchased never reaches a guest. If it’s not being logged, it can’t be managed.
Pricing that hasn’t been updated. If your supplier raised prices six months ago and your menu prices didn’t move, your food cost went up without you noticing. Running the calculation weekly makes these gaps visible fast.
Theft. It happens. In kitchens that track inventory carefully, unexplained variance gets noticed quickly. In kitchens that don’t, it can run for months.
Ideal food cost by menu item
Overall food cost percentage is useful, but item-level costing is where you actually manage the number.
Recipe costing means calculating exactly what each dish costs to produce — ingredient by ingredient, at current prices, at the specced portion. Once you have that, you can calculate the food cost percentage per item and price accordingly.
High-cost items (proteins, shellfish) need to be priced to maintain margin. Loss leaders need to be balanced against high-margin items in the same menu section. This is menu engineering, and it starts with knowing your costs.
What to do when the number is off
Above 35%: Start with inventory. Are portions correct? Is there unexplained variance between purchases and sales? Are supplier prices current? Is anything being wasted or going unused?
Below 25%: Not automatically good news. Check whether portions are being shorted. Guests notice before managers do.
Sudden change week to week: Find the cause before assuming it’s a trend. A one-off event, a price spike on a single commodity, or a miscounted inventory can move the number without indicating a systemic problem.
The calculation is ten minutes of work. Knowing your food cost percentage means knowing your kitchen.