Restaurant Food Cost: Formula, Worked Example & Common Mistakes
Food cost measures the ingredients needed to prepare what you sell. It is useful for menu decisions, but it is not the same as net profit or actual cash spent in a month.
What is food-cost percentage?
For a single dish, estimated recipe food-cost percentage = estimated cost of the ingredients used ÷ selling price × 100. Use the same definition consistently when comparing menu items.
The example leaves ₹130 before labour, rent, utilities, packaging, delivery commission, wastage and other costs. It must not be described as ₹130 profit.
Worked calculation using purchase units
Suppose a kitchen prepares one pizza using the fictional rates below. These prices are illustrative only.
| Raw material | Purchase unit price | Used | Ingredient cost |
|---|---|---|---|
| Flour | ₹60 per kg | 0.15 kg | ₹9.00 |
| Cheese | ₹400 per kg | 0.08 kg | ₹32.00 |
| Tomato sauce | ₹120 per kg | 0.05 kg | ₹6.00 |
| Vegetables | ₹100 per kg | 0.03 kg | ₹3.00 |
| Estimated ingredients total | ₹50.00 | ||
How FRB can help with the calculation
- Keep ingredient purchase prices and units in the raw-material master.
- Set quantities per serving in Recipe & BOM Management.
- Review estimated food cost and contribution at item level.
- Re-check recipes after purchase price changes, food waste or portion-size changes.
Advanced FRB recipe tracking can record raw-material movements for eligible sales, optional toppings, meals and batches. The figures depend on the accuracy of ingredient records and configuration.
Why estimated and actual food cost differ
- Purchase prices change
- A revised supplier rate changes replacement cost. Check when your recipe estimate was last refreshed.
- Waste and spoilage happen
- Trimmings, mistakes and expired stock create costs that a standard portion recipe alone cannot explain.
- Portions may differ
- A cook may use 100 g of cheese where the recipe assumes 80 g. Periodic physical counts reveal the gap.
- Refunds are not ingredient returns
- A refunded cooked order may still have consumed ingredients. Treat the stock adjustment separately.
How to use food cost safely
Compare estimated ingredient costs across dishes, review waste and repeat counts. Do not infer profit, income tax, GST treatment or market benchmarks from recipe food cost alone. For accounting or tax decisions, consult the applicable professional and current official rules.
Try the free food cost calculator or set up one test recipe.