Food Cost Percentage

Food cost percentage is the most-watched cost metric in a restaurant. It is calculated as: cost of food sold ÷ food revenue × 100. A restaurant that spends $32 on ingredients for every $100 in food revenue has a 32% food cost.

Healthy ranges depend on the format. Full-service restaurants typically target 28-35%. Fast-casual is 25-30%. Pizza and pasta concepts can run lower (22-28%) because of starch-heavy ingredient mixes. Fine dining and steakhouses run higher (35-40%) because of expensive proteins.

Food cost is the largest line that an operator can actively control. Labor is largely fixed by service hours; rent is locked. Food cost moves with vendor pricing, portion control, waste management, and recipe engineering. A 2-point reduction in food cost on a $1.5M restaurant is $30k of profit.

The two ways to lower food cost are price (lower ingredient cost via vendor negotiation, substitution, or less waste) and yield (more dollars of revenue per dollar of cost via menu engineering — moving customers toward higher-margin items). Most restaurants under-do the second lever.

Food cost is the gravity well of restaurant profit. A restaurant with 30% food cost has roughly twice the profit per dollar of revenue as one with 38% food cost — same volume, same labor, same rent. Understanding and tracking food cost weekly is non-optional. The number you should not know off the top of your head, you cannot fix.