What is Food cost percentage?

Food cost percentage tells a restaurant how much of each sales dollar went to ingredients. The period formula is (beginning inventory + purchases − ending inventory) ÷ food sales. Many full-service restaurants aim for roughly 28% to 35%, but the right target depends on the concept: a steakhouse runs higher than a pizzeria, and a café with a large beverage share runs lower. The trend matters more than any industry number.

There are two versions worth comparing. Actual food cost comes from purchases and stock counts. Theoretical (or ideal) food cost comes from recipe costing: each menu item’s ingredients are costed per portion, multiplied by how many were sold. The gap between the two is waste, over-portioning, theft, comps and receiving errors. A gap of a point or two is normal; a growing gap is a signal to look at the line and the back door.

To control food cost, keep recipes and portion sizes written down, update ingredient prices when supplier invoices change, and count high-value items weekly. Menu engineering helps too: price each dish so its plate cost lands near your target, and promote items with the best margin in dollars, not just percentage. A POS that deducts ingredients as items sell makes theoretical cost available every day instead of once a month.