Food Cost Percentage Formula (+ Free Calculator and Worked Example)

The food cost formula with a free calculator, a worked example, what a good food cost percentage is, and how to cost a single dish down to the plate.

Food cost percentage is the single number most restaurant owners should know cold. It tells you how much of every rupee of food sales is being spent on ingredients — and when it quietly creeps up, profit disappears long before anyone notices in the bank balance.

The formula

Food cost % = (Opening stock + Purchases − Closing stock) ÷ Food sales × 100

The top half is what you actually consumed in the period; the bottom half is what you sold. Use the same period for both — a week is ideal, a month is the minimum.

A worked example (illustrative numbers)

Say a restaurant starts the month with ₹80,000 of stock on the shelves, buys ₹2,40,000 of ingredients during the month, and counts ₹70,000 left at the end. It consumed ₹80,000 + ₹2,40,000 − ₹70,000 = ₹2,50,000 of food. Food sales for the month were ₹8,00,000.

Food cost % = ₹2,50,000 ÷ ₹8,00,000 × 100 = 31.25%. Roughly ₹31 of every ₹100 you took in went into the food itself.

What is a good food cost percentage for a restaurant?

There is no universal answer. Many operators aim for somewhere in the high-20s to mid-30s as a rough rule of thumb, but a biryani-centric menu, a sweet shop and a steakhouse have very different natural ranges. A bar-heavy format with high-margin drinks can run a higher food cost percentage and still be healthy overall, because beverage margin picks up the slack. The useful comparison is not against a textbook figure — it is against your own theoretical cost, below.

Dish costing: pricing a single recipe

Dish costing (sometimes called plate costing or portion costing) is the same idea applied to one recipe instead of the whole restaurant: what does this exact plate cost to make, ingredient by ingredient, at today's prices? List every ingredient in the recipe with its quantity per portion, price each one from your last purchase, and add them up — that total is the dish's raw cost. Divide by the selling price to get that dish's own food cost percentage.

For example, a plate of paneer butter masala might use 150g paneer (₹36), 200g gravy ingredients (₹18), and 8g butter and garnish (₹8) — a plate cost of ₹62. Sold at ₹240, that dish runs a 25.8% food cost (62 ÷ 240 × 100), lower than the restaurant's overall average, which usually means it is carrying some of the higher-cost dishes on the menu.

Portion cost is the same number stated per unit instead of per plate — useful when one batch of prep (a pot of gravy, a tray of dough) is portioned across many dishes, since you cost the batch once and divide by how many portions it makes.

Costing every dish this way, restaurant-wide, is what turns "our food cost is 31%" into "these six dishes are why" — see the actual vs theoretical breakdown next.

Actual vs theoretical food cost

The formula above gives your actual food cost. Theoretical food cost is what you should have spent if every plate matched its recipe exactly. Work it out by costing each dish from its recipe and multiplying by how many you sold.

For example, if a plate of paneer butter masala uses ingredients that cost ₹62 and sells for ₹240, its plate cost is about 25.8% (62 ÷ 240). Do that for every dish, weight by how often each sells, and you have a theoretical figure for the month.

The gap between actual and theoretical is where the money leaks:

• Over-portioning — the extra spoonful of gravy that adds up over a thousand plates.
• Wastage and spoilage that never got recorded.
• Comps, staff meals and tastings not rung through the till.
• Supplier price changes that never made it into your dish costing.
• Theft or receiving errors, when deliveries are not checked against invoices.

How to keep it from drifting

• Cost every recipe once, then re-cost when a major ingredient’s price moves — a spreadsheet works, but it needs someone to keep updating it.
• Count stock on a fixed day every week, not just at month-end.
• Log wastage and comps as their own category so you can see how much they cost, instead of burying them in “shrinkage”.
• Review your five best-selling dishes first; a small price or portion fix on a high-volume item is worth more than tuning a rarely ordered one.

Where software helps

Doing this by hand is possible but tedious, which is why it usually lapses after a month. EasyBills links each dish to a recipe, deducts stock ingredient by ingredient as plates are sold, logs wastage separately, and shows the margin per dish — so the theoretical number is always there and the gap is visible without a weekend of spreadsheets.