Food cost is the single most important indicator of a restaurant’s profitability. Getting it right means knowing exactly what each dish costs you — and therefore what you actually earn. Here’s the method.

What is food cost?

Food cost is the cost of the raw ingredients needed to make a dish, relative to its selling price. It’s most often expressed as a percentage (the food cost percentage).

The formula

Food cost (%) = (dish ingredient cost / selling price excl. tax) × 100

A dish’s ingredient cost is the sum of every ingredient on the recipe card, based on the quantities actually used and waste (trimming, peeling, cooking loss).

A worked example

Take a burger sold at €14 (excl. tax):

  • Bun: €0.40
  • 150 g beef patty: €1.80
  • Cheese, sauce, toppings: €1.30
  • Fries: €0.70

Total ingredient cost = €4.20

Food cost = (4.20 / 14) × 100 = 30%

In other words, 30% of the selling price goes to ingredients.

What ratio should you aim for?

There’s no magic number — it depends on your concept:

  • Quick service / snack: often 28–35%
  • Full-service dining: 25–32%
  • Drinks: much lower (often < 20%)

What matters isn’t a universal “ideal” ratio, but tracking how yours evolves and reacting when it drifts.

Managing it day to day

Calculating food cost once is useless: purchase prices move, waste adds up, and the actual figure quickly drifts from the theoretical one. To stay in control:

  1. Build up-to-date recipe cards for every dish.
  2. Track ingredient costs in real time (supplier prices change).
  3. Measure actual food cost (including waste), not just theoretical.
  4. Cross-reference with your POS sales to see where the margin goes.

That’s exactly what FoodCostOS does: recipe cards, up-to-date costs, per-dish ratio and POS integration — to manage your margin without a calculator.