PelicanWork out food cost from inventory first?
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Enter net purchase prices (before VAT).
Gross profit has to cover labor, rent and energy too. Treat the target percentage as a floor, not a stretch goal.
The formula: how to calculate food cost
Food cost is the net value of goods actually used in a period. It comes from your inventory counts:
All values net, before VAT.
Important: food cost is not the same as purchases. What sits in the storeroom has not been used yet. Only the two inventory counts turn purchases into true usage, including shrink, spoilage and breakage.
Food cost percentage: one division
Example: your restaurant takes 35,000 in net revenue in a month and uses 10,500 in goods. The percentage is 10,500 ÷ 35,000 × 100 = 30 percent. Of every revenue unit, 70 percent remains as gross profit to pay for labor, rent, energy and profit.
The most common mistake: the till shows gross revenue including VAT, but the percentage needs net revenue. Calculated on gross, your percentage looks several points better than it is. The calculator above handles the conversion: enter the gross figure, pick the VAT rate, done.
Benchmarks: what is a good food cost percentage?
- Bar / café: 20 to 28 percent
- Quick service / pizzeria: 25 to 32 percent
- Classic restaurant: 28 to 35 percent
- Fine dining: 32 to 40 percent
These ranges are orientation, not law. A steakhouse lives with a high percentage and high checks, a cocktail concept the other way round. What matters more than the industry comparison is the trend in your own operation: if the percentage climbs two months in a row, something is off, in purchase prices, portion sizes or the bin.
Lowering food cost starts with ordering
Most operations look for savings in the kitchen, yet much of the waste happens before cooking: duplicate orders, gut-feel safety orders and prices nobody wrote down at the supplier visit. That is what an order history fixes: when every order is recorded with quantity, supplier and price, price increases and unusual quantities stand out immediately, not on the monthly invoice.
Frequently asked questions
How do you calculate food cost?
Food cost = beginning inventory + purchases − ending inventory, all net. Inventory figures come from stock counts at the start and end of the period, purchases from supplier invoices.
How do you calculate food cost percentage?
Food cost percentage = food cost ÷ net revenue × 100. Both values must cover the same period and be net of VAT.
What is a good food cost percentage?
As a rule of thumb: bars and cafés 20 to 28 percent, quick service 25 to 32 percent, classic restaurants 28 to 35 percent, fine dining 32 to 40 percent. Your own trend matters more than the benchmark.
How do I price a dish from its food cost?
Net price = food cost per portion ÷ target percentage. At 4.20 food cost and a 30 percent target that is 14.00 net; add VAT where applicable for the menu price. The third tab above does exactly that.
The numbers for this calculator? Your order history has them.
Pelican records every order with quantity, supplier and price, as a side effect of normal ordering. Free for 30 days.
Create business and try 30 days free