Food cost percentage: how to calculate it, what's normal, and how to fix it when it drifts
Food cost percentage is the number that decides whether a busy kitchen is a business or a hobby. It's also the number most owners calculate once a year, at tax time, when it's far too late to act on. Here's the weekly version that actually changes decisions.
Wemu Team
Product
There are two food cost numbers, and confusing them is why so many owners think theirs is fine when it isn't. Theoretical food cost is what your recipes say you should have spent. Actual food cost is what left your bank account. The gap between them is waste, over-portioning, theft, and mis-rung orders — and that gap, not the headline percentage, is where the money is.
The formula
Actual food cost percentage for a period:
“(Opening inventory + purchases − closing inventory) ÷ food sales × 100”
Worked example for one week: you start with $4,200 of stock, buy $6,800, and finish with $3,900. Cost of goods used is $7,100. On $23,000 of food sales, that's 30.9%.
Weekly beats monthly
A monthly number tells you what happened. A weekly number tells you what's happening — early enough to change a supplier order, retrain a portion, or pull a dish that's quietly losing money on every plate.
What's normal
| Venue type | Typical food cost | Notes |
|---|---|---|
| Café / coffee-led | 18–28% | Beverages carry very low cost; food pulls the average up |
| Casual dining | 28–35% | The broad middle where most venues sit |
| Fine dining | 30–40% | Premium ingredients, offset by higher prices and labour intensity |
| Pizza / pasta-led | 20–28% | Low-cost base ingredients with high perceived value |
| Bar / pub with food | 25–32% | Drinks subsidise the kitchen's percentage |
| Food truck | 25–33% | Tight menu helps; small-batch purchasing hurts |
Why your number drifts up
- 1Supplier price rises absorbed silently — the invoice went up 8% and the menu price didn't move
- 2Portion drift — the same dish plated a little more generously by every new hire, compounding across thousands of covers
- 3Waste and spoilage from over-ordering perishables, especially on slow weeks
- 4Modifiers and extras given away — the extra shot, the side of aioli, the added avocado that never gets rung in
- 5Staff meals and comps that nobody codes separately, so they land in food cost and look like waste
- 6Menu mix shifting toward your low-margin dishes because they're the ones that got the photo and the top-of-menu placement
Note how many of those are point-of-sale problems rather than kitchen problems. If your POS makes it easy to ring modifiers and hard to give things away untracked, several of these fix themselves.
Cost your menu properly — once
Recipe costing is a weekend of work that pays for years. For each dish, list every ingredient with its purchase unit cost, convert to the portion used, add a waste allowance (typically 2–5%, higher for fresh produce), and total it. That gives your plate cost. Divide plate cost by target food cost percentage to get the price you should be charging.
Then look at the two numbers together — plate cost and how often it sells — and you get the menu engineering matrix that actually drives decisions:
| Sells a lot | Sells rarely | |
|---|---|---|
| High margin | Stars — protect them, feature them, never discount them | Puzzles — promote, reposition, or rename before you cut |
| Low margin | Workhorses — re-cost, trim the plate, or raise price slightly | Dogs — remove, and reclaim the prep time and stock |
The weekly routine
- 1Count key stock the same morning each week — you don't need a full count of everything, just the 20 items that represent most of your spend
- 2Pull purchases for the week from your supplier invoices
- 3Pull food sales for the same period from your POS
- 4Calculate the percentage and write it on the same sheet as last week's
- 5If it moved more than two points, find out why this week — not at month end
This is far easier when purchases and sales live in the same system. In Wemu, supplier purchase orders record what you bought and at what cost, receiving updates stock automatically, and the products report shows margin per item against actual sales — so the weekly number is a report rather than a spreadsheet evening.
How to bring it down without cheapening the food
- Re-cost your top 10 selling dishes first — they drive the average, and a 40-cent saving on a dish that sells 200 times a week is $4,000 a year
- Standardise portions with scoops, ladles, and scales, then re-check after every new hire
- Ring every modifier, always — free extras should be a deliberate decision, not a habit
- Negotiate your top three suppliers annually, and track cost per unit over time so you notice creep
- Cross-utilise ingredients so fewer items spoil: the same herb, sauce, or protein across three dishes orders better than nine single-use items
- Raise prices on stars by small amounts rather than cutting quality anywhere
Know your margin per dish
Wemu tracks cost price against every sale, records supplier costs on purchase orders, and shows margin by product — so food cost is a report, not a spreadsheet night. 7-day free trial.
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