Food & Cooking⏱ 5 min read
How to Calculate Food Cost Percentage for a Restaurant or Home Kitchen
Food cost percentage is the single most important number in food business economics. Here's how to calculate it, what a good target looks like, and how to reduce it without sacrificing quality.
Whether you're running a restaurant, a meal prep business, or just trying to understand where your grocery money goes, food cost percentage gives you the clearest view of value for money in your kitchen.
The Formula
Food Cost % = (Cost of Ingredients ÷ Selling Price) × 100
Or for a period:
Food Cost % = (Food Used ÷ Food Revenue) × 100
Food Used = Opening Stock + Purchases − Closing Stock
What a Good Food Cost Percentage Looks Like
Business TypeTarget Food Cost %Why
Fine dining restaurant28–32%High labour, premium prices, experience premium
Casual / mid-range restaurant28–35%Balance of volume and margin
Fast food / QSR25–32%High volume compensates
Café / coffee shop25–35%Beverage margins subsidise food
Home cookingN/A — aim for value vs quality balanceNo labour cost to consider
There's no universal "correct" number — food cost percentage only has meaning in context of the full profit and loss. A restaurant with 40% food cost but very low labour (e.g. a food van) can be profitable; a restaurant at 28% food cost with excessive waste and labour might not be.
Calculating Per-Dish Food Cost
Start by costing each ingredient in a recipe at the quantity actually used:
Example: Grilled salmon fillet
Salmon (180g portion): £180/kg → £3.24 per portion
New potatoes (200g): £0.90/kg → £0.18
Salad leaves (50g): £8/kg → £0.40
Butter, lemon, seasoning (estimated): £0.20
Total ingredient cost: £4.02
Selling price: £16.50
Food cost % = (4.02 ÷ 16.50) × 100 = 24.4%
The Yield Problem
Raw ingredient costs must account for yield — the usable percentage after trimming, peeling, and cooking loss. A 1kg whole salmon fillet might yield only 700g of portionable fish after removing skin and bones.
Yield % = (Usable weight ÷ Original weight) × 100
Cost per usable kg = Purchase cost per kg ÷ Yield %
Example: Salmon at £12/kg, 70% yield
Real cost per kg = £12 ÷ 0.70 = £17.14/kg of usable fish
Ignoring yield leads to systematically undercosting dishes — one of the most common causes of restaurant profitability problems.
How to Reduce Food Cost Without Cutting Quality
- Reduce waste: The biggest lever in most kitchens. Track what's thrown away for one week — the number is usually shocking.
- Portion control: Consistent portions protect margins. A 200g portion being served at 230g is a 15% cost overrun per dish.
- Menu engineering: Replace or reprice high-cost, low-popularity items. Spotlight high-margin dishes with better placement or descriptions.
- Supplier negotiation: Shopping multiple suppliers for key items (proteins especially) creates competitive pricing.
- Batch cooking: Reduces time and energy cost and often enables bulk purchasing discounts.
The Prime Cost Formula
Food cost percentage alone doesn't tell the full profitability story. Add labour to get "prime cost" — the most useful single metric in restaurant economics:
Prime Cost = Food Cost % + Labour Cost %
Healthy target: Prime Cost below 65%
Example: Food 32% + Labour 28% = Prime Cost 60% ✓