How to Calculate Food Cost Percentage
Food cost percentage equals food cost per serving divided by menu price. It is not gross margin; labor, rent, delivery commissions and waste sit outside it. A common target is 28 to 35 percent, but it varies by format.
The formula
Cost per serving = batch ingredient cost divided by sellable servings; food cost percentage = cost per serving divided by menu price times 100.
For a cost of 3 and a price of 15, food cost is 20 percent.
Targets and errors
28 to 35 percent is a common range; with high delivery commissions, food cost must be lower to keep margin.
Missing oil, salt, sauce, tasting and waste understates cost; using purchase weight instead of sellable servings also skews it.
FAQ
Is 20 percent good?
For most restaurants it is low and may mean small portions or missing costs; consider labor and rent too.
Should labor and rent be included?
No; full margin also subtracts labor, rent, utilities and delivery commissions.